EFTA01358969.pdf

Page 40 874 F.3d 787, "; 2017 U.S. App. LEXIS 20596, **; Bankr. L. Rep. (CCH) P83,176; 64 Bankr. Ct. Dec. 216 17 Debtors filed with the district court a motion to dismiss the appeal of the bankruptcy court's confirmation order on the basis of equitable mootness. 15.1771 JA 4570-88. The district court made no ruling on the motion, concluding it was -mooted by this Court's decision to affirm the Orders of the Bankruptcy Court." 531 B.R. at 338 n.14. Debtors then filed motions to dismiss on equitable mootness grounds with this Court. 15-1682 Doc. 58; 15-1771 Doe. 62 . which we summarily denied without prejudice to Debtors "rais(ing) the issue . . . in their merits brief." 15-1682 Doc. 159; 15-1771 Doc. 102. [HN13] Where, as here, a reorganization plan has been substantially consummated, we presume that an appeal of that plan is equitably moot. In re BG1, Inc., 772 F.3d 102, 104 (2d Cir. 2014). That presumption, however, gives way where five factors first identified in Chateaugay II are met. They are, where: (i) effective relief can be ordered; (ii) relief will not affect the debtor's re-emergence; (iii) relief "will not unravel intricate transactions"; (iv) affected third-parties are notified and able to participate in the appeal; and (v) appellant diligently sought a stay of the reorganization plan. In re Charter, 691 F.3d at 482. Although we require satisfaction of each Chateaugay II factor to overcome a mootness presumption, we have placed significant reliance on the fifth factor, concluding that a "chief consideration under Chateaugay 11 is whether the appellant sought a stay of confirmation." In re Metromedia, 416 F.3d at 144. Along these lines, we concluded that "[i]f a stay was sought, we will provide relief if it is at all ["8O5] feasible, that is, unless relief would 'knock the props out from under the authorization for every transaction that has taken place and create an unmanageable, uncontrollable r36] situation for the Bankruptcy Court."' Id. (quoting Chateaugay 11, 10 F.3d at 953). A special emphasis on this factor is sound. [HN14] Equitable mootness issues only arise in earnest following a judicial determination that some facet of a reorganization plan violates the Code. It is generally considered inappropriately harsh to deny relief to which one is entitled on the purportedly equitable ground that the unfair (or illegal) plan has been put into effect, especially where a creditor took all appropriate steps to secure judicial relief. In such a case, we have held that it is proper to "provide relief if it is at all feasible." Id. Here, the appellants immediately objected to various provisions of the Plan and promptly and consistently sought a stay in three different courts. Thus their diligence is not in question. Debtors nevertheless argue that these appeals should be dismissed as moot because of the cascading effects of rewriting the plan were the appellants to prevail. Specifically, they argue that "granting the Noteholders' relief would alter a critical piece of the Plan resulting from the intense-multi-party negotiation, thereby impact[ing] other terms of the agreement and throw[ing] into doubt the viability of the Plan," and that r37] according such relief 'Would cause debilitating financial uncertainty" to the emergent Debtor. 15-1682 Br. of Appellees 69, 71 (internal quotation marks omitted). In light of the limited nature of the remand we order, we do not believe these concerns will materialize. On remand, the bankruptcy court will only be called on to re-evaluate the interest to be received on the replacement notes held by the Senior-Lien Notes holders. The Debtors acknowledge that this might require, at most, $32 million of additional annual payments over seven years. 15-1682 Br. of Appellees 69. The Debtors will not have to pay out the nearly $200 million they assert would be required to pay the Senior-Lien Notes holders' make-whole premium, nor will any redistribution be required to the Subordinated For internal use only For internal use only CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0046959 CONFIDENTIAL SDNY_GM_00193143 EFTA01358969