Talarico v. Ultra Petroleum

Case Type:
Business
Case Status:
Affirmed
Citation:
21-20049 (5th Circuit, Apr 01,2022) Not Published
Tag(s):
Ruling:
Affirmed the District Court's dismissal of a challenge, asserted by a former shareholder of the Debtor, to the bankruptcy court's Chapter 11 confirmation order, finding in part that: "if the doctrine of equitable mootness is meant for any case, it is this one."
Procedural context:
Shareholder appealed decision from the United States Bankruptcy Court for the Southern District of Texas, and the District Court's affirmation of the trial court's determination. After its de novo review of equitable mootness factors, the Fifth Circuit affirmed.
Facts:
The Debtor, an oil and gas exploration company, obtained confirmation of its Chapter 11 reorganization plan, over the objection of one of its former shareholders. The shareholder claimed the plan was filed in bad faith and misrepresented the Debtor's assets. The bankruptcy court denied those objections following a six-day evidentiary hearing, and the shareholder appealed. Significantly, the shareholder never sought a stay of plan implementation in any court. The Debtor moved to dismiss the appeal as equitably moot, and that the shareholder lacked standing to appeal. The Fifth Circuit agreed with the Debtor's arguments on equitable mootness and standing, and dismissed the appeal. In support of its equitable mootness ruling, the Court found that the confirmed plan had been implemented in a number of substantial and irreversible areas, including: termination of the Debtor and the establishment, capitalization, issuance of shares, election of directors, and transfer of assets to the reorganized debtor. The shareholder's allegations of fraud against the debtor's former management could not be litigated against the reorganized debtor.
Judge(s):
Higginson, Willett, and Ho.

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