Bear Creek Trail v. BOKF, 35 F.4th 1277

Bank of Texas obtained a ~ $1.3M judgment against Marvin Keith; a Texas court appointed a receiver and ordered Keith to turnover his interests in several entities, including Bear Creek Trail, LLC (the Debtor) and Elk Mountain, plus certain assets.
Receiver McClintock (on behalf of Elk Mountain) moved in bankruptcy court to convert Bear Creek’s Chapter 11 case to Chapter 7; the Bank joined the motion.
Bankruptcy court granted conversion and appointed a Chapter 7 trustee (Randy Royal); the Debtor’s motions to stay and for reconsideration were denied.
Debtor’s counsel, Ken McCartney, filed a notice of appeal to the district court listing “Bear Creek Trail, LLC, Debtor in Possession” as appellant; Elk Mountain was not identified in the notice.
The district court dismissed the appeal, holding that only the Chapter 7 trustee had authority to appeal on behalf of the Debtor; former management and counsel lacked that authority.
The Tenth Circuit affirmed, explaining that appointment of a Chapter 7 trustee divests former management of authority to litigate or appeal on the corporation’s behalf; former managers may only appeal in their own right if pecuniarily aggrieved.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether former management or counsel could appeal the conversion order on behalf of the Debtor after a Chapter 7 trustee was appointed	McCartney/Bear Creek: C.W. Mining is distinguishable; denying them makes conversion effectively unreviewable because a trustee likely won’t appeal	Bank/Receiver: Appointment ousted management; only the trustee can appeal for the Debtor	Only the Chapter 7 trustee may appeal on behalf of the Debtor; former management/counsel lacked authority
Whether Elk Mountain was an appellant despite not being named in the notice of appeal	Counsel: Elk Mountain’s identity was effectively described; Elk Mountain joined filings and sought stays, so it should be treated as an appellant	Bank/Receiver: Notice did not identify Elk Mountain as required by Rule 8003(a); it was not an appellant	Elk Mountain was not an appellant in district court or here because the notice failed to name it per bankruptcy rules

In re C.W. Mining Co., 636 F.3d 1257 (10th Cir. 2011) (appointment of Chapter 7 trustee divests former management of authority to act or appeal on the corporation’s behalf)
Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343 (U.S. 1985) (after trustee appointment, management’s legal authority over corporate decisions is transferred to trustee)
In re S. Star Foods, Inc., 144 F.3d 712 (10th Cir. 1998) (standard of review: legal questions reviewed de novo)