United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO v. ASARCO Inc.

Summarized by Aaron Kaufman , Gray Reed LLP
15 years 3 months ago

Citation:

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

Tag(s):

5th Circuit

Ruling:

The Court of Appeals dismissed this appeal as equitably moot, finding that (1) no stay had been sought or obtained; (2) the confirmed plan had been substantially consummated; and (3) no relief could be granted to the Appellants without affecting rights of third parties not before the Court. Said the Court: "There is ample reason to think that substituting [Appellants] as the primary equity-holder would have a far-reaching impact. It would be difficult to maintain anything resembling the status quo if the primary equity holder were replaced by [Appellants]." Because no relief was available to the Appellants and all other factors weighed in favor of equitable mootness, the Court dismissed the appeal.

Procedural context:

Appeal of the District Court's order confirming the "Parent's Plan" (supported by Appellees) over the "Debtor's Plan" (supported by the Appellants). Appellees moved to dismiss the appeal as equitably moot.

Facts:

The District Court was presented with competing chapter 11 plans--one supported by the debtors' equity holders, and the other supported by a group known as "Sterlite." Both plans proposed to pay creditors in full. The key distinction was who would control the equity in the reorganized debtors. Based on the report and recommendation of the Bankruptcy Court, the District Court concluded that both plans satisfied the requirements for confirmation under 11 U.S.C. 1129(a)&(b), and elected to confirm the "Parent's Plan," which left equity unchanged (the plan supported by Sterlite would have allowed them to take control of the debtors). Sterlite appealed the confirmation order, but did not obtain a stay pending appeal. By time the appeal was considered, the reorganized debtors had paid out over $3.35 billion to creditors, and hundreds of state environmental settlements had become effective, resolving $6.5 billion of asserted environmental claims. The Appellants argued that relief could be granted, nevertheless, because they could easily be substituted as the equity holders without affecting any other parties. The Court of Appeals disagreed, explaining that "[h]ere, the inquiry under the third prong favors a finding of equitable mootness because a change in the equity holder’s identity would affect numerous complex financial transactions." Finding no other relief available to the Appellants, the Court of Appeals dismissed the appeal as equitably moot.

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