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9 June 2025

Third Circuit's Mootness Debate Avoids Reversal Of Confirmation Order

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Schulte Roth & Zabel LLP

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With a firm focus on private capital, Schulte Roth & Zabel comprises legal advisers and commercial problem-solvers who combine exceptional experience, industry insight, integrated intelligence and commercial creativity to help clients raise and invest assets and protect and expand their businesses.
In his latest article for The Bankruptcy Strategist titled, "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 the Boy Scouts of America reorganization case on the ground of statutory mootness.
United States Insolvency/Bankruptcy/Re-Structuring

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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