Mission Product Holdings, Inc. v. Old Cold LLC

Case Type:
Case Status:
16-90102, 116-9015 (1st Circuit, Jan 12,2018) Published
Bankruptcy court's finding of good faith in a §363 sale affirmed; otherwise the appeal is moot due to the sale having been completed without a stay.
Procedural context:
This is a companion case to 16-9106 between the same parties, essentially. In this appeal, Chapter 11 debtor Tempnology, LLC ("Debtor") auctioned off its assets pursuant to section 363 of the Bankruptcy Code. Schleicher and Stebbins Hotels LLC ("S&S") was declared the winning bidder over Mission Product Holdings, Inc. ("Mission"). With the bankruptcy court's approval, Debtor and S&S completed the sale. On appeal, Mission asked the First Circuit to order the bankruptcy court to unwind the sale and treat Mission as the winning bidder. After a thorough analysis of the "good faith" standard for such sales, the First Circuit affirmed and thus did not reach any other issues since they were statutorily moot, the sale having been completed.
Debtor made specialized products -- such as towels, socks, headbands, and other accessories -- designed to remain at low temperatures even when used during exercise. It marketed these products under the "Coolcore" and "Dr. Cool" brands. S&S is an investment holding company with its primary interest in hotels. Prior to Debtor's bankruptcy, S&S owned a majority interest in Debtor. Until just under two months before Debtor commenced this Chapter 11 proceeding, Mark Schleicher and Mark Stebbins -- S&S's two principals -- sat on Debtor's management committee. Mission argued that the sale was tainted by collusion and bad faith. The bankruptcy court, however, conducted several hearings and a trial, and concluded that the sale was conducted in good faith. The sale was completed.
Kayatta (author), Torruella, and Lynch

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