In Re City of San Bernardino, California, 5:17-cv-00345

Background

City of San Bernardino filed Chapter 9 bankruptcy on August 1, 2012; creditors Briones, Harding, and Renter were prepetition unsecured creditors who filed proofs of claim.
San Bernardino filed a Plan of Adjustment on July 29, 2016; all impaired classes voted to accept the Plan (95% acceptance in general unsecured class).
Bankruptcy Court held multiple confirmation hearings and San Bernardino lodged a proposed form of Confirmation Order on January 3, 2017 with a clear deadline and hearing (Jan. 27, 2017) for objections to the draft order.
Appellants did not file timely written objections to the proposed Confirmation Order nor appear at the January 27, 2017 hearing; the Bankruptcy Court entered the Confirmation Order on February 7, 2017 and the Plan became effective June 15, 2017.
Appellants appealed the Confirmation Order in February 2017; San Bernardino moved to dismiss the appeal arguing waiver/lack of standing and equitable mootness.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether appellants have standing to appeal the Confirmation Order	Appellants: objection at earlier stages, voting against the Plan, joinder of another creditor’s objection, and other filings show non-consent and preserve appellate standing	San Bernardino: appellants failed to file objections to the Plan or the lodged draft Confirmation Order and thus waived objections; Bankruptcy Code binds creditors whether or not they object	Court: appellants waived objections by failing to timely object/appear; lacking standing under the "person aggrieved" test
Whether joinder of another creditor’s withdrawn objection suffices for standing	Renter: joinder of another creditor’s objection preserved rights	San Bernardino: joinder of a withdrawn objection is insufficient absent a direct, timely objection by the appellant	Court: joinder of withdrawn objection insufficient; Renter failed to file her own objection despite warning
Whether failure to seek a stay renders appeal equitably moot	Appellants: did not show they pursued interim relief or a stay	San Bernardino: appellants did not seek a stay and Plan was substantially consummated when effective	Court: appeal equitably moot because no stay sought and Plan was substantially consummated
Whether judicial notice of related filings is appropriate	Appellants: did not oppose taking judicial notice of non-disputed filings	San Bernardino: requested judicial notice of several court filings and proofs of claim	Court: granted judicial notice of the filings’ existence and contents (but not the truth of disputed facts)

Key Cases Cited

Fondiller v. Robertson, 707 F.2d 441 (9th Cir. 1983) (establishes the "person aggrieved" test for appellate standing in bankruptcy)
In re Commercial W. Fin. Corp. (Brady v. Andrew), 761 F.2d 1329 (9th Cir. 1985) (attendance and objection are ordinarily prerequisites to standing absent lack of proper notice)
In re Thorpe Insulation Co., 677 F.3d 869 (9th Cir. 2012) (articulates the equitable-mootness test focusing on stays sought, substantial consummation, third-party effects, and feasibility of relief)
In re Crystal Properties Ltd., 268 F.3d 743 (9th Cir. 2001) (district court appellate-review standard for bankruptcy court decisions)