Ronit Inc. v. Block Shim Development Co.—Irving (In Re Block Shim Development Co.—Irving)

113 B.R. 256, 1990 U.S. Dist. LEXIS 4199, 1990 WL 42632
CourtDistrict Court, N.D. Texas
DecidedApril 10, 1990
DocketCiv. A. No. CA3-89-2471-D, Bankruptcy No. 389-30670-RCM-11
StatusPublished
Cited by5 cases

This text of 113 B.R. 256 (Ronit Inc. v. Block Shim Development Co.—Irving (In Re Block Shim Development Co.—Irving)) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ronit Inc. v. Block Shim Development Co.—Irving (In Re Block Shim Development Co.—Irving), 113 B.R. 256, 1990 U.S. Dist. LEXIS 4199, 1990 WL 42632 (N.D. Tex. 1990).

Opinion

FITZWATER, District Judge:

In this appeal from a bankruptcy court order confirming a plan of reorganization, the court must decide whether appellants’ failure to obtain a stay of the order precludes appellate review. For the reasons set forth, the court dismisses the appeal in part.

I

Appellee Block Shim Development Company — Irving (“Block Shim”) was placed in chapter 11 bankruptcy following an involuntary petition. Block Shim is a Texas general partnership composed of appellant *257 Ronit Incorporated (“Ronit”) and appellees Stemson Corporation (“Stemson”) and Ron-ville, Inc. (“Ronville”). Ronit is owned 100% by appellant Michael A. Block (“Block”). Following the filing of proofs of claim, Stemson proposed a second amended plan of reorganization for Block Shim. The bankruptcy court conducted a hearing and confirmed the plan over the objections of appellants Ronit and Block.

Appellants appeal the confirmation order on six grounds. They argue the bankruptcy court clearly erred in finding: (1) that the plan was accepted by the creditors and equity security holders as required by law; (2) that the plan met the requirements of and was confirmable pursuant to 11 U.S.C. § 1129(b); (3) that full disclosure had been made with respect to persons acquiring property and affiliates of the debtor; (4) that at least one class of impaired claims, excluding insiders, had accepted the plan; (5) that the plan was proposed in good faith and not by any means forbidden by law; and (6) that each holder of a claim or interest had accepted the plan or would receive or retain under the plan property of a value not less than the amount the claimant would have received had Block Shim been liquidated under chapter 7. Appellants ask the court to reverse the order confirming the plan and to enter judgment denying confirmation. In a responsive pleading filed with the court, appellants appear to request in the alternative that the court at least reverse the portions of the plan that modify the Block Shim partnership agreement. 1

Appellants timely appealed the bankruptcy court’s confirmation order but neither sought nor obtained a Fed.R.Bankr.P. 8005 2 stay of the order. Appellees move to dismiss the appeal, contending the appeal is now moot or that it would be inequitable or contravene public policy to grant appellate relief after the plan has been substantially consummated and comprehensive changes have occurred.

II

A

When a party who has been unsuccessful in the bankruptcy court fails to obtain a Rule 8005 stay of an order approving a plan of reorganization, the ensuing appeal may be dismissed on mootness grounds. “With respect to the appeal of a confirmed reorganization plan, it is generally settled that a court should dismiss an appeal as moot when the plan has been ‘so substantially consummated that effective judicial relief is no longer available.’ ” Huddleston v. Nelson Bunker Hunt Trust Estate, 109 B.R. 197, 200 (N.D.Tex.1989) (footnote omitted) (quoting In re Sun Country Dev., *258 Inc., 764 F.2d 406, 407 n. 1 (5th Cir.1985)). 3

The mootness doctrine is not to be applied in an uncritical manner, sweeping aside all claims on the basis of some that may be incapable of prompting effective appellate relief. The appellate court must instead approach the mootness inquiry with care and skillful precision, pretermitting merits resolution only as to discrete aspects of a plan that have been so substantially consummated that effective relief is unavailable. This principle explains, for example, why courts dismiss reorganization plan appeals in their entirety in some instances, e.g., In re Crystal Oil Co., 854 F.2d 79, 82 (5th Cir.1988); In re Roberts Farms, Inc., 652 F.2d 793, 797-98 (9th Cir.1981), and in other contexts dismiss but a portion of an appeal, e.g., In re AOV Indus., 792 F.2d 1140, 1149-50 (D.C.Cir.1986); In re Combined Metals Reduction Co., 557 F.2d 179, 194-95 (9th Cir.1977). The D.C. Circuit explained the duty of the appellate court this way:

In exercising its discretionary power to dismiss an appeal on mootness grounds, a court cannot avoid its obligation to scrutinize each individual claim, testing the feasibility of granting the relief against its potential impact on the reorganization scheme as a whole.

AOV Industries, 792 F.2d at 1148.

In order to decide whether portions or all of the instant appeal should be dismissed, it is necessary to examine in some detail the pertinent provisions of the Block Shim plan of reorganization and the transactions that have occurred pursuant to the plan since confirmation.

The court derives the pertinent background information from the appellate record and from the affidavit of Stemson shareholder Moisés Mondlak (“Mondlak”), submitted by appellees in support of their motion to dismiss. 4 In their response to the motion, appellants complain that they are at a disadvantage in refuting the mootness claims. This is so because the Mond-lak affidavit describes transactions as to which appellees Stemson and Ronville have not provided appellant Ronit with certain transaction documents. According to appellants, these documents would enable Ronit effectively to analyze, review, and present an accurate picture of the transactions that have occurred. 5 Appellants do not, however, expressly challenge the accuracy or credibility of the Mondlak affidavit and have not filed counter affidavits. The court need not, therefore, remand the dismissal question to the bankruptcy court for initial determination but may decide the issue on the present briefing and record. Cf. Huddleston v. Nelson Bunker Hunt Trust Estate, 102 B.R. 71, 76 (N.D.Tex.1989) (district court should remand appeal to bankruptcy court for initial determination of mootness question where resolution turns upon disputed controlling facts).

The Block Shim plan divided the partnership’s creditors into five classes. Class 1 pertained to administrative claims entitled to priority pursuant to 11 U.S.C. § 507; class 2 to a secured allowed claim of a group of individuals collectively called the “Sandfields;” class 3 to an unsecured allowed claim of Saraband, Inc.

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Bluebook (online)
113 B.R. 256, 1990 U.S. Dist. LEXIS 4199, 1990 WL 42632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ronit-inc-v-block-shim-development-coirving-in-re-block-shim-txnd-1990.