In his latest article forThe Bankruptcy Strategisttitled, "Third Circuit's Mootness Debate Avoids Reversal of Confirmation Order," Schulte Roth & Zabel of counsel Michael L. Cook explains the Third Circuit's dismissal of two tort claimants' appeals in theBoy Scouts of Americareorganization case on the ground of statutory mootness. The appellants sought reversal of a plan confirmation order authorizing the sale of the debtor's insurance policies under Bankruptcy Code §363(b). Since the sale was made in good faith and not stayed, Code §363(m) barred reversal because the appeals would affect the sale's validity, a principal part of the chapter 11 plan.
Appeals from two other groups of insurers, C and D, however, were not subject to the same statutory restriction, allowing the court to address their merits. Although the majority dismissed A and B's appeals as statutorily moot, a concurring judge argued that equitable mootness warranted dismissal of A and B's appeals, while agreeing with the majority's treatment of the appeals by C and D. This mootness debate enabled the court to avoid addressing the nonconsensual third-party releases in the debtor's reorganization plan that would have been invalidated by the US Supreme Court's 2024Purdue Pharmadecision.
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