WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on April 29 denied a petition for certiorari in which a debenture trust company argued that the Second Circuit U.S. Court of Appeals inappropriately applied the doctrine of equitable mootness in affirming a bankruptcy court's decision that overruled its objections to the reorganization plan of Charter Communications Inc. (Law Debenture Trust Co. v. Charter Communications Inc., No. 12-847, Chapter 11, U.S. Sup.).
In 2009, Charter Communications filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York and simultaneously submitted a proposed reorganization plan that had been prearranged. The company reorganized and emerged from bankruptcy.
The reorganization plan shed billions of dollars and wiped out shareholder equity, according to court records.
The Bankruptcy Court ultimately confirmed Charter's reorganization plan over objections by the Law Debenture Trust Co. (LDTC), the Securities and Exchange Commission and the U.S. trustee.
LDTC appealed the Bankruptcy Court's decision confirming the reorganization plan to the U.S. District Court for the Southern District of New York. The District Court affirmed the ruling, and LDTC appealed to the Second Circuit.
The Second Circuit affirmed the District Court's decision, ruling that the case was "equitably moot," and LDTC filed a petition for writ of certiorari with the Supreme Court on Jan.10.
LDTC contended that the case presented "two particularly troubling mutations of the equitable-mootness doctrine." Specifically, the Second Circuit held that once a bankruptcy plan is substantially consummated, any appeal challenging the plan's confirmation is presumed to be equitably moot, LDTC said.
LDTC argued that the time had come for the Supreme Court to rein in the "curious doctrine" of equitable mootness.
In its brief filed March 28, Charter Communications argued that the doctrine of equitable mootness had been properly applied. Moreover, Charter Communications contended that the case was "an inappropriate vehicle by which to consider the contours of the equitable mootness doctrine."
Charter Communications insisted that under any standard, the Second Circuit's decision was correct and LDTC had waived its right to seek further relief.
LDTC is represented by Andrew W. Hammond of White & Case in New York and Lawrence S. Robbins, Mark T. Stancil and Matthew M. Madden of Robbins, Russell Englert Orseck, Untereiner & Sauber in Washington. Charter Communications is represented by Jay P. Lefkowitz, Jeffrey S. Powell, Daniel T. Donovan, John C. O'Quinn, K. Winn Allen and Joseph R. Oliveri of Kirkland & Ellis in Washington.
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