21-1754 In Re: Windstream Holdings, Inc.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at the 2 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 3 25th day of October, two thousand twenty-two. 4 5 Present: 6 PIERRE N. LEVAL, 7 DENNY CHIN, 8 EUNICE C. LEE, 9 Circuit Judges. 10 _____________________________________ 11 12 IN RE: WINDSTREAM HOLDINGS, INC. 13 _____________________________________ 14 15 U.S. BANK NATIONAL ASSOCIATION, 16 17 Appellant, 18 19 v. 21-1754 20 21 WINDSTREAM HOLDINGS, INC., 22 23 Debtor-Appellee, 24 25 ELLIOTT INVESTMENT MANAGEMENT L.P., 26 FIRST LIEN AD HOC GROUP, 27 28 Intervenors-Appellees. 29 30 _____________________________________
1 1 For Appellant: THOMAS E. LAURIA, White & Case LLP, Miami, Florida 2 (Raoul G. Cantero III, David P. Draigh, Cecilia E. 3 Walker, J. Christopher Shore, Harrison Denman, and 4 Charles Koster, on the brief). 5 6 For Debtor-Appellee: C. HARKER RHODES IV, Kirkland & Ellis LLP, 7 Washington, District of Columbia (Evelyn Blacklock, 8 on the brief). 9 10 For Intervenor-Appellee Gregg M. Galardi, Ropes & Gray LLP, New York, New 11 Elliott Investment Management L.P.: York, and William L. Roberts, Ropes & Gray LLP, 12 Boston, Massachusetts. 13
14 Appeal from the United States District Court for the Southern District of New York
15 (Vincent L. Briccetti, Judge).
16 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
17 DECREED that the order of the district court is AFFIRMED.
18 U.S. Bank National Association (“U.S. Bank”) appeals an order of the district court
19 (Briccetti, J.) dismissing as equitably moot U.S. Bank’s appeals of two orders of the bankruptcy
20 court (Drain, Bankr. J.), one approving a settlement between debtor Windstream Holdings, Inc.
21 (together with its debtor subsidiaries) (“Windstream”) and Uniti Group, Inc. (the “Settlement
22 Order”), and another confirming Windstream’s Chapter 11 plan of reorganization (the
23 “Confirmation Order”). U.S. Bank argues primarily that the equitable mootness doctrine must be
24 limited because the doctrine’s overbroad application has no basis in either the Constitution or
25 Bankruptcy Code and contravenes the federal courts’ strong obligation to exercise jurisdiction.
26 U.S. Bank also argues that, even on the doctrine’s own terms, the district court misapplied the test
27 for equitable mootness.
28 We assume the parties’ familiarity with the underlying facts, procedural history, and issues
29 and arguments on appeal.
2 1 DISCUSSION
2 This Court reviews a district court’s equitable mootness determination for abuse of
3 discretion. See In re Charter Commc’ns, Inc., 691 F.3d 476, 483 (2d Cir. 2012). The prudential
4 doctrine of equitable mootness allows a court to dismiss a bankruptcy appeal “when, even though
5 effective relief could conceivably be fashioned, implementation of that relief would be
6 inequitable.” In re Metromedia Fiber Network, Inc., 416 F.3d 136, 143 (2d Cir. 2005) (internal
7 quotation marks omitted). Its purpose is “to avoid disturbing a reorganization plan once
8 implemented,” id. at 144, and accordingly, “a bankruptcy appeal is presumed equitably moot when
9 the debtor’s reorganization plan has been substantially consummated,” In re BGI, Inc., 772 F.3d
10 102, 108 (2d Cir. 2014).
11 To overcome that presumption, an appellant must show all five of the so-called Chateaugay
12 factors. See Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 952–53 (2d
13 Cir. 1993) (“Chateaugay II”). These factors are whether: “(i) effective relief can be ordered; (ii)
14 relief will not affect the debtor’s re-emergence; (iii) relief will not unravel intricate transactions;
15 (iv) affected third-parties are notified and able to participate in the appeal; and (v) [the] appellant
16 diligently sought a stay of the reorganization plan.” In re MPM Silicones, L.L.C., 874 F.3d 787,
17 804 (2d Cir. 2017) (internal quotation marks omitted). “Although we require satisfaction of each
18 Chateaugay II factor to overcome a mootness presumption, we have placed significant reliance on
19 the fifth factor, concluding that a chief consideration under Chateaugay II is whether the appellant
20 sought a stay of confirmation.” Id.
21 U.S. Bank’s first argument—that the doctrine’s application must be limited because it lacks
22 a basis in the Constitution or Bankruptcy Code and contravenes federal courts’ obligation to
23 exercise jurisdiction—is foreclosed by this Court’s precedent. As an initial matter, U.S. Bank has
3 1 not suggested any principled rule by which we should limit the doctrine or determine when its
2 application is overbroad. U.S. Bank appears instead to invite us to carve out the facts of this case
3 ad hoc. We must decline this invitation. While we have acknowledged the doctrine’s “enigmatic
4 origins,” In re Motors Liquidation Co., 829 F.3d 135, 167 (2d Cir. 2016), equitable mootness is
5 now firmly established by this Court’s caselaw, see, e.g., MPM Silicones, 874 F.3d at 804–05;
6 BGI, 772 F.3d at 107–09; Charter, 691 F.3d at 481–82; Metromedia, 416 F.3d at 143–44.
7 Whatever merit there may be to U.S. Bank’s criticisms of the doctrine and of the bankruptcy
8 process in general, a panel of this Court “is bound by the decisions of prior panels until such time
9 as they are overruled either by an en banc panel of our Court or by the Supreme Court.” Springfield
10 Hosp., Inc. v. Guzman, 28 F.4th 403, 421 (2d Cir. 2022) (internal quotation marks omitted).
11 Of course, the doctrine’s application requires a court “to carefully balance the importance
12 of finality in bankruptcy proceedings against the appellant’s right to review and relief.” Charter,
13 691 F.3d at 481. The Chateaugay factors serve to guide that balancing act and, contrary to U.S.
14 Bank’s second argument, the district court did not abuse its discretion in applying them.
15 U.S. Bank filed the notice of appeal to the district court approximately a week after the
16 bankruptcy court entered its Confirmation Order but waited two months before requesting a stay.
17 Even then, U.S. Bank’s request was awkwardly appended to an unrelated motion and demonstrated
18 little serious effort to show that the requirements for issuing a stay were met. The request’s timing
19 and presentation caused the bankruptcy judge to describe it as “a sham and procedural gambit,”
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21-1754 In Re: Windstream Holdings, Inc.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at the 2 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 3 25th day of October, two thousand twenty-two. 4 5 Present: 6 PIERRE N. LEVAL, 7 DENNY CHIN, 8 EUNICE C. LEE, 9 Circuit Judges. 10 _____________________________________ 11 12 IN RE: WINDSTREAM HOLDINGS, INC. 13 _____________________________________ 14 15 U.S. BANK NATIONAL ASSOCIATION, 16 17 Appellant, 18 19 v. 21-1754 20 21 WINDSTREAM HOLDINGS, INC., 22 23 Debtor-Appellee, 24 25 ELLIOTT INVESTMENT MANAGEMENT L.P., 26 FIRST LIEN AD HOC GROUP, 27 28 Intervenors-Appellees. 29 30 _____________________________________
1 1 For Appellant: THOMAS E. LAURIA, White & Case LLP, Miami, Florida 2 (Raoul G. Cantero III, David P. Draigh, Cecilia E. 3 Walker, J. Christopher Shore, Harrison Denman, and 4 Charles Koster, on the brief). 5 6 For Debtor-Appellee: C. HARKER RHODES IV, Kirkland & Ellis LLP, 7 Washington, District of Columbia (Evelyn Blacklock, 8 on the brief). 9 10 For Intervenor-Appellee Gregg M. Galardi, Ropes & Gray LLP, New York, New 11 Elliott Investment Management L.P.: York, and William L. Roberts, Ropes & Gray LLP, 12 Boston, Massachusetts. 13
14 Appeal from the United States District Court for the Southern District of New York
15 (Vincent L. Briccetti, Judge).
16 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
17 DECREED that the order of the district court is AFFIRMED.
18 U.S. Bank National Association (“U.S. Bank”) appeals an order of the district court
19 (Briccetti, J.) dismissing as equitably moot U.S. Bank’s appeals of two orders of the bankruptcy
20 court (Drain, Bankr. J.), one approving a settlement between debtor Windstream Holdings, Inc.
21 (together with its debtor subsidiaries) (“Windstream”) and Uniti Group, Inc. (the “Settlement
22 Order”), and another confirming Windstream’s Chapter 11 plan of reorganization (the
23 “Confirmation Order”). U.S. Bank argues primarily that the equitable mootness doctrine must be
24 limited because the doctrine’s overbroad application has no basis in either the Constitution or
25 Bankruptcy Code and contravenes the federal courts’ strong obligation to exercise jurisdiction.
26 U.S. Bank also argues that, even on the doctrine’s own terms, the district court misapplied the test
27 for equitable mootness.
28 We assume the parties’ familiarity with the underlying facts, procedural history, and issues
29 and arguments on appeal.
2 1 DISCUSSION
2 This Court reviews a district court’s equitable mootness determination for abuse of
3 discretion. See In re Charter Commc’ns, Inc., 691 F.3d 476, 483 (2d Cir. 2012). The prudential
4 doctrine of equitable mootness allows a court to dismiss a bankruptcy appeal “when, even though
5 effective relief could conceivably be fashioned, implementation of that relief would be
6 inequitable.” In re Metromedia Fiber Network, Inc., 416 F.3d 136, 143 (2d Cir. 2005) (internal
7 quotation marks omitted). Its purpose is “to avoid disturbing a reorganization plan once
8 implemented,” id. at 144, and accordingly, “a bankruptcy appeal is presumed equitably moot when
9 the debtor’s reorganization plan has been substantially consummated,” In re BGI, Inc., 772 F.3d
10 102, 108 (2d Cir. 2014).
11 To overcome that presumption, an appellant must show all five of the so-called Chateaugay
12 factors. See Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 952–53 (2d
13 Cir. 1993) (“Chateaugay II”). These factors are whether: “(i) effective relief can be ordered; (ii)
14 relief will not affect the debtor’s re-emergence; (iii) relief will not unravel intricate transactions;
15 (iv) affected third-parties are notified and able to participate in the appeal; and (v) [the] appellant
16 diligently sought a stay of the reorganization plan.” In re MPM Silicones, L.L.C., 874 F.3d 787,
17 804 (2d Cir. 2017) (internal quotation marks omitted). “Although we require satisfaction of each
18 Chateaugay II factor to overcome a mootness presumption, we have placed significant reliance on
19 the fifth factor, concluding that a chief consideration under Chateaugay II is whether the appellant
20 sought a stay of confirmation.” Id.
21 U.S. Bank’s first argument—that the doctrine’s application must be limited because it lacks
22 a basis in the Constitution or Bankruptcy Code and contravenes federal courts’ obligation to
23 exercise jurisdiction—is foreclosed by this Court’s precedent. As an initial matter, U.S. Bank has
3 1 not suggested any principled rule by which we should limit the doctrine or determine when its
2 application is overbroad. U.S. Bank appears instead to invite us to carve out the facts of this case
3 ad hoc. We must decline this invitation. While we have acknowledged the doctrine’s “enigmatic
4 origins,” In re Motors Liquidation Co., 829 F.3d 135, 167 (2d Cir. 2016), equitable mootness is
5 now firmly established by this Court’s caselaw, see, e.g., MPM Silicones, 874 F.3d at 804–05;
6 BGI, 772 F.3d at 107–09; Charter, 691 F.3d at 481–82; Metromedia, 416 F.3d at 143–44.
7 Whatever merit there may be to U.S. Bank’s criticisms of the doctrine and of the bankruptcy
8 process in general, a panel of this Court “is bound by the decisions of prior panels until such time
9 as they are overruled either by an en banc panel of our Court or by the Supreme Court.” Springfield
10 Hosp., Inc. v. Guzman, 28 F.4th 403, 421 (2d Cir. 2022) (internal quotation marks omitted).
11 Of course, the doctrine’s application requires a court “to carefully balance the importance
12 of finality in bankruptcy proceedings against the appellant’s right to review and relief.” Charter,
13 691 F.3d at 481. The Chateaugay factors serve to guide that balancing act and, contrary to U.S.
14 Bank’s second argument, the district court did not abuse its discretion in applying them.
15 U.S. Bank filed the notice of appeal to the district court approximately a week after the
16 bankruptcy court entered its Confirmation Order but waited two months before requesting a stay.
17 Even then, U.S. Bank’s request was awkwardly appended to an unrelated motion and demonstrated
18 little serious effort to show that the requirements for issuing a stay were met. The request’s timing
19 and presentation caused the bankruptcy judge to describe it as “a sham and procedural gambit,”
20 App’x at 918, noting also that U.S. Bank “made such a half-hearted attempt to prosecute [the stay
21 request],” App’x at 925. U.S. Bank nevertheless argues that dismissal for equitable mootness is
22 “only appropriate” if an appellant makes “no effort” at all to obtain a stay. Appellant’s Br. at 44.
4 1 That is incorrect. To avoid dismissal for equitable mootness, an appellant must have sought a stay
2 “with diligence.” Chateaugay II, 10 F.3d at 953.
3 U.S. Bank further argues that a stay was initially unnecessary because Windstream had to
4 complete time-consuming regulatory requirements before the plan could be consummated. This
5 argument was not raised below and is forfeited. See Browe v. CTC Corp., 15 F.4th 175, 190–91
6 (2d Cir. 2021). It also fails because Windstream stated during the confirmation hearing that it
7 intended to consummate the plan in late August or early September of 2020, including sufficient
8 time for regulatory approvals, and U.S. Bank in fact relied on that timeline in its motion to expedite
9 the appeal in the district court. Nevertheless, U.S. Bank neglected to request a stay until September
10 1, 2020—well into the period in which the plan was expected to be consummated. Accordingly,
11 we agree with the district court that U.S. Bank failed to diligently seek a stay of the plan as the
12 fifth Chateaugay factor requires. Because the presumption of equitable mootness can be overcome
13 only if an appellant meets all five of the Chateaugay factors, see Charter, 691 F.3d at 482, U.S.
14 Bank’s failure to meet the fifth factor is a sufficient ground to affirm the order of the district court.
15 Finally, U.S. Bank also challenges the district court’s findings on the second and third
16 Chateaugay factors that the relief requested would jeopardize Windstream’s emergence from
17 bankruptcy and require unraveling numerous complex transactions related to the plan. Given our
18 conclusion above as to U.S. Bank’s failure to diligently pursue a stay, we do not need to address
19 this challenge. We note, however, that we discern no error in the district court’s analysis or
20 conclusions concerning the second and third Chateaugay factors.
21 The district court therefore did not abuse its discretion in dismissing the appeals as
22 equitably moot.
5 1 CONCLUSION
2 We have considered U.S. Bank’s remaining arguments and find them to be without merit.
3 Accordingly, we AFFIRM the order of the district court.
4 FOR THE COURT: 5 Catherine O’Hagan Wolfe, Clerk