608 B.R. 206
8th Cir. BAP2019Background
- Debtor Johnny M. Belew filed a Chapter 7 petition; Trustee Bianca Rucker administered the estate.
- The Bank offered $11,000 to purchase the estate's causes of action and residual assets (plus $1,000 contingent option); Debtor offered $10,000.
- Trustee moved for court approval of the Bank's sale; the bankruptcy court approved after a hearing.
- Debtor appealed the approval but did not obtain a stay of the sale or the court's order; Trustee and Bank completed the sale.
- The Bankruptcy Appellate Panel sua sponte examined jurisdictional issues: whether the appeal is moot under §363(m) and whether Debtor has standing given the lack of any realistic surplus to return to him.
Issues
| Issue | Debtor's Argument | Trustee/Bank's Argument | Held |
|---|---|---|---|
| Mootness of appeal after completed sale | Court erred approving sale and order should be reversed | Sale completed to a good-faith purchaser; no stay was obtained, so §363(m) bars undoing the sale and renders appeal moot | Appeal is moot under §363(m); cannot undo sale absent a stay |
| Standing to appeal (person aggrieved) | Debtor challenges approval as party affected by order | Debtor has no reasonable possibility of a surplus because assets are minimal and unsecured claims total millions | Debtor lacks standing; no pecuniary interest or reasonable possibility of surplus |
Key Cases Cited
- Robb v. Harder (In re Robb), 534 B.R. 354 (B.A.P. 8th Cir. 2015) (appellate panels must independently examine jurisdiction)
- Sears v. U.S. Trustee (In re AFY), 734 F.3d 810 (8th Cir. 2013) (mootness deprives appellate jurisdiction)
- O & S Trucking, Inc. v. Mercedes Benz Fin. Servs. USA (In re O & S Trucking, Inc.), 811 F.3d 1020 (8th Cir. 2016) (standing requires a person aggrieved)
- Nieters v. Sevcik (In re Rodriquez), 258 F.3d 757 (8th Cir. 2001) (§363(m) finality rule protects good-faith purchasers absent a stay)
- Nangle v. Surratt-States (In re Nangle), 288 B.R. 213 (B.A.P. 8th Cir. 2003) (debtor has standing only if there is a reasonable possibility of a surplus)
- Bank of Neb. v. Rose (In re Rose), 483 B.R. 540 (B.A.P. 8th Cir. 2012) (order of priority and distribution under §726 affects debtor's entitlement to surplus)