1. Analysis of
Beeman v. BGI Creditors’ Liquidating Trust (In re BGI, Inc.),
2014 WL 5462477 (2d Cir. 2014)
and Its Implications for Both Bankruptcy Law and Our Clients
Exam #: 124
[Alson Alston]
Bankruptcy Law
Fall Semester 2014

2. 1
TO: Juliet Attorney, Esq., Senior Partner, ACME Law Firm LLP
FROM: [Alson Alston] Exam #124, Esq., Junior Partner, ACME Law Firm LLP
DATE: December 16, 2014
RE: Analysis of Beeman v. BGI Creditors’ Liquidating Trust (In re BGI, Inc.)
Ms. Attorney, you have requested that I prepare an analysis of In re BGI, Inc., 772 F.3d
102, 2014 WL 5462477 (2d Cir. 2014). You have asked me to address the following:
 the important facts of the case;
 the prior law that In re BGI, Inc. changes or clarifies;
 how this case changes or clarifies that law;
 why this case is important;
 cases in other circuits addressing the same issues; and
 which circuits are more favorable to creditors and which are more favorable to debtors,
with respect to the issues that In re BGI, Inc. changes or clarifies.
In In re BGI, Inc., former book retailer BGI Inc., f/k/a Borders Group, Inc., and its
affiliates (“Borders” or “Debtors”) filed voluntary petitions in February 2011 for relief through
reorganization under Chapter 11 of the Bankruptcy Code.1
The Bankruptcy Court established
June 1, 2011 as the deadline for prepetition claims to be filed by purported creditors (the “Bar
Date”).2
Borders completed all notice requirements for the Bar Date, pursuant to Rule 2002.3
In July 2011, after Borders failed to reorganize as on ongoing concern, the court permitted
1
11 U.S.C. § 1101, et seq.; Id. at 104.
2
Id.
3
Id. at 105.

3. 2
Borders to liquidate its assets and close its business.4
On September 20, 2011, Borders closed
the last of its retail branches and, one week later, discontinued accepting gift card sales and all
website sales.5
In November 2011, Borders filed its Chapter 11 liquidation plan under section
1125 of the Bankruptcy Code, together with the required Disclosure Statement, pursuant to 11
U.S.C. § 1125(b).6
Borders complied with all notification requirements, including publication of
the confirmation hearing date in The New York Times on November 16, 2011.7
No appellant
filed an objection to the Plan before or during the hearing.8
The court approved the liquidation
plan (the “Plan”) after the December 20, 2011 confirmation hearing and ordered the Plan put
into effect on January 12, 2012 (the “Confirmation Order”).9
Two weeks after the hearing, on January 4, 2012, Appellants Beeman and Freij filed
motions to file untimely proofs of claim, alleging that they never received adequate notice of
the bankruptcy proceedings or Bar Date (“Late Claims Motion”).10
A third Appellant, Traktman,
filed a late claim without authorization.11
All three Appellants filed a motion for class
certification (“Class Certification Motion”).12
The Appellants held unused gift cards issued by
Borders.13
Appellees BGI Creditors' Liquidating Trust (the “Trust”) and the Liquidating Trustee
filed objections to the motions.14
4
Id. at 105.
5
Id.
6
Id.
7
Id.
8
Id.
9
Id.
10
Id. at 106.
11
Id.
12
Id.
13
Id. at 104.
14
Id. at 106.

4. 3
The court denied all motions.15
Pursuant to Rule 2002, the court found that only the
“constructive notice” of the newspaper publication was required for gift card holders because
their identities were unknown to Borders.16
The court concluded that the Appellants would be
entitled to “actual notice” of the Bar Date only if they were “known” debtors of the Chapter 11
debtor.17
Because the Plan had been substantially consummated, the court concluded that
relief, if granted, would have been “disastrous” to the estate and, therefore, inequitable.18
Further, because they had no entitlement to actual notice, the court concluded that their
failure to file timely proofs of claim could not be considered excusable neglect and hence could
not be excused under Bankruptcy Rule 9006(b)(1).19
After denying the Lateness Motion (and
similarly denying Traktman’s motion), the court then denied the Class Certification Motion as
moot.20
The Appellants timely appealed to District Court, which dismissed all three appeals as
equitably moot.21
The Appellants appealed to the Second Circuit.22
The Second Circuit ruled
that equitable mootness applied and affirmed the District Court decisions.23
15
Id.
16
Id.; In re BGI, Inc., 476 B.R. 812, 820-21, 823-24 (Bankr. S.D.N.Y. 2012).
17
In re BGI, Inc., 772 F.3d at 106.
18
Id.
19
Id.
20
Id. at 107.
21
Id. The doctrine of equitable mootness permits a district court, in its discretion, to dismiss a bankruptcy appeal,
that could otherwise be granted, when implementation of the relief would be inequitable because the realities and
interests of the parties in finality outweigh the appellant’s right to review and relief. Id.; In re Charter Commc'ns,
Inc., 691 F.3d 476, 481 (2d Cir.2012). Constitutional (Article III) mootness arises when “an event occurs which
renders it impossible for this court, if it should decide the case in favor of the plaintiff, to grant him any effectual
relief whatever.” Mills v. Green, 159 U.S. 651, 653, 16 S. Ct. 132, 133, 40 L. Ed. 293 (U.S.S.C. 1895) (emphasis
added). The typical invocation of equitable mootness, however, arises after a Chapter 11 plan has been approved
under section 1129 of the Bankruptcy Code, but an objecting creditor exercises its right to appeal the plan. 2010
Ann. Surv. of Bankr.Law 9. Relief in a constitutional sense is still possible, because there remains an actual case or
controversy, but is not granted pursuant to a balancing of equitable, not constitutional, considerations. In re AOV
Indus., Inc., 792 F.2d 1140, 1147 (D.C. Cir. 1986) (concluding that “Even when the moving party is not entitled to
dismissal on article III grounds, common sense or equitable considerations may justify a decision not to decide a
case on the merits”). Equitable mootness is, therefore, to be distinguished from Article III mootness utterly.
However, the fact that a court may choose to declare an active case or controversy moot is troubling to some

5. 4
In the Second Circuit, prior to In re BGI, Inc., the courts had fashioned the doctrine of
equitable mootness for Chapter 11 reorganizations, but not for liquidations.24
The In re BGI,
Inc. ruling advances prior precedent regarding equitable mootness as applied to Chapter 11
liquidations in the Second Circuit, which had not addressed the question, by concluding that the
doctrine “applied to appeals arising from Chapter 11 liquidation proceedings,” not merely
appeals from Chapter 11 reorganization proceedings.”25
The court concluded that there was no
reason to limit its application to reorganizations, so it extended equitable mootness to
liquidations.26
Equitable mootness is a “pragmatic” doctrine, which takes notice of the fact that the
passage of time after a judgment in equity entitles the parties to a sense of finality when
disturbing that finality on appeal is “impractical, imprudent, and therefore inequitable.”27
In
the Second Circuit, a bankruptcy court ruling is presumed equitably moot when the
jurists, so, at minimum, the terminology should be modified. See the analysis of Seventh Circuit Judge
Easterbrook’s comments in Bankruptcy Appeals and Equitable Mootness:
On appeal, Judge Easterbrook found that the “raw ability” to award relief existed, effectively ruling out
mootness under the authority of Mills v. Green. Rather, he focused on the possibility that the case should
be dismissed as equitably *2326 moot. Judge Easterbrook attempted, however, to banish the term
“equitable mootness” from the local lexicon. Instead of determining whether the case was moot, Judge
Easterbrook suggested that it was more accurate to determine “whether it [was] prudent to upset the
plan of reorganization.” Ross E. Elgart, Bankruptcy Appeals and Equitable Mootness, 19 CARDOZO L. REV.
2311, 2325-26 (1998).
22
In re BGI, Inc., 772 F.3d at 107.
23
Id. at 110-11.
24
In In re BGI, Inc., 772 F.3d at 107, the Second Circuit explained that:
It was developed judicially “in response to the particular problems presented by the consummation of
plans of reorganization under Chapter 11,” in which “the need for finality, and the need for third parties
to rely on that finality,” is of paramount importance. (internal citations omitted)
25
Id. at 107.
26
Id. at 108 (holding that “We see no principled reason, in a Chapter 11 liquidation proceeding, for denying a court
discretion to apply the doctrine of equitable mootness and the corresponding Chateaugay analysis.”).
27
Id. at 107; Deutsche Bank AG v. Metromedia Fiber Network, Inc. (In re Metromedia Fiber Network, Inc.), 416
F.3d 136, 144 (2d Cir.2005) (quoting MAC Panel Co. v. Va. Panel Corp., 283 F.3d 622, 625 (4th Cir.2002)).

6. 5
reorganization plan is “substantially consummated.”28
Section 1101(2) of the Bankruptcy Code
defines “substantial consummation” as:
(A) transfer of all or substantially all of the property proposed by the plan to be
transferred; (B) assumption by the debtor or by the successor to the debtor under the
plan of the business or of the management of all or substantially all of the property
dealt with by the plan; and (C) commencement of distribution under the plan. 11 U.S.C.
§ 1101(2).
An objector may overcome a plan’s presumed equitable mootness due to substantial
consummation if all five conditions of FritoLay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10
F.3d 944 (2d Cir.1993) (“Chateaugay II ”) are satisfied.29
Those conditions are:
(a) the court can still order some effective relief, *953 Church of Scientology v. United
States, 506 U.S. 9, 113 S.Ct. 447, 449, 121 L.Ed.2d 313 (1992);
(b) such relief will not affect “the re-emergence of the debtor as a revitalized corporate
entity”, In re AOV Industries, Inc., 792 F.2d at 1149;
(c) such relief will not unravel intricate transactions so as to “knock the props out from
under the authorization for every transaction that has taken place” and “create an
unmanageable, uncontrollable situation for the Bankruptcy Court”, In re Roberts Farms,
Inc., 652 F.2d 793, 797 (9th Cir.1981);
(d) the “parties who would be adversely affected by the modification have notice of the
appeal and an opportunity to participate in the proceedings”, Central States, Southeast
and Southwest Areas Pension Fund v. Central Transport, Inc., 841 F.2d 92, 96 (4th
Cir.1988) (citations omitted); and
(e) the appellant “pursue[d] with diligence all available remedies to obtain a stay of
execution of the objectionable order ... if the failure to do so creates a situation
rendering it inequitable to reverse the orders appealed from”, In re Roberts Farms, Inc.,
652 F.2d at 798. Chateaugay II, 10 F.3d 944, 952-53 (2d Cir. 1993).
These conditions must be evaluated in a context-specific inquiry into the actual effects of any
requested relief on a given bankruptcy.30
The significance of equitable mootness, as applied in Chapter 11 liquidations, is that it
recognizes that the compromises made to execute a liquidation frequently cannot be undone
28
Id. at 108; In re Charter Commc'ns, Inc.,691 F.3d at 482.
29
Id. at 109.
30
In re BGI, Inc., 772 F.3d at 108.

7. 6
and that any attempt to do so invites perilous and unpredictable results.31
More specifically,
the court in In re BGI, Inc. stated:
In such a liquidation, affected parties may have devoted months of time and resources
toward developing an acceptable plan; creditors with urgent needs may have been
stayed from accessing assets and funds to which they are entitled; and extensive judicial
resources may have been consumed. In liquidation as in reorganization, substantial
interests may counsel in favor of preventing tardy disruption of a duly developed,
confirmed, and substantially consummated plan. In re BGI, Inc., 772 F.3d at 108-09.
Equitable mootness, then, attempted to guarantee a kind of common-sense fairness and
predictability to all parties in interest.
While In re BGI, Inc. firmly entrenched the doctrine of equitable mootness for Chapter
11 liquidation plans in the Second Circuit, there is a mixed application in other circuits.32
The
following circuits have explicitly endorsed the doctrine for Chapter 11 liquidations: the Fifth,33
Eighth,34
and Tenth.35
The following Circuits have explicitly endorsed the doctrine for Chapter 7
liquidations, but it would appear likely that the doctrine would be extended to Chapter 11
liquidations36
: the First,37
Fourth,38
and Ninth.39
31
Id. at 108-09.
32
Id. at 109. Note that we initially rely on the findings of In re BGI, Inc. to cite precedent in other circuits.
However, we also independently assess precedent.
33
See Schaefer v. Superior Offshore Int'l, Inc. (In re Superior Offshore Int'l, Inc.), 591 F.3d 350, 353–54 (5th
Cir.2009) (applying equitable mootness analysis to appeal of order confirming a Chapter 11 liquidation plan) cited
with approval in In re BGI, Inc., 772 F.3d at 109 n.10 (2d Cir. 2014).
34
See Zegeer v. President Casinos, Inc. (In re President Casinos, Inc.), 409 Fed.Appx. 31 (8th Cir.2010) (dismissing as
equitably moot appeal related to a Chapter 11 liquidation proceeding) cited with approval in In re BGI, Inc., 772
F.3d at 109 n.10 (2d Cir. 2014).
35
See Sutton v. Weinman (In re Centrix Fin. LLC), 355 Fed.Appx. 199, 201–02 (10th Cir.2009) (remanding appeal to
district court in a Chapter 11 liquidation proceeding to apply equitable mootness analysis) cited with approval in In
re BGI, Inc., 772 F.3d at 109 n.10 (2d Cir. 2014).
36
See In re BGI, Inc., 772 F.3d at 109.
37
See Hicks, Muse & Co. v. Brandt (In re Healthco Int'l, Inc.), 136 F.3d 45, 48–49 (1st Cir.1998) (applying equitable
mootness analysis in a Chapter 7 liquidation proceeding) cited with approval in In re BGI, Inc., 772 F.3d at 109 n.10
(2d Cir. 2014).
38
See Drawbridge Special Opportunities Fund, L.P. v. Shawnee Hills, Inc. (In re Shawnee Hills, Inc.), 125 Fed.Appx.
466, 469–70 (4th Cir.2005) (applying equitable mootness analysis in a Chapter 7 liquidation proceeding) cited with
approval in In re BGI, Inc., 772 F.3d at 109 n.10 (2d Cir. 2014).

8. 7
The extent to which a circuit’s extension of equitable mootness to Chapter 11
liquidation benefits creditors or debtors requires an analysis of the elements identified by each
circuit. In all circuits below, except where previously indicated, we describe the doctrine as
applied to Chapter 11 reorganizations, not liquidations, because the doctrine was merely
extended to liquidations, unaltered, and the case law is extensive only for reorganizations.40
Though my review of dozens of cases suggests that no circuit is resistant to the doctrine or its
extension to liquidation (only the name of the doctrine is particularly controversial), our
attorneys should be prepared to argue for that extension as a natural and trivial adaptation,
when necessary for a debtor.41
The tests for equitable mootness established by each circuit
follow.
The First Circuit requires the court to inquire as to “whether an unwarranted or
repeated failure to request a stay enabled developments to evolve in reliance on the
bankruptcy court order to the degree that their remediation has become impracticable or
impossible.”42
The circuit further requires the court to determine whether the relief is feasible
in light of the impact on the plan.43
39
See Fitzgerald v. Ninn Worx Sr., Inc. (In re Fitzgerald), 428 B.R. 872, 881 (9th Cir.BAP 2010) (applying equitable
mootness analysis in a Chapter 7 liquidation proceeding) cited with approval in In re BGI, Inc., 772 F.3d at 109 n.10
(2d Cir. 2014).
40
The court in In re BGI, Inc., for instance, discounted the notion that the doctrine should change when applied to
liquidations with: “Indeed, to the contrary: several of our sister circuits have applied the doctrine in the liquidation
setting and did so with no more than cursory discussion.” See In re BGI, Inc., 772 F.3d at 109.
41
Due to its ubiquitous support, however, our attorneys are well advised not to argue against it as a viable
doctrine when representing objecting creditors in liquidation matters. The tests established by the circuits present
ample opportunity for defeating the doctrine’s application in a given case.
42
In re Healthco Int'l, Inc., 136 F.3d 45, 48 (1st Cir. 1998).
43
See In re Pub. Serv. Co. of New Hampshire, 963 F.2d 469, 473 (1st Cir. 1992) (“The failure to obtain a stay is not
sufficient ground for a finding of mootness. … in the absence of a stay, . . . the reviewing court must scrutinize each
individual claim, testing the feasibility of granting relief against the potential impact on the reorganization scheme
as a whole. . . . The case is moot if the requested relief would be either inequitable or impracticable in light of the
change in circumstances.”) (quotation marks and citations omitted).

9. 8
The Third Circuit requires that five factors be considered with weights according to the
circumstances of the case; the chief among these factors is whether the plan has been
substantially consummated.44
Specifically, the court stated:
Factors that have been considered by courts in determining whether it would be
equitable or prudential to reach the merits of a bankruptcy appeal include (1) whether
the reorganization plan has been substantially consummated, (2) whether a stay has
been obtained, (3) whether the relief requested would affect the rights of parties not
before the court, (4) whether the relief requested would affect the success of the plan,
and (5) the public policy of affording finality to bankruptcy judgments. See Manges, 29
F.3d at 1039; Rochman, 963 F.2d at 471–72. The Trustees have not taken issue with our
identification of these factors. In re Cont'l Airlines, 91 F.3d 553, 560 (3d Cir. 1996).
The Third Circuit recently reaffirmed this five-factor test and explained the relationships
between the factors in detail.45
The Fourth Circuit requires a four-part balancing test to determine whether equitable
mootness applies:
(1) whether the appellant sought and obtained a stay; (2) whether the reorganization
plan or other equitable relief ordered has been substantially consummated; (3) the
extent to which the relief requested on appeal would affect the success of the
reorganization plan or other equitable relief granted; and (4) the extent to which the
relief requested on appeal would affect the interests of third parties. Mac Panel Co. v.
Virginia Panel Corp., 283 F.3d 622, 625 (4th Cir. 2002).
The Fifth Circuit requires that only three factors be considered to apply equitable
mootness, but permits the court to hear the appeal even if multiple factors are actually met,
especially if the court can fashion effective relief without disturbing the finality of the plan:
44
In re Cont'l Airlines, 91 F.3d 553, 560 (3d Cir. 1996).
45
In re Semcrude, L.P., 728 F.3d 314, 320-21 (3d Cir. 2013) (“These factors, as we explained recently, are
interconnected and overlapping. Phila. Newspapers, 690 F.3d at 168–69. ‘The second factor principally duplicates
the first in the sense that a plan cannot be substantially consummated if the appellant has successfully sought a
stay.’ In analyzing the first factor, courts have asked ‘whether allowing an appeal to go forward will undermine the
plan, and not merely whether the plan has been substantially consummated under the Bankruptcy Code's
definition.’ This collapses the first and fourth factors. . . .”) (most quotation marks and citations omitted).

10. 9
When determining whether a bankruptcy issue is equitably moot, the court considers
“(1) whether a stay was obtained, (2) whether the plan has been ‘substantially
consummated,’ and (3) whether the relief requested would affect either the rights of
parties not before the court or the success of the plan.” In re Manges, 29 F.3d 1034,
1039 (5th Cir.1994). Here, the first and third factors predispose toward equitable
mootness, but the doctrine does not prevent this court from addressing the issues on
appeal. In re Superior Offshore Int'l, Inc., 591 F.3d 350, 353 (5th Cir. 2009).
The Sixth Circuit also adopted these three factors.46
The Seventh Circuit rejects the name “equitable mootness” because mootness, as an
Article III constitutional bar to review, is jurisdictional, and cannot be overcome by equitable
considerations.47
Chief Judge Posner captured the view of the Seventh Circuit on the matter
with:
The now nameless doctrine is perhaps best described as merely an application of the
age-old principle that in formulating equitable relief a court must consider the effects of
the relief on innocent third parties. So if modification of a plan of reorganization would
upset legitimate expectations, it may be refused . . . . Matter of Envirodyne Indus., Inc.,
29 F.3d 301, 304 (7th Cir. 1994) (internal citations omitted).
The discretion of the courts of the Seventh Circuit is, therefore, broad. Specific factors to be
weighed are not explicitly authorized within the circuit.
46
See In re United Producers, Inc., 526 F.3d 942, 947 (6th Cir. 2008) (holding that “The leading Sixth Circuit case on
equitable mootness issues is In re American HomePatient in which we adopted the Fifth Circuit's three-part test for
determining whether an appeal from the confirmation of a bankruptcy plan should be dismissed as equitably
moot. In re American HomePatient, 420 F.3d at 563-64.”).
47
See, for instance, Matter of Envirodyne Indus., Inc., 29 F.3d 301, 304 (7th Cir. 1994), in which the Seventh Circuit
stated that:
A case is moot if there is no possible relief which the court could order that would benefit the party
seeking it. The appeal in this case is not moot in that sense. At least partial relief is possible, and that is
enough to satisfy the requirements of Article III. Id. at ––––, 113 S.Ct. at 450; In re UNR Industries, Inc., 20
F.3d 766, 768 (7th Cir.1994). . . . But even when relief is possible . . . courts will frequently refuse to
modify the plan if it has already been implemented, because of the effects of modification on nonparties
to the dispute. Id. at 769-70, and cases cited there. This principle went by the misleading name of
“equitable mootness,” until the name was anathematized by Judge Easterbrook in the UNR case. Id. at
769.” Matter of Envirodyne Indus., Inc., 29 F.3d 301, 303-04 (7th Cir. 1994) (some citations omitted).

11. 10
In the Eighth Circuit, the standard is not completely clear. One Bankruptcy Appellate
Panel decision, which the Eight Circuit approves, but only in an unpublished opinion, appears to
adopt the standard of the First Circuit.48
Another appears to adopt the Third Circuit’s test.49
The Ninth Circuit has adopted a four-factor, sequentially applied test that places
significant emphasis on its first factor, whether a stay has been obtained or at least sought with
due diligence50
:
We endorse a test similar to those framed by the circuits that have expressed a
standard: [a] We will look first at whether a stay was sought, for absent that a party has
not fully pursued its rights. [b] If a stay was sought and not gained, we then will look to
whether substantial consummation of the plan has occurred. [c] Next, we will look to
the effect a remedy may have on third parties not before the court. [d] Finally, we will
look at whether the bankruptcy court can fashion effective and equitable relief without
completely knocking the props out from under the plan and thereby creating an
uncontrollable situation for the bankruptcy court. In re Thorpe Insulation Co., 677 F.3d
at 881.
The D.C. Circuit follows the standard of the Ninth Circuit.51
48
See In re President Casinos, Inc., 409 F. Appx. at 31-32. In re President Casinos, Inc. explicitly endorses the
Bankruptcy Appellate Panel’s decision In re Williams, 256 B.R. 885, 896 (8th Cir.BAP 2001) (factors considered in
determining equitable mootness). In re President Casinos, Inc., 409 F. Appx. at 32. In re Williams, 256 B.R. 885,
896 (8th Cir.BAP 2001) describes the standard to be applied in the Eighth Circuit as that of the First Circuit
standard:
In essence, the appellate court “inquires whether an unwarranted or repeated failure to request a stay
enabled developments to evolve in reliance on the bankruptcy court order to the degree that their
remediation has become impracticable or impossible.” Hicks, Muse & Co., Inc. v. Brandt (In re Healthco
International Inc.), 136 F.3d 45, 48 (1st Cir.1998). In re Williams, 256 B.R. 885, 896 (B.A.P. 8th Cir. 2001).
49
In re Michels, 286 B.R. 684, 690 (B.A.P. 8th Cir. 2002) (holding “In In re Continental Airlines, 91 F.3d 553 (3d
Cir.1996), the Third Circuit established the doctrine of equitable mootness under which an appellate court may
dismiss an appeal from a bankruptcy court as moot ‘even though effective relief could conceivably be fashioned,
[when] implementation of that relief would be inequitable.’ Id. at 559.”). The In re Michels court then proceeds to
list and follow the factors provided by In re Continental Airlines., deciding that the test argued against equitable
mootness. In re Michels, 286 B.R. at 690-91.
50
See In re Thorpe Insulation Co., 677 F.3d 869, 881 (9th Cir. 2012) (“A failure to seek a stay can render an appeal
equitably moot. In re Roberts Farms, 652 F.2d at 797–98. However, failure to obtain a stay does not require a
conclusion of equitable mootness where parties use due diligence in seeking the stay.”).
51
In re AOV Indus., Inc., 792 F.2d 1140, 1148 (D.C. Cir. 1986) (“Although this circuit has not considered the issue
directly, a line of Ninth Circuit decisions has applied these principles to disputes over the continued viability of
bankruptcy appeals. . . . We think that properly understood, the Ninth Circuit's decisions provide the appropriate
analytic framework for the mootness issue.”).

12. 11
The Tenth Circuit implicitly endorsed the approach of the Third Circuit by following the
Third Circuit’s precedent identified in 1998.52
However, later the court adopted a six-factor
test:
It seems that under the doctrine of equitable mootness a court should decline to hear
an appeal of a bankruptcy court's decision where the answers to the following six
questions indicate that reaching the merits would be unfair or impracticable: (1) Has the
appellant sought and/or obtained a stay pending appeal? (2) Has the appealed plan
been substantially consummated? (3) Will the rights of innocent third parties be
adversely affected by reversal of the confirmed plan? (4) Will the public-policy need for
reliance on the confirmed bankruptcy plan—and the need for creditors generally to be
able to rely on bankruptcy court decisions—be undermined by reversal of the plan? (5)
If appellant's challenge were upheld, what would be the likely impact upon a successful
reorganization of the debtor? And (6) based upon a quick look at the merits of
appellant's challenge to the plan, is appellant's challenge legally meritorious or equitably
compelling? These six factors are not necessarily conclusive, nor will each factor always
merit equal weight. But these six factors seem to reflect the factors often weighed in
other cases where equitable mootness is at issue. In re Paige, 584 F.3d 1327, 1339 (10th
Cir. 2009).
The Eleventh Circuit holds that a nine-part inquiry is necessary to determine equitable
mootness53
:
The mootness inquiry necessarily involves many subsidiary questions: Has a stay
pending appeal been obtained? If not, then why not? Has the plan been substantially
consummated? If so, what kind of transactions have been consummated? What type of
relief does the appellant seek on appeal? What effect would granting relief have on the
interests of third parties not before the court? And, would relief affect the re-
emergence of the debtor as a revitalized entity? The answers to these questions provide
the reviewing court with the backdrop to evaluate the ultimate issue of whether a
52
Specifically, the Tenth Circuit stated:
In Continental Airlines, the court isolated five factors that may be considered when determining if
equitable or prudential mootness is applicable. Continental Airlines, 91 F.3d at 560. These factors, which
may be given “varying weight, depending on the particular circumstances” of any given case, include . . ..
A short examination of the issues raised by Telco on appeal in relation to these five factors reveals the
problems that would be faced if we were to exercise jurisdiction and reverse the Bankruptcy Court's
Confirmation Order or Modification Order. In re Long Shot Drilling, Inc., 224 B.R. 473, 479 (B.A.P. 10th Cir.
1998).
53
In re Lett, 632 F.3d 1216, 1226 n.20 (11th Cir. 2011) (“The Eleventh Circuit in In re Club Associates offered a list
of subsidiary questions a court may consider when looking at the circumstances of the case.”) (internal quotation
marks omitted).

13. 12
confirmation plan has progressed to the point where effective judicial relief is no longer
a viable option. In re Club Associates, 956 F.2d 1065, 1069 n.11 (11th Cir. 1992).
The Federal Circuit appears to be silent on the issue of equitable mootness, although it
is aware of the doctrine.54
In determining which circuit court would be most favorable to a creditor or debtor on
the question of equitable mootness, we initially note the different interests that each seeks to
protect. A debtor generally favors equitable mootness because it is a defense against a creditor
attempting to unravel a confirmed plan. The lower the bar for advancing the doctrine, the
better for the debtor because the debtor’s defense will be easier to mount. The doctrine,
however, works against an objecting creditor because it is a barrier to the creditor’s appeal
being heard. Such a creditor would favor a rigid standard for applying the doctrine. However, a
non-objecting creditor, reasonably satisfied with confirmed plan, would, like the debtor, prefer
that the plan not be disturbed and, therefore, favor a standard that is easy to meet. Hence, the
circuits that would benefit a debtor or satisfied creditors are those with minimal standards to
meet to apply the doctrine successfully. The circuits that would benefit a dissatisfied creditor
are those with more exacting standards for the successful invocation of equitable mootness.
The most difficult standard to apply is likely that of the Second Circuit, which requires
that all five of the elements of its test be met. The other circuits permit the doctrine to be
applied as part of more traditional balancing tests, so will be more or less difficult to apply,
depending on the individual circumstances of the client. In general, however, it might be
54
A Westlaw search on the terms “equitable mootness” and similar terms in the Federal District yielded only one
case, which merely stated that the court need not reach that question. See In re Cambridge Biotech Corp., 186
F.3d 1356, 1360 (Fed. Cir. 1999) (“Cambridge cross-appeals, urging that we dismiss appellants' appeal under the
equitable mootness doctrine. We affirm all of the district court's rulings appealed by appellants and thus do not
reach the issue raised by Cambridge's cross-appeal.”).

14. 13
argued that the more factors to be considered, the higher the bar for the successful application
of equitable mootness. The Third, Tenth, and Eleventh Circuits are found at this end of the
continuum. However, whether the objecting creditor has sought and/or obtained a stay
pending appeal is a consideration common to all circuits because the existence of a stay soon
enough after the plan has been confirmed essentially freezes the effects of the plan and
reduces any harm that equitable relief disturbing the plan could possibly cause. Similarly,
whether the plan has been substantially consummated is explicitly or inferentially common to
all circuits.
Finally, depending on the size and sophistication of the debtor, there could be
significant choice in where the debtor files or where creditors attempt to force an involuntary
bankruptcy upon a debtor.55
After a bankruptcy case has commenced in a given jurisdiction,
the parties can apply for a change of venue, though other parties are likely to object
strenuously.56
Since the Bankruptcy Code has been interpreted as permitting a substantial
degree of forum shopping, your question about which circuits benefit our clients is extremely
important to explore.57
55
The typical small business or individual debtor files where the debtor lives. ELIZABETH WARREN, JAY WESTBROOK, JOEL
M. WESTBROOK, KATHERINE PORTER & JOHN POTTOW, THE LAW OF DEBTORS AND CREDITORS 875 (7th ed. 2014). However, a
debtor may file in the district “in which the domicile, residence, principal place of business … or principal assets” of
the debtor exists. 28 U.S.C. §1408(1). The courts have held that a corporation’s domicile is its state of
incorporation. E.g., In re Ocean Properties of Delaware, Inc., 95 B.R. 304 (Bankr. D. Del. 1988). A company may file
where an affiliate has already filed. 28 U.S.C. §1408(2). Effectively, a large company with affiliates in every state
could file in any district. See WARREN, supra note 55, at 876. Creditors may also file an involuntary petition against
a debtor. 11 U.S.C. §303. That petition is a “case under title 11” and hence is subject to the venue requirements
identified above. 28 U.S.C. §1408.
56
28 U.S.C. §1412. For an application of this statute, see In re Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y.
2012).
57
See the discussion in footnotes 55 and 56. However, I must note that, to some extent, the circuit in which we
address an equitable mootness matter in a Chapter 11 liquidation may not always matter significantly. All circuits
have fundamentally similar equitable mootness requirements which attempt to balance the equities of disturbing
a confirmed plan vs. providing finality to the parties in interest.

15. 14
With these considerations in mind, I would advise the firm to select a venue, where
possible, as follows:
1. For a debtor client, we should avoid the Second Circuit, which has a more exacting
standard for the application of equitable mootness. We should also avoid the Third
Circuit and Eleventh Circuits for debtor clients because these circuits have more factors
to be considered and explicitly include public policy considerations, all of which make
equitable mootness a harder proposition to demonstrate;
2. For our creditor clients, then, we should choose the Second, Third or Eleventh Circuits.
In these circuits, we will have a somewhat better chance of defeating equitable
mootness arguments, due to the range and variety of factors that must be analyzed
there;
3. If further choice is required for either debtor or creditor clients, we should favor the
First and Seventh Circuits because they have distilled broader, equitable considerations,
without explicit statements of multiple factors. There is more room to argue in these
circuits, so, absent other, extreme fact-specific considerations, the better lawyers could
very well prevail. This should benefit our clients because we represent them;
4. If possible, our creditor clients might want to avoid the Tenth Circuit because one
explicit factor to be weighed is a “quick look” at the merits of the appellant’s challenge.
There is no reason to accept this additional hurdle if it could be avoided by choosing
another circuit;

16. 15
5. For debtor and creditor clients alike, we should avoid the Eighth and Federal Circuits
because their standards appear to be particularly unevolved and we cannot offer as
much predictability to our clients there as we can in other circuits; and
6. The other circuits, not mentioned above for a given creditor or debtor, seem to offer,
relatively, as many advantages as disadvantages for both creditors and debtors.
The facts surrounding the cases of our debtor and creditor clients will ultimately determine
which circuit we choose, to the extent that choice is available to us. However, the above
guidance presents key considerations that we should weigh once we know the material facts of
our clients’ respective matters.