Third Circuit’s Mootness Debate Avoids Reversal of Confirmation Order

Two groups of claimant-appellants (A and B” sought to “reverse the Confirmation Order and vacate the Plan in its entirety.” Id., at *9. Because the Plan’s confirmation order “contains the authorization of the sale of [the debtor’s] insurance policies,” said the court’s majority, these appeals “would reverse … an authorization made pursuant to [Bankruptcy Code] §363(b),” a result barred by Code §363(m) (good-faith purchaser of property protected from reversal on appeal of sale order unless order stayed). In short, said the majority, A and B’s appeals were taken “from an authorization of the sale,” when “the purchase was made in good faith,” and when “the sale was not stayed.” Id., at *7, quoting In re Energy Future Holdings, 949 F. 3d 806, 821 (3d Cir. 2020). A and B’s appeals “would necessarily affect the sale’s validity,” requiring their appeals to be dismissed as statutorily moot.

Appeals by two other groups of insurers (C and D) “did not trigger the same statutory bar,” enabling the majority to “reach the merits” of their appeals. A concurring judge would have dismissed the appeals of A and B as equitably moot, but accepted the majority’s treatment of the appeals by C and D.