In Re River West Plaza-Chicago, LLC
664 F.3d 668
7th Cir.2011Background
- River West Plaza-Chicago, LLC filed a Chapter 11 petition to sell Joffco Square, a single asset shopping center.
- Schwab filed state-court suit seeking a profit-based share and filed a lis pendens to secure his claim.
- Bankruptcy court, on September 2010, disallowed Schwab's claim entirely, treating him as holding only a potentially worthless equity interest.
- River West and Bank of America announced a joint liquidation plan to sell Joffco Square at auction, dated October 4, 2010.
- Schwab appealed the disallowance on October 6, 2010, but did not obtain a stay of the sale pending appeal.
- Default dates: sale occurred December 15, 2010; plan was confirmed December 22, 2010; Schwab appealed to district court and later to the Seventh Circuit; trial court later dismissed the appeal as moot are not beneficial without a stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Schwab's appeal is moot under § 363(m). | Schwab | Bankruptcy sale to Inland was good-faith; no stay means mootness | Yes, moot; cannot alter proceeds or sale. |
| Whether Schwab could challenge the plan's distribution despite the lack of a stay. | Schwab | No jurisdiction to modify post-petition plan without stay and proper appeal | Yes, moot; distribution cannot be modified. |
| Whether Schwab preserved authority to seek modification by appealing the plan order. | Schwab | Only appealed the disallowance, not the plan order | No proper appellate jurisdiction for plan-order modification. |
Key Cases Cited
- In re CGI Indus., 27 F.3d 296 (7th Cir. 1994) (mootness where sale proceeds unalterable absent stay)
- In re Sax, 796 F.2d 994 (7th Cir. 1986) (finality of sale and need for stay to challenge)
- In re Vlasek, 325 F.3d 955 (7th Cir. 2003) (proper scope of appeal when stay not obtained)
- In re Gucci, 105 F.3d 837 (2d Cir. 1997) (limits appellate review to good-faith purchaser issues when sale not stayed)
- In re Envirodyne Indus., 29 F.3d 301 (7th Cir. 1994) (mootness and finality principles in bankruptcy appeals)
- In re Lloyd, 37 F.3d 271 (7th Cir. 1994) (proceeds exemption can affect mootness analysis)