C.W. Mining Co. v. Aquila, Inc. (In re C.W. Mining Co.)
- Summarized by Kevin Moore , St. John's University
- 13 years 11 months ago
- Citation:
- 10th Cir. No. 10-4023 & 10-4033 (February 14, 2011)
- Tag(s):
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- Ruling:
- As a threshold issue, a party must have standing to appeal. The 10th Circuit has adopted the standard that appellate review of a bankruptcy court order is limited to "persons aggrieved" by that order. A debtor company is generally going to have the standing to bring an appeal of a bankruptcy court's order for involuntary bankruptcy relief. However, the debtor's managers and directors are divested of the authority to exercise the debtor's right of appeal once a Chapter 7 trustee has been appointed without challenge. According to the Bankruptcy Code (Section 323) and Supreme Court jurisprudence (CFTC v. Weintraub, 471 U.S. 343 (1985)), the trustee, once appointed, becomes the sole agent of the liquidating business and is the "only" one who "may appeal an order from a bankruptcy court". As such, the 10th Circuit reversed and remanded the Bankruptcy Appellate Panel with instructions to dismiss, stating that the managers who filed the appeal no longer had standing to appeal on behalf of the debtor corporation since a trustee was in place.
- Procedural context:
- Appeal from 10th Circuit Bankruptcy Appellate Panel's affirmation of bankruptcy court's grant of summary judgment, which held that creditors who filed an involuntary petition were "qualifying creditors" under Section 303.
- Facts:
- C.W. was a coal mining company in Utah. In January 2008, three creditors filed an involuntary Chapter 11 petition against C.W. Two of the creditors, including Aquila, filed a motion for partial summary judgment in July 2008, seeking a ruling that they were qualifying petitioning creditors. C.W. opposed the motion. In September, the bankruptcy court granted the creditors qualifying status and shortly thereafter ordered involuntary Chapter 11 relief. C.W. filed a motion to reconsider the summary judgment ruling. Before the court ruled on that motion, Aquila moved to convert the case to Chapter 7. In November 2008, the bankruptcy court granted the motion to convert, appointed a Chapter 7 interim trustee, and denied the motion to reconsider. C.W.'s former counsel, purporting to act on behalf of the corporation appealed to the BAP, which confirmed the summary judgment order, and then to the 10th Circuit Court of Appeals. The 10th Circuit Court of Appeals did not reach the merits of the summary judgment order, for it ruled that former managers had no standing to bring this appeal in the first place, once a Chapter 7 trustee was appointed.
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