In Re Asarco, LLC
650 F.3d 593
| 5th Cir. | 2011Background
- ASARCO LLC sought bankruptcy bid protections to reimburse certain bidders’ due diligence expenses for a two-phase sale of the SCC Judgment assets.
- The bankruptcy court authorized such reimbursements under the business-judgment standard of 11 U.S.C. § 363(b).
- The Parent (AMC and ASARCO Incorporated) appealed; the district court affirmance was followed by plan-confirmation in which the Parent regained control and the SCC Judgment was released from the plan.
- Intervenors Elliott Management and the Baupost Group joined post-plan, asserting entitlement to reimbursement-related claims incurred pre-stay.
- ASARCO and the Parent pursue appellate review of the reimbursement order, which the district court also affirmed as part of the reorganization proceedings.
- The Fifth Circuit affirms, holding the reimbursement order final and proper under § 363(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Reimbursement Order is a final, appealable order | Appellants: not final under §158(a). | Appellees: flexible finality supports appeal. | Yes; order is a final disposition of a discrete dispute and appealable. |
| Correct statutory standard for reimbursement of bidder expenses | ASARCO should be judged under §503(b). | §363(b) is appropriate for use of estate funds for due diligence reimbursements. | §363(b) is the proper standard. |
| Whether §363(b) applied to this reimbursement had sound business justification | Record insufficient to show a sound business justification. | Record shows maximizing estate value and fair, reasonable process. | Record supports compelling business justification under §363(b). |
| Whether the reimbursement procedures violated notice or oversight requirements | Procedures lacked notice to the Parent and sufficient oversight. | Waived on appeal; no exceptional circumstances shown. | Issue waived; not reviewed. |
Key Cases Cited
- In re Integrated Resources, Inc., 3 F.3d 49 (2d Cir.1993) (discussed finality in bankruptcy appeals)
- Bartee v. Tara Colony Homeowners Ass'n (In re Bartee), 212 F.3d 277 (5th Cir.2000) (rejects rigid finality rule in bankruptcy appeals)
- In re Kizzee-Jordan, 626 F.3d 239 (5th Cir.2010) (flexible finality standard for bankruptcy appellate review)
- In re Orr, 180 F.3d 656 (5th Cir.1999) (lower threshold for final judgments in bankruptcy)
- In re OCA, Inc., 551 F.3d 359 (5th Cir.2008) (standard of review for bankruptcy findings)
- O'Brien Environmental Energy, Inc., 181 F.3d 527 (3d Cir.1999) (administrative expenses for break-up fees not apt here)