In re Motors Liquidation Co., No. 15-2844 (2d Cir. 2016)

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Justia Opinion Summary

After Old GM filed for bankruptcy, New GM emerged. This case involves one of the consequences of the GM bankruptcy. Beginning in February 2014, New GM began recalling cars due to a defect in their ignition switches. Many of the cars in question were built years before the GM bankruptcy. Where individuals might have had claims against Old GM, a ʺfree and clearʺ provision in the bankruptcy courtʹs sale order barred those same claims from being brought against New GM as the successor corporation. Various individuals nonetheless initiated class action lawsuits against New GM, asserting ʺsuccessor liabilityʺ claims and seeking damages for losses and injuries arising from the ignition switch defect and other defects. The bankruptcy court enforced the Sale Order to enjoin many of these claims against New GM. The court concluded that the bankruptcy court had jurisdiction to interpret and enforce the Sale Order; the ʺfree and clearʺ provision covers pre‐closing accident claims and economic loss claims based on the ignition switch and other defects, but does not cover independent claims or Used Car Purchasersʹ claims; the court found no clear error in the bankruptcy court's finding that Old GM knew or should have known with reasonable diligence about the defect, and individuals with claims arising out of the ignition switch defect were entitled to notice by direct mail or some equivalent, as required by procedural due process; because enforcing the Sale Order would violate procedural due process in these circumstances, the bankruptcy court erred in granting New GMʹs motion to enforce and these plaintiffs cannot be bound by the terms of the Sales Order; and the bankruptcy courtʹs decision on equitable mootness was advisory. Accordingly, the court affirmed in part, reversed in part, vacated in part, and remanded.

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15 2844 bk(L) In re Motors Liquidation Co. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2015 (Argued: March 15, 2016 Decided: July 13, 2016) Docket Nos. 15 2844 bk(L), 15 2847 bk(XAP), 15 2848 bk(XAP) IN THE MATTER OF: MOTORS LIQUIDATION COMPANY, Debtor. CELESTINE ELLIOTT, LAWRENCE ELLIOTT, BERENICE SUMMERVILLE, Creditors Appellants Cross Appellees, SESAY AND BLEDSOE PLAINTIFFS, IGNITION SWITCH PLAINTIFFS, IGNITION SWITCH PRE CLOSING ACCIDENT PLAINTIFFS, DORIS POWLEDGE PHILLIPS, Appellants Cross Appellees, GROMAN PLAINTIFFS, Appellants, v. GENERAL MOTORS LLC, Appellee Cross Appellant, WILMINGTON TRUST COMPANY, Trustee Appellee Cross Appellant, PARTICIPATING UNITHOLDERS, Creditors Appellees Cross Appellants.1 ON APPEAL FROM THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK Before: STRAUB, CHIN, and CARNEY, Circuit Judges. Appeal from a judgment of the United States Bankruptcy Court for the Southern District of New York (Gerber, J.), enforcing a free and clear provision of a sale order to enjoin claims against a debtor s successor corporation and concluding under the equitable mootness doctrine that assets of the debtor s unsecured creditors trust would be protected from late led claims. On appeal, plainti s challenge the bankruptcy court s rulings that: (1) it had jurisdiction, (2) the sale order covered their claims, (3) enforcement of the sale order would not The Clerk of Court is respectfully directed to amend the official caption to conform to the above. 1 2 violate procedural due process, and (4) relief for any late led claims would be barred as equitably moot. AFFIRMED, REVERSED, AND VACATED IN PART, AND REMANDED. GARY PELLER, Washington, D.C., for Creditors Appellants Cross Appellees Celestine Elliott, Lawrence Elliott, and Berenice Summerville, and Appellants Cross Appellees Sesay and Bledsoe Plainti s. STEVEN W. BERMAN (Andrew M. Volk, on the brief), Hagens Berman Sobol Shapiro LLP, Seattle, Washington, and Elizabeth J. Cabraser, Lie Cabraser Heimann & Bernstein, LLP, San Francisco, California, and Rachel J. Geman, Lie Cabraser Heimann & Bernstein, LLP, New York, New York, and Edward S. Weisfelner, David J. Molton, Howard S. Steel, Brown Rudnick LLP, New York, New York, and Sandra L. Esserman, Stutzman, Bromberg, Esserman & Plifka, P.C., Dallas Texas, for Appellants Cross Appellees Ignition Switch Plainti s. WILLIAM P. WEINTRAUB (Gregory W. Fox, on the brief), Goodwin Procter LLP, New York, New York, for Appellants Cross Appellees Ignition Switch Pre Closing Accident Plainti s. Joshua P. Davis, Josh Davis Law Firm, Houston, Texas, for Appellant Cross Appellee Doris Powledge Phillips. 3 ALEXANDER H. SCHMIDT, Wolf Haldenstein Adler Freeman & Herz LLP, New York, New York, and Jonathan L. Flaxer, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, New York, for Appellants Groman Plainti s. ARTHUR J. STEINBERG (Scott Davidson, on the brief), King & Spalding LLP, New York, New York, and Merritt E. McAlister, King & Spalding LLP, Atlanta, Georgia, and Edward L. Ripley, King & Spalding LLP, Houston, Texas, and Richard C. Godfrey, Andrew B. Bloomer, Kirkland & Ellis LLP, Chicago, Illinois, for Appellee Cross Appellant General Motors LLC. Adam H. O enhartz, Aric H. Wu, Lisa H. Rubin, Gabriel K. Gillett, Gibson, Dunn & Crutcher LLP, New York, New York, for Trustee Appellee Cross Appellant Wilmington Trust Company. PRATIK A. SHAH, Akin Gump Strauss Hauer & Feld LLP, Washington, D.C., and Daniel H. Golden, Deborah J. Newman, Akin Gump Strauss Hauer & Feld LLP, New York, New York, for Creditors Appellees Cross Appellants Participating Unitholders. 4 CHIN, Circuit Judge: On June 1, 2009, General Motors Corporation ( Old GM ), the nation s largest manufacturer of automobiles and the creator of such iconic American brands as Chevrolet, Cadillac, and Jeep, led for bankruptcy. During the nancial crisis of 2007 and 2008, as access to credit tightened and consumer spending diminished, Old GM posted net losses of $70 billion over the course of a year and a half. The U.S. Department of the Treasury ( Treasury ) loaned billions of dollars from the Troubled Asset Relief Program ( TARP ) to buy the company time to revamp its business model. When Old GM s private e orts failed, President Barack Obama announced to the nation a solution a quick, surgical bankruptcy. 2 Old GM petitioned for Chapter 11 bankruptcy protection, and only forty days later the new General Motors LLC ( New GM ) emerged. This case involves one of the consequences of the GM bankruptcy. Beginning in February 2014, New GM began recalling cars due to a defect in their ignition switches. The defect was potentially lethal: while in motion, a car s ignition could accidentally turn o , shutting down the engine, disabling power steering and braking, and deactivating the airbags. Remarks on the United States Automobile Industry, 2009 Daily Comp. Pres. Doc. 2 (June 1, 2009). 2 5 Many of the cars in question were built years before the GM bankruptcy, but individuals claiming harm from the ignition switch defect faced a potential barrier created by the bankruptcy process. In bankruptcy, Old GM had used 11 U.S.C. § 363 of the Bankruptcy Code (the Code ) to sell its assets to New GM free and clear. In plain terms, where individuals might have had claims against Old GM, a free and clear provision in the bankruptcy court s sale order (the Sale Order ) barred those same claims from being brought against New GM as the successor corporation. Various individuals nonetheless initiated class action lawsuits against New GM, asserting successor liability claims and seeking damages for losses and injuries arising from the ignition switch defect and other defects. New GM argued that, because of the free and clear provision, claims could only be brought against Old GM, and not New GM. On April 15, 2015, the United States Bankruptcy Court for the Southern District of New York (Gerber, J.) agreed and enforced the Sale Order to enjoin many of these claims against New GM. Though the bankruptcy court also determined that these plainti s did not have notice of the Sale Order as required by the Due Process Clause of the Fifth Amendment, the bankruptcy court denied 6 plainti s relief from the Sale Order on all but a subset of claims. Finally, the bankruptcy court invoked the doctrine of equitable mootness to bar relief for would be claims against a trust established in bankruptcy court to pay out unsecured claims against Old GM ( GUC Trust ).3 The bankruptcy court entered judgment and certi ed the judgment for direct review by this Court.4 Four groups of plainti s appealed, as did New GM and GUC Trust. We a rm, reverse, and vacate in part the bankruptcy court s decision to enforce the Sale Order against plainti s and vacate as advisory its decision on equitable mootness. BACKGROUND I. Bailout In the nal two quarters of 2007, as the American economy su ered a signi cant downturn, Old GM posted net losses of approximately $39 billion and $722 million. General Motors Corp., Annual Report (Form 10 K) 245 (Mar. 5, 2009). In 2008, it posted quarterly net losses of approximately $3.3 billion, $15.5 For ease of reference, in the context of this appeal, we also refer to Wilmington Trust Company (the administrator of GUC Trust) and the unitholders of GUC Trust collectively and singularly as GUC Trust. 3 See 28 U.S.C. § 158(d)(2) (providing jurisdiction for courts of appeals to hear appeals if the bankruptcy court certi es that certain conditions are met). 4 7 billion, $2.5 billion, and $9.6 billion. Id. In a year and a half, Old GM had managed to hemorrhage over $70 billion. The possibility of Old GM s collapse alarmed many. Old GM employed roughly 240,000 workers and provided pensions to another 500,000 retirees. Id. at 19, 262. The company also purchased parts from over eleven thousand suppliers and marketed through roughly six thousand dealerships. A disorderly collapse of Old GM would have far reaching consequences. After Congress declined to bail out Old GM, President George W. Bush announced on December 19, 2008 that the executive branch would provide emergency loans to help automakers stave o bankruptcy while they develop plans for viability. 5 In Old GM s case, TARP loaned $13.4 billion on the condition that Old GM both submit a business plan for long term viability to the President no later than February 17, 2009 and undergo any necessary revisions no later than March 31, 2009. If the President found the business plan unsatisfactory, the TARP funds would become due and payable in thirty days, rendering Old GM insolvent and e ectively forcing it into bankruptcy. Remarks on the American Auto Industry, 44 Weekly Comp. Pres. Doc. 1569 (Dec. 19, 2008). 5 8 On March 30, 2009, President Obama told the nation that Old GM s business plan was not viable.6 At the same time, the President provided Old GM with another $6 billion loan and sixty more days to revise its plan along certain parameters. President Obama also reassured the public: But just in case there s still nagging doubts, let me say it as plainly as I can: If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it s ever been, because starting today, the United States Government will stand behind your warranty.7 As the President stood behind the reliability of GM cars, pledging another $600 million to back all warranty coverage, bankruptcy remained a stark possibility.8 II. Bankruptcy The federal aid did not succeed in averting bankruptcy. Old GM fared no better in the rst quarter of 2009 posting on May 8, 2009 a $5.9 billion net loss. General Motors Corp., Quarterly Report (Form 10 Q) 57 (May 8, 2009). Remarks on the United States Automobile Industry, 2009 Daily Comp. Pres. Doc. 2 (Mar. 30, 2009) [hereinafter March 30, 2009 Presidential Remarks ]. 6 7 March 30, 2009 Presidential Remarks, supra note 6, at 3. See Office of the Press Sec y, White House, Obama Administration s New Warrantee Commitment Program (Mar. 30, 2009); see also Office of the Press Sec y, White House, Obama Administration New Path to Viability for GM & Chrysler (Mar. 30, 2009); Steven Rattner, Overhaul: An Insider s Account of the Obama Administration s Emergency Rescue of the Auto Industry 299 (2010). 8 9 But ente ering bank kruptcy po osed a uniq que set of p problems: Old GM s sought to restruct ture and be ecome pro o table aga ain, not to shut down n; yet if Ol ld GM lingered d in bankru uptcy too long, oper rating expe enses wou uld accumu ulate and consum mer con de ence in the e GM brand d could de eteriorate, leaving Old GM no alternat tive but to liquidate a and close o once and f for all. On n June 1, 20 009, with th hese risks in mind, Old d GM petit tioned for Chapter 11 bankrup ptcy protec ction in the e nkruptcy C Court for th he Souther rn District of New Yo ork. United States Ban A. A Mech hanics of th he § 363 Sa ale The e same day y, Old GM led a mo otion to sel ll itself to N New GM (also dubbed d Vehicle A Acquisition n Holding gs LLC or NGMCO O, Inc. ), co omplete wi ith a 103 pag ge draft sal le agreeme ent and 30 page prop posed sale e order. Through this p proposed sa ale, Old G GM was atte empting n not a traditio onal Chapte er 11 reorg ganization n, but a tran nsaction pursuant to o 11 U.S.C. § 363 a less com mmon way of e ectin ng a bankru uptcy. See e, e.g., In re e Lionel Cor rp., d 1063, 106 66 70 (2d C Cir. 1983) (explaining g the history of § 363 3). The usu ual 722 F.2d Chapter r 11 reorga anization f follows set t procedur res: the com mpany entering bankrup ptcy (the debtor ) les a reorg ganization n plan discl losing to creditors ho ow they wi ill be treate ed, asks th hose credito ors to vote e to accept the plan, a and then 10 emerges from bankruptcy with its liabilities restructured along certain parameters. See 11 U.S.C. §§ 1121 1129.9 This jostling can take years.10 In contrast, in a § 363 sale of substantially all assets, the debtor does not truly reorganize. Instead, it sells its primary assets to a successor corporation, which immediately takes over the business. See Fla. Dep t of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 37 n.2 (2008). As evidenced by the GM bankruptcy, a § 363 sale can close in a matter of weeks. The proposed sale was, in e ect, a complex transaction made possible by bankruptcy law. GM s sale would proceed in several parts. First, Old GM would become a debtor in possession under the Code. See 11 U.S.C. § 1101. Where a trustee might otherwise be appointed to assert outside control of the debtor, id. § 1104, a debtor in possession continues operating its business, id. §§ 1107, 1108. See In re Smart World Techs., LLC, 423 F.3d 166, 174 n.10 (2d Cir. See generally Evan F. Rosen, Note, A New Approach to Section 363(f)(3), 109 Mich. L. Rev. 1529, 1538 39 (2011) ( However, unlike sales pursuant to the standard Chapter 11 plan confirmation process, 363(f) Sales occur without the benefit of the Chapter 11 Safeguards the disclosure, notice, voting, and priority safeguards . . . to protect secured creditors. ). 9 See Jacob A. Kling, Rethinking 363 Sales, 17 Stan. J.L. Bus. & Fin. 258, 262 (2012) ( A plan of reorganization must be submitted to a vote of creditors and equity holders after furnishing them with a disclosure statement, a process that can take years. (footnote omitted)). 10 11 2005) ( In a chapter 11 case, . . . the debtor usually remains in control of the estate as the debtor in possession. ). Still in control, Old GM could seek the bankruptcy court s permission to sell portions of its business. See 11 U.S.C. § 363(b)(1). Second, there would be New GM, a company owned predominantly by Treasury (over sixty percent). As proposed, New GM would acquire from Old GM substantially all of its business what one might commonly think of as the automaker GM. But New GM would not take on all of Old GM s liabilities. The Code allows a § 363 sale free and clear of any interest in such property. 11 U.S.C. § 363(f). The proposed sale order provided that New GM would acquire Old GM assets free and clear of all liens, claims, encumbrances, and other interests of any kind or nature whatsoever, including rights or claims based on any successor or transferee liability. J. App. 276. Other than a few liabilities that New GM would assume as its own, this free and clear provision would act as a liability shield to prevent individuals with claims against Old GM from suing New GM. Once the sale closed, the bankruptcy would be done: New GM could immediately begin operating the GM business, free of Old GM s debts. 12 Third d, Old GM M would rem main. The e proposed d sale wou uld leave O Old GM wit th some as ssets, inclu uding $1.17 75 billion in n cash, int terests in th he Saturn brand, a and certain n real and personal p property. Old GM w would also o receive conside eration from m New GM M, includin ng a prom mise to repa ay Treasur ry and Canadia an governm ment loans used to nance the e business through b bankruptcy y and a te en percent t equity sta ake in New w GM. Old d GM wou uld retain, however, the bulk of its old liab bilities. Fourth, Old GM M would li iquidate. T Though liq quidation is not y part of a a § 363 sale e, the sale w would resu ult in two GM comp panies. Old d formally GM wo ould disban nd: it wou uld rename e itself Mo otors Liquidation Co ompany a and arrange e a plan for r liquidatio on that add dressed ho ow its rem maining liab bilities would be paid. See 11 U.S.C. § 112 29(a)(11). T Thus, whil le New GM M would q quickly em merge from ba ankruptcy to operate e the GM b business, O Old GM wo ould remain in bankrup ptcy and u undergo a traditional, lengthy liquidation n process. B. B Sale Order One day after O Old GM l led its mot tion, on June 2, 2009, , the bankrup ptcy court t ordered O Old GM to provide n notice of th he propose ed sale ord der. Old GM M was requ uired to sen nd direct m mail notice e of its pro oposed sale e order to 13 numerous interested parties, including all parties who are known to have asserted any lien, claim, encumbrance, or interest in or on [the to be sold assets], and to post publication notice of the same in major publications, including the Wall Street Journal and New York Times. J. App. 385 86. The sale notice speci ed that interested parties would have until June 19, 2009 to submit to the bankruptcy court responses and objections to the proposed sale order. The bankruptcy court proceeded to hear over 850 objections to the proposed sale order over the course of three days, between June 30 and July 2, 2009. On July 5, 2009, after addressing and dismissing the objections, the bankruptcy court approved the § 363 sale. In re General Motors Corp. ( GM ), 407 B.R. 463 (Bankr. S.D.N.Y. 2009) (Gerber, J.). Among those objections were arguments against the imposition of a free and clear provision to bar claims against New GM as the successor to Old GM made by consumer organizations, state attorneys general, and accident victims. Next, the bankruptcy court issued the Sale Order, which entered into e ect the nal sale agreement between Old GM and New GM (the Sale Agreement ). In the Sale Agreement, New GM assumed fteen categories of liabilities. As relevant here, New GM agreed to assume liability for accidents 14 after the closing date for the § 363 sale and to make repairs pursuant to express warranties issued in connection with the sale of GM cars two liability provisions present in the initial draft sale agreement. The Sale Agreement also provided a new provision resulting from negotiations among state attorneys general, the GM parties, and Treasury during the course of the sale hearing that New GM would assume liability for any Lemon Law claims.11 With these exceptions, New GM would be free and clear of any and all liabilities of Old GM. On July 10, 2009, the § 363 sale o cially closed, and New GM began operating the automaker business. As a matter of public perception, the GM bankruptcy was over the company had exited bankruptcy in forty days.12 The Sale Agreement defined Lemon Laws as state statute[s] requiring a vehicle manufacturer to provide a consumer remedy when such manufacturer is unable to conform a vehicle to the express written warranty after a reasonable number of attempts, as defined in the applicable statute. J. App. 1676. 12 See, e.g., Bill Vlasic, G.M. Vow to Slim Includes Top Ranks, N.Y. Times (July 10, 2009) ( General Motors . . . emerged from bankruptcy on Friday . . . . ); John D. Stoll & Neil King Jr., GM Set to Exit Bankruptcy, Wall Street Journal (July 10, 2009) ( The new General Motors Co. is poised to exit Chapter 11 protection as soon as Friday morning, and to emerge as a leaner, more focused company after only 40 days in bankruptcy court. ). 11 15 C. C Liqui idation of Old GM f Mean nwhile, Ol ld GM rem mained in b bankruptcy y. Over th he next sev veral years, th he bankruptcy court t managed d the process of satisf fying liabil lities that remaine ed with Ol ld GM (i.e., not taken n on by Ne ew GM). The b bankruptcy y court set t Novembe er 30, 2009 9 as the ba ar date for r any ind dividual or r entity to le a proof f of claim that is, to o assert a c claim as to o Old GM M s remaining assets. . Old GM led its r rst Chapte er 11 liquid dation plan n on August 31, 2010, a and amend ded it on D December 8 8, 2010 and d again on n March 29 9, The propos sed plan pr rovided ho ow claims against Ol ld GM wo ould be pai id: 2011. T secured d claims, ot ther priori ity claims, and environmental claims ma ade by the governm ment woul ld be paid in full; un nsecured cl laims (clai ims withou ut an assuran nce of paym ment, such h as in the f form of a l lien on pro operty) wo ould not. Instead, under the plan, O Old GM w would estab blish GUC C Trust, wh hich would b be adminis stered by t the Wilmin ngton Trus st Compan ny. Once G GUC Trust t (and oth her like tru usts) was e established d, Old GM M would dis ssolve. GUC C Trust wou uld hold c certain Old d GM asset ts includ ding New G GM stock an nd stock w warrants th hat could be used to p purchase s shares at xed prices s, along w with other nancial in nstrument ts. Credito ors with un nsecured c claims agai inst 16 Old GM would receive these New GM securities and units of GUC Trust (the value of which would be pegged to the residual value of GUC Trust) on a pro rata basis in satisfaction of their claims. The Sale Agreement also imposed an accordion feature to ensure that GUC Trust would remain adequately funded in the event that the amount of unsecured claims grew too large. The accordion feature provided that if the Bankruptcy Court makes a nding that the estimated aggregate allowed general unsecured claims against [Old GM s] estates exceed $35 [billion], then [New GM] will . . . issue 10,000,000 additional shares of Common Stock . . . to [Old GM]. J. App. 1699. On March 29, 2011, the bankruptcy court con rmed this liquidation plan. GUC Trust made quarterly distributions of its assets thereafter. The initial distribution released more than seventy ve percent of the New GM securities. On February 8, 2012, the bankruptcy court ordered that no further claims against Old GM and payable by GUC Trust would be allowed unless the claim amended a prior claim, was led with GUC Trust s consent, or was deemed timely led by the bankruptcy court. As of March 31, 2014, GUC Trust had distributed roughly ninety percent of its New GM securities and nearly 32 million units of GUC Trust; the expected value of unsecured claims against Old 17 GM totaled roughly $32 billion, not enough to trigger the accordion feature and involve New GM in the bankruptcy. The GM bankruptcy that began ve years earlier appeared to be approaching its end. III. Ignition Switch Defect On February 7, 2014, New GM rst informed the National Highway Tra c Safety Administration ( NHTSA ) that it would be recalling, among other vehicles, the 2005 Chevrolet Cobalt. A defect in the ignition switch could prevent airbags from deploying. A later congressional sta report, which followed four days of testimony by New GM CEO Mary Barra before committees of the House of Representatives and Senate, described what could happen by referring to an actual tragic accident caused by the defect:13 In October 2006, three teenagers Staff of H. Comm. on Energy & Commerce, 113th Cong., Report on the GM Ignition Switch Recall: Review of NHTSA 1 (Sept. 16, 2014); Examining Accountability and Corporate Culture in Wake of the GM Recalls: Hearing Before the Subcomm. on Consumer Prot., Prod. Safety, & Ins. of the S. Comm. on Commerce, Sci., & Transp., 113th Cong. (2014); The GM Ignition Switch Recall: Investigation Update: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Energy & Commerce, 113th Cong. (2014); Examining the GM Recall and NHTSA s Defect Investigation Process: Hearing Before the Subcomm. on Consumer Prot., Prod. Safety, & Ins. of the S. Comm. on Commerce, Sci., & Transp., 113th Cong. (2014) [hereinafter April 2, 2014 Senate Hearing ]; The GM Ignition Switch Recall: Why Did It Take So Long?: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Energy & Commerce, 113th Cong. (2014). 13 18 were riding in a 2005 Chevrolet Cobalt when the driver lost control and the car careened o the side of the road. The vehicle ew into a telephone utility box and several trees. The airbags did not deploy, and two of the teenagers died. From February until October 2014, New GM would issue over 60 recalls, with the number of a ected vehicles in the United States alone surpassing 25 million. New GM hired attorney Anton Valukas of the law rm Jenner & Block to investigate; he did so and prepared an extensive report (the Valukas Report ).14 In 1997, Old GM sold three out of ten cars on the road in North America. See General Motors Corp., Annual Report (Form 10 K) 60 (Mar. 20, 1998). Engineers began developing a new ignition switch that could be used in multiple vehicles across the GM brand, rst by setting technical speci cations for the switch and then by testing prototypes against those speci cations. Throughout testing, which lasted until 2002, prototypes consistently failed to meet technical speci cations. In particular, a low amount of torque Plaintiffs and New GM each extensively cite and quote to the Valukas Report as an account of the underlying facts regarding the ignition switch defect, and we do as well. 14 19 could cause the ignition switch to switch to accessory or o . 15 A low torque threshold on an ignition switch would mean that little force perhaps even the bump of a stray knee would be needed to rotate the key in the switch from the on position to the accessory or o position. Near the end of testing, an engineer commented on the ignition switch s lingering problems in an email: he was tired of the switch from hell. J. App. 9696. Three months later, in May 2002, the ignition switch was approved for production, despite never having passed testing. In the fall of 2002, Old GM began producing vehicles with the faulty ignition switch. Almost immediately, customers complained of moving stalls, sometimes at highway speeds instances where the engine and power steering and braking cut o while the car was in motion, leaving drivers to manually maneuver the vehicle, that is, without assistance of the car s power steering and braking systems. Despite customer complaints, and grumblings in the press, Old GM classi ed the moving stall as a non safety issue. Id. at 9711. As Valukas put it, on a scale of 1 (most severe) to 4 (least severe) . . . the problem could have been Torque is a measure of twisting force it is generated, for example, when one twists o the cap of a soda bottle or tightens a bolt with a wrench. 15 20 designated a severity level 1 safety problem, [but] it was not. Id. Instead, the moving stall was assigned a severity level of 3. Old GM personnel considered the problem to be a matter of customer satisfaction, not safety. These personnel apparently also did not then fully realize that when a car shuts o , so does its airbags. But as early as August 2001, at least some Old GM engineers understood that turning o the ignition switch could prevent airbags from deploying. Complaints about the ignition switch continued. Between 2004 and 2005, NHTSA began asking questions about engine stalls. In 2005, several media outlets also reported on the stalls. See, e.g., Je Sabatini, Making a Case for Keyless Ignitions, N.Y. Times (June 19, 2005). Senior attorneys studied the stalls, but considered the risk to be remote[]. J. App. 9734. At the same time, Old GM s product investigations unit recreated the ignition switch s issues by using only a heavy keychain to generate torque. Finally, in December 2005, Old GM issued a bulletin to dealers, but not to customers, warning them that low ignition key cylinder torque could cause cars to turn o . Id. at 9740. The bulletin did not mention that, as a result, cars could stall on the road. Then came reports of fatalities. In late 2005 through 2006, news of deaths from airbag non deployments in crashes where airbags should have 21 deployed reached the desks of Old GM s legal team. Around April 2006, Old GM engineers decided on a design change of the ignition switch to increase the torque. Old GM engineers did so quietly, without changing the ignition switch s part number, a change that would have signaled that improvements or adjustments had been made. In February 2007, a Wisconsin state trooper s report made its way into the les of Old GM s legal department: The two front seat airbags did not deploy. It appears that the ignition switch had somehow been turned from the run position to accessory prior to the collision with the trees. Id. at 9764. NHTSA similarly brought to Old GM s attention reported airbag non deployments. See Transportation Research Center, Indiana University, On Site Air Bag Non Deployment Investigation 7 (Apr. 25, 2007, rev. Mar. 31, 2008). As more incidents with its cars piled up, Old GM nally drafted an updated bulletin to dealers warning them of possible stalls, but never sent it out. Old GM internally continued to investigate. By May 2009, sta had gured out that non deployment of airbags in these crashes was attributable to a sudden loss of power. They believed that one of the two most likely explanation[s] for the power mode signal change was . . . a problem with the 22 Ignition Switch. J. App. 9783. By June 2009, Old GM engineers had implemented a change to the ignition key, hoping to x the problem once and for all. One engineer lamented that [t]his issue has been around since man rst lumbered out of [the] sea and stood on two feet. Id. at 9781. Later, the Valukas Report commented on the general attitude at Old GM. For eleven years, GM heard over and over from various quarters including customers, dealers, the press, and their own employees that the car s ignition switch led to moving stalls, group after group and committee after committee within GM that reviewed the issue failed to take action or acted too slowly. Although everyone had responsibility to x the problem, nobody took responsibility. J. App. 9650. The Valukas Report recounted aspects of GM s corporate culture. With the GM salute, employees would attend action meetings and literally cross their arms and point ngers at others to shirk responsibility. With the GM nod, employees would (again) literally nod in agreement to endorse a proposed plan, understanding that they and others had no intention of following through. Finally, the Report described how GM employees, instead of taking action, would claim the need to keep searching for the root cause of the moving stalls 23 and airbag non deployments. This search for root cause became a basis for doing nothing to resolve the problem for years. Id. at 9906. Indeed, New GM would not begin recalling cars for ignition switch defects until February 2014. Soon after New GM s initial recall, individuals led dozens of class actions lawsuits, claiming that the ignition switch defect caused personal injuries and economic losses, both before and after the § 363 sale closed.16 New GM sought to enforce the Sale Order, invoking the liability shield to hold New GM free and clear of various claims. This meant that when it came to Old GM cars New GM would pay for post closing personal injuries, make repairs, and follow Lemon Laws, but nothing else. The amount of purportedly barred liabilities was substantial an estimated $7 to $10 billion in economic losses, not to mention damages from pre closing accidents. IV. Proceedings Below On April 21, 2014, Steven Groman and others (the Groman Plainti s ) initiated an adversary proceeding against New GM in the bankruptcy court below, asserting economic losses arising from the ignition switch defect. Those class actions are consolidated before a district judge in the United States District Court for the Southern District of New York. See In re General Motors LLC Ignition Switch Litigation, No. 14 MD 2543 (S.D.N.Y.) (Furman, J.). 16 24 The same day, New GM moved to enforce the Sale Order to enjoin those claims, as well as claims in other ignition switch actions then being pursued against New GM. Other plainti s allegedly a ected by the Sale Order included classes of individuals who had su ered pre closing injuries arising from the ignition switch defect ( Pre Closing Accident Plainti s ), economic losses arising from the ignition switch defect in Old GM cars ( Ignition Switch Plainti s ), and damages arising from defects other than the ignition switch in Old GM cars ( Non Ignition Switch Plainti s ).17 Included within the Ignition Switch Plainti s were individuals who had purchased Old GM cars secondhand after the § 363 sale closed ( Used Car Purchasers ). On appeal, several orders are before us. First, the Non Ignition Switch Plainti s led a motion, asserting, among other things, that the bankruptcy court lacked jurisdiction to enforce the Sale Order. On August 6, 2014, the bankruptcy court denied that motion. In re Motors Liquidation Co. ( MLC I ), 514 B.R. 377 (Bankr. S.D.N.Y. 2014) (Gerber, J.). On August 1, 2014, New GM filed motions to enforce the Sale Order against the Pre Closing Accident Plaintiffs and Non Ignition Switch Plaintiffs, who entered the bankruptcy proceedings later. 17 25 Second, after receiving further brie ng and hearing oral argument on the motion to enforce, on April 15, 2015 the bankruptcy court decided to enforce the Sale Order in part and dismiss any would be claims against GUC Trust because relief would be equitably moot. In re Motors Liquidation Co. ( MLC II ), 529 B.R. 510 (Bankr. S.D.N.Y. 2015) (Gerber, J.). The bankruptcy court rst determined plainti s lacked notice consistent with procedural due process. Id. at 540 60. In particular, the bankruptcy court found that the ignition switch claims were known to or reasonably ascertainable by Old GM prior to the sale, and thus plainti s were entitled to actual notice, as opposed to the mere publication notice that they received. Id. at 556 60. The bankruptcy court found, however, that with one exception plainti s had not been prejudiced by this lack of notice the exception being claims stemming from New GM s own wrongful conduct in concealing defects (so called independent claims ). Id. at 560 74. In other words, the bankruptcy court held that New GM could not be sued in bankruptcy court or elsewhere for ignition switch claims that otherwise could have been brought against Old GM, unless those claims arose from New GM s own wrongful conduct. Id. at 574 83. 26 In the same decision, the bankruptcy court addressed arguments by GUC Trust that it should not be held as a source for relief either. Applying the factors set out in In re Chateaugay Corp. ( Chateaugay III ), 10 F.3d 944 (2d Cir. 1993), the bankruptcy court concluded that relief for any late claims against GUC Trust was equitably moot, as the plan had long been substantially consummated. MLC II, 529 B.R. at 583 92. Finally, the bankruptcy court outlined the standard for any future fraud on the court claims. Id. at 592 97. With these issues resolved, the bankruptcy court certi ed its decision for appeal to this Court pursuant to 28 U.S.C. § 158. Id. at 597 98. Third, the bankruptcy court issued another decision after the parties disagreed on the form of judgment and other ancillary issues. On May 27, 2015, the bankruptcy court clari ed that the Non Ignition Switch Plainti s would be bound by the judgment against the other plainti s, but would have seventeen days following entry of judgment to object. In re Motors Liquidation Co. ( MLC III ), 531 B.R. 354 (Bankr. S.D.N.Y. 2015) (Gerber, J.). The bankruptcy court left open the question of whether Old GM knew of other defects. On June 1, 2015, the bankruptcy court entered judgment against all plainti s and issued an order certifying the judgment for direct appeal. 27 Following brie ng by the Non Ignition Switch Plainti s, on July 22, 2015, the bankruptcy court rejected their objections to the judgment. New GM, GUC Trust, and the four groups of plainti s described above the Groman Plainti s, Ignition Switch Plainti s, Non Ignition Switch Plainti s, and Pre Closing Accident Plainti s appealed.18 We turn to these appeals. DISCUSSION The Code permits a debtor to sell substantially all of its assets to a successor corporation through a § 363 sale, outside of the normal reorganization process. Here, no party seeks to undo the sale of Old GM s assets to New GM, as executed through the Sale Order.19 Instead, plainti s challenge the extent to which the bankruptcy court may absolve New GM, as a successor corporation, of Old GM s liabilities. See generally 3 Collier on Bankruptcy ¶ 363.02[2] (Alan N. On appeal, the Non Ignition Switch Plaintiffs are joined by certain ignition switch and pre closing accident plaintiffs and call themselves the Elliot, Sesay, and Bledsoe Plaintiffs. That group also represents two other appellants captioned above: Berenice Summerville and Doris Powledge Phillips. For ease of reference, in the context of this appeal, we will continue to call the group the Non Ignition Switch Plaintiffs. 18 Indeed, the bankruptcy court s opinion in GM, 407 B.R. 463, which approved the § 363 sale, has been reviewed on appeal has three times: a stay pending appeal was denied in In re General Motors Corp., No. M 47(LAK), 2009 WL 2033079 (S.D.N.Y. July 9, 2009), and the opinion was affirmed in In re Motors Liquidation Co., 428 B.R. 43 (S.D.N.Y. 2010), and in In re Motors Liquidation Co., 430 B.R. 65 (S.D.N.Y. 2010). 19 28 Resnick & Harry J. Sommer eds., 16th ed. 2013) [hereinafter Collier on Bankruptcy ] (noting that use of a section 363 sale probably reached its zenith with the GM bankruptcy). In particular, they dispute whether New GM may use the Sale Order s free and clear provision to shield itself from claims primarily arising out of the ignition switch defect and other defects. The decisions below generate four issues on appeal: (1) the bankruptcy court s jurisdiction to enforce the Sale Order, (2) the scope of the power to sell assets free and clear of all interests, (3) the procedural due process requirements with respect to notice of such a sale, and (4) the bankruptcy court s ruling that would be claims against GUC Trust are equitably moot. I. Jurisdiction We rst address the bankruptcy court s subject matter jurisdiction. New GM argued below that successor liability claims against it should be enjoined, and the bankruptcy court concluded as a threshold matter that it had jurisdiction to enforce the Sale Order. See MLC I, 514 B.R. at 380 83. The Non Ignition Switch Plainti s challenge jurisdiction: (1) as a whole to enjoin claims against New GM, (2) with respect to independent claims, which stem from New GM s own wrongful conduct, and (3) to issue a successive injunction. We review 29 de novo rulings as to the bankruptcy court s jurisdiction. See In re Petrie Retail, Inc., 304 F.3d 223, 228 (2d Cir. 2002). First, as to jurisdiction broadly, [t]he jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute. Celotex Corp. v. Edwards, 514 U.S. 300, 307 (1995); see 28 U.S.C. § 1334. Bankruptcy courts may exercise jurisdiction, through referral from the district court, over three broad categories of proceedings: those arising under title 11 of the Code, those arising in . . . a case under title 11, and those related to a case under title 11. 28 U.S.C. § 157(a). Proceedings arising under title 11, or arising in a case under title 11, are deemed core proceedings. Stern v. Marshall, 564 U.S. 462, 476 (2011) (quoting 28 U.S.C. § 157(b)). In those proceedings, bankruptcy courts retain comprehensive power to resolve claims and enter orders or judgments. See In re Millenium Seacarriers, Inc., 419 F.3d 83, 96 (2d Cir. 2005). [T]he meaning of the statutory language arising in may not be entirely clear. Baker v. Simpson, 613 F.3d 346, 351 (2d Cir. 2010). At a minimum, a bankruptcy court s arising in jurisdiction includes claims that are not based on any right expressly created by [T]itle 11, but nevertheless, would have no 30 existence outside of the bankruptcy. Id. (quoting In re Wood, 825 F.2d 90, 97 (5th Cir. 1987)). A bankruptcy court s decision to interpret and enforce a prior sale order falls under this formulation of arising in jurisdiction. An order consummating a debtor s sale of property would not exist but for the Code, see 11 U.S.C. § 363(b), and the Code charges the bankruptcy court with carrying out its orders, see id. § 105(a) (providing that bankruptcy court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title ). Hence, a bankruptcy court plainly ha[s] jurisdiction to interpret and enforce its own prior orders. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009); see Millenium Seacarriers, 419 F.3d at 96 ( A bankruptcy court retains post con rmation jurisdiction to interpret and enforce its own orders, particularly when disputes arise over a bankruptcy plan of reorganization. (quoting Petrie Retail, 304 F.3d at 230)). That is what happened here. The bankruptcy court rst interpreted the free and clear provision that barred successor liability claims a provision that was integral to resolving Old GM s bankruptcy and then determined whether to enforce that provision. 31 Second, the Non Ignition Switch Plainti s specify that the bankruptcy court lacked jurisdiction over independent claims. Even though the bankruptcy court ultimately did not enjoin independent claims, we address this argument because it implicates subject matter jurisdiction. In any event, the argument is misguided. The Sale Order, on its face, does not bar independent claims against New GM; instead, it broadly transfers assets to New GM free and clear of liens, claims, encumbrances, and other interests . . . , including rights or claims . . . based on any successor or transferee liability. J. App. 1621. By making the argument that the bankruptcy court could not enjoin independent claims through the Sale Order, the Non Ignition Switch Plainti s already assume that the bankruptcy court indeed has jurisdiction to interpret the Sale Order to determine whether it covers independent claims and to hear a motion to enforce in the rst place. Third, the Non Ignition Switch Plainti s argue that the bankruptcy court lacked power to issue a so called successive injunction. In certain parts of the Sale Order, the bankruptcy court had included language that successor liability claims would be forever prohibited and enjoined. J. App. 1649. But New GM was not seeking an injunction to stop plainti s from violating that 32 prior injunction; New GM wanted the bankruptcy court to con rm that the Sale Order covered these plainti s. In other words, New GM did not seek a new injunction but, rather, [sought] to enforce an injunction already in place. In re Kalikow, 602 F.3d 82, 93 (2d Cir. 2010) (quoting In re Texaco Inc., 182 B.R. 937, 945 (Bankr. S.D.N.Y. 1995)). In such situations, bankruptcy courts have jurisdiction to decide a motion s[eeking] enforcement of a pre existing injunction issued as part of the bankruptcy court s sale order. Petrie Retail, 304 F.3d at 230. Accordingly, we agree that the bankruptcy court had jurisdiction to interpret and enforce the Sale Order. See MLC I, 514 B.R. at 380 83. II. Scope of Free and Clear Provision We turn to the scope of the Sale Order. The Sale Order transferred assets from Old GM to New GM free and clear of liens, claims, encumbrances, and other interests . . . , including rights or claims . . . based on any successor or transferee liability. J. App. 1621. The bankruptcy court did not explicitly address what claims were covered by the Sale Order.20 The bankruptcy court mentioned, however, that claims based on New GM s independently wrongful, and otherwise actionable, conduct could not be categorized as claims that could be assumed by New GM or retained by Old GM via the Sale Order. MLC II, 529 B.R. at 583. But the bankruptcy court did not explicitly address whether it still considered those claims to be covered by the Sale Order. 20 33 We a address the e scope of t the Sale O Order becau use it impl licates our procedu ural due process ana alysis that f follows. If f the Sale O Order cove ers certain n claims, then we w would have e to consid der whethe er plainti s s due proc cess rights s are d by apply ying the fr ree and cle ear clause to those claims. If th he Sale Or rder violated did not cover cert tain claims s, however r, then thos se claims c could not b be enjoined d by ng the Sale e Order an nd due process conce erns would d not be im mplicated. We enforcin interpre et the Sale Order de n novo to det termine wh hat claims s are barred d. See In re e Duplan Corp., 212 F.3d 144, 151 (2d Cir. 2000); se ee also Petri ie Retail, 30 04 F.3d at 2 229 where enfo orcement rst requir red interpr retation of prior orde er). (noting instance w A. A Appl licable Law w The C Code allow ws the trus stee or deb btor in pos ssession to use, sell, or lease, ot ther than i in the ordi inary cours se of busin ness, prope erty of the estate. 11 U.S.C. § § 363(b)(1). A sale pu ursuant to § 363(b) m may be ma ade free an nd clear of f any inte erest in suc ch propert ty if any c condition o on a list of condition ns is met. I Id. § 363(f). Yet the Code does s not de n ne the conc cept of inte erest, of w which the propert ty may be sold free a and clear, 3 Collier on n Bankrupt tcy ¶ 363.0 06[1], nor d does it expre ess the exte ent to whic ch claims fall withi in the amb bit of inter rests. 34 New GM asserts that In re Chrysler LLC, 576 F.3d 108, 126 (2d Cir. 2009), resolved that successor liability claims are interests. New GM Br. 75.21 But Chrysler was vacated by the Supreme Court after it became moot during the certiorari process and remanded with instructions to dismiss the appeal as moot. See Ind. State Police Pension Tr. v. Chrysler LLC, 558 U.S. 1087 (2009). The Supreme Court vacated Chrysler pursuant to United States v. Munsingwear, Inc., 340 U.S. 36, 41 (1950), which prevent[s] a judgment, unreviewable because of mootness, from spawning any legal consequences. See Russman v. Bd. of Educ. of Enlarged City Sch. Dist., 260 F.3d 114, 121 22 n.2 (2d Cir. 2001) ( [V]acatur eliminates an appellate precedent that would otherwise control decision on a contested question throughout the circuit. ). We had not addressed the issue before Chrysler, and now that case is no longer controlling precedent.22 See 576 F.3d at 124 ( We have never addressed the scope of the language any interest in such property, and the statute does not de ne the term. ). New GM also cites a non precedential summary order on this issue. See Douglas v. Stamco, 363 F. App x 100 (2d Cir. 2010). 22 When the bankruptcy court determined that successor liability claims could constitute interests, Chrysler had not yet been vacated. See GM, 407 B.R. at 505 ( Chrysler is not distinguishable in any legally cognizable respect. ). 21 35 Rather than formulating a single precise de nition for any interest in such property, courts have continued to address the phrase on a case by case basis. In re PBBPC, Inc., 484 B.R. 860, 867 (B.A.P. 1st Cir. 2013). At minimum, the language in § 363(f) permits the sale of property free and clear of in rem interests in the property, such as liens that attach to the property. See In re Trans World Airlines, Inc., 322 F.3d 283, 288 (3d Cir. 2003). But courts have permitted a broader de nition that encompasses other obligations that may ow from ownership of the property. 3 Collier on Bankruptcy ¶ 363.06[1]. Sister courts have held that § 363(f) may be used to bar a variety of successor liability claims that relate to ownership of property: an interest might encompass Coal Act obligations otherwise placed upon a successor purchasing coal assets, In re Leckie Smokeless Coal Co., 99 F.3d 573, 581 82 (4th Cir. 1996), travel vouchers issued to settle an airline s discrimination claims in a sale of airline assets, Trans World Airlines, 322 F.3d at 288 90, or a license for future use of intellectual property when that property is sold, FutureSource LLC v. Reuters Ltd., 312 F.3d 281, 285 (7th Cir. 2002). See generally Precision Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537, 545 (7th Cir. 2003) ( [T]he term interest is a broad term no doubt selected by Congress to avoid rigid and technical de nitions drawn from other areas of the 36 law. (quoting Russello v. United States, 464 U.S. 16, 21 (1983))). In these instances, courts require a relationship between the[] right to demand . . . payments from the debtors and the use to which the debtors had put their assets. Trans World Airlines, 322 F.3d at 289. We agree that successor liability claims can be interests when they ow from a debtor s ownership of transferred assets. See 3 Collier in Bankruptcy ¶¶ 363.06[1], [7]; Trans World Airlines, 322 F.3d at 289. But successor liability claims must also still qualify as claims under Chapter 11. Though § 363(f) does not expressly invoke the Chapter 11 de nition of claims, see 11 U.S.C. § 101(5), it makes sense to harmonize Chapter 11 reorganizations and § 363 sales to the extent permitted by the statutory language. Chrysler, 576 F.3d at 125; see Lionel, 722 F.2d at 1071 ( [S]ome play for the operation of both § 363(b) and Chapter 11 must be allowed for. ).23 Here, the bankruptcy court s power to bar claims in a quick § 363 sale is plainly no broader than its power in a traditional Chapter 11 reorganization. Compare 11 U.S.C. § 363(f) ( free and clear of any interest in such Although Chrysler was vacated on grounds of mootness, it still constitute[s] persuasive authority. Anderson v. Rochester Genesee Reg l Transp. Auth., 337 F.3d 201, 208 n.5 (2d Cir. 2003). Both our Circuit and the Third Circuit have continued to cite Chrysler favorably. See In re N. New Eng. Tel. Operations LLC, 795 F.3d 343, 346, (2d Cir. 2015); In re Jevic Holding Corp., 787 F.3d 173, 188 89 (3d Cir. 2015). 23 37 property ), with § 1141(c) ( free and clear of all claims and interests ). We thus consider what claims may be barred under Chapter 11 generally. Section 101(5) de nes claim as any right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, xed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. 11 U.S.C. § 101(5). A claim is (1) a right to payment (2) that arose before the ling of the petition. See Pension Ben. Guar. Corp. v. Oneida Ltd., 562 F.3d 154, 157 (2d Cir. 2009). If the right to payment is contingent on future events, the claim must instead result from pre petition conduct fairly giving rise to that contingent claim. In re Chateaugay Corp. ( Chateaugay I ), 944 F.2d 997, 1005 (2d Cir. 1991) (internal quotation marks omitted). This Court has not decided, however, the di cult case of pre petition conduct that has not yet resulted in detectable injury, much less the extreme case of pre petition conduct that has not yet resulted in any tortious consequence to a victim. Id. at 1004. Chateaugay I considered a hypothetical bankrupt bridge building company, which could predict that out of the 10,000 bridges it built, one would one day fail, causing deaths and other injuries. Id. at 38 1003. If that bridge did fail, the individuals might have tort claims resulting from pre petition conduct, namely the building of the bridge. Recognizing these claims would engender enormous practical and perhaps constitutional problems. Id. Thus, claim cannot be extended to include . . . claimants whom the record indicates were completely unknown and unidenti ed at the time [the debtor] led its petition and whose rights depended entirely on the fortuity of future occurrences. Lemelle v. Universal Mfg. Corp., 18 F.3d 1268, 1277 (5th Cir. 1994); see In re Chateaugay Corp. ( Chateaugay IV ), 53 F.3d 478, 497 (2d Cir. 1995) (stating that, in common sense, claim is not in nite ). To avoid any practical and constitutional problems, courts require some minimum contact, Chateaugay I, 944 F.2d at 1003 04, or relationship, Chateaugay IV, 53 F.3d at 497, that makes identi able the individual with whom the claim does or would rest. To summarize, a bankruptcy court may approve a § 363 sale free and clear of successor liability claims if those claims ow from the debtor s ownership of the sold assets. Such a claim must arise from a (1) right to payment (2) that arose before the ling of the petition or resulted from pre petition conduct fairly giving rise to the claim. Further, there must be some contact or 39 relation nship betw ween the de ebtor and t the claiman nt such tha at the claim mant is identi a able. B. B Appl lication We a apply these e principle es to: (1) pr re closing accident c claims, (2) econom mic loss clai ims arising g from the e ignition s switch defe ect or othe er defects, (3) indepen ndent claim ms relating g only to N New GM s conduct, a and (4) Use ed Car Purchas sers claim ms. The ban nkruptcy c court assum med that th he Sale Or rder s broa ad languag ge suggest ted that all of these claims fell w within the e scope of t the free an nd clear p provision. We hold, h however, t that the r rst two sets s of claims s are covered by the S Sale Order r but that th he latter tw wo sets of claims are e not. First, , the pre cl losing acci ident claim ms clearly f fall within n the scope of the Sale e Order. T Those claim ms directly relate to t the owners ship of the e GM automa aker s busin ness Old d GM built t cars with h ignition s switch defe ects. And those pl lainti s cl laims are p properly th hought of a as tort clai ims that ar rose before e the ling of f the petition; indeed d, the claim ms arise fro om acciden nts that occurred pre e closing involving Old GM c cars.24 To th he extent tha at Pre Closi ing Acciden nt Plaintiffs s assert clai ims arising after the e petition bu ut before th he § 363 sale e closing, n no party on appeal sug ggests that w we treat claims in this timeframe differently. In any ev vent, those c claims are c contingent on 24 4 40 Second, the economic loss claims arising from the ignition switch defect or other defects present a closer call. Like the claims of Pre Closing Accident Plainti s, these claims ow from the operation of Old GM s automaker business. These individuals also, by virtue of owning Old GM cars, had come into contact with the debtor prior to the bankruptcy petition. Yet the ignition switch defect (and other defects) were only revealed some ve years later. GUC Trust thus asserts that there was no right to payment prior to the petition. We disagree. The economic losses claimed by these individuals were contingent claims. 11 U.S.C. § 101(5). That is, the ignition switch defect was there, but was not yet so patent that an individual could, as a practical matter, bring a case in court. The contingency standing in the way was Old GM telling plainti s that the ignition switch defect existed. In other words, Old GM s creation of the ignition switch defect fairly gave rise to these claims, even if the claimants did not yet know. See Chateaugay I, 944 F.2d at 1005. Third, however, the independent claims do not meet the Code s limitation on claims. By de nition, independent claims are claims based on New GM s own post closing wrongful conduct. Though the parties do not lay out the the accident occurring and result from pre petition conduct fairly giving rise to [a] contingent claim. Chateaugay I, 944 F.2d at 1005 (internal quotation marks omitted). 41 whole universe of possible independent claims, we can imagine that some claims involve misrepresentations by New GM as to the safety of Old GM cars. These sorts of claims are based on New GM s post petition conduct, and are not claims that are based on a right to payment that arose before the ling of petition or that are based on pre petition conduct. Thus, these claims are outside the scope of the Sale Order s free and clear provision. Fourth, the Sale Order likewise does not cover the Used Car Purchasers claims. The Used Car Purchasers were individuals who purchased Old GM cars after the closing, without knowledge of the defect or possible claim against New GM. They had no relation with Old GM prior to bankruptcy. Indeed, as of the bankruptcy petition there were an unknown number of unknown individuals who would one day purchase Old GM vehicles secondhand. There could have been no contact or relationship actual or presumed between Old GM and these speci c plainti s, who otherwise had no awareness of the ignition switch defect or putative claims against New GM. We cannot, consistent with bankruptcy law, read the Sale Order to cover their claims. See Chateaugay I, 944 F.2d at 1003 04 (calling such a reading absurd ). 42 New GM argues that modifying the Sale Order would knock the props out of the foundation on which the [Sale Order] was based or otherwise be unlawful. New GM Br. 77 (internal quotation marks omitted). But we do not modify the Sale Order. Instead, we merely interpret the Sale Order in accordance with bankruptcy law. Indeed, by ling a motion to enforce, New GM in e ect asked for the courts to interpret the Sale Order. See Petrie Retail, 304 F.3d at 229. In sum, the free and clear provision covers pre closing accident claims and economic loss claims based on the ignition switch and other defects. It does not cover independent claims or Used Car Purchasers claims. Accordingly, we a rm the bankruptcy court s decision not to enjoin independent claims, see MLC II, 529 B.R. at 568 70, and reverse its decision to enjoin the Used Car Purchasers claims, see id. at 570 72. III. Procedural Due Process The Sale Order covers the pre closing accident claims and economic loss claims based on the ignition switch and other defects. The Sale Order, if enforced, would thus bar those claims. Plainti s contend on appeal that enforcing the Sale Order would violate procedural due process. We address two issues: (1) what notice plainti s were entitled to as a matter of procedural due 43 process s, and (2) if f they were e provided d inadequa ate notice, whether the bankrup ptcy court t erred in d denying rel lief on the t most plainti s were e basis that not pre ejudiced. eview fact tual nding gs for clea ar error and d legal con nclusions, We re includin ng interpre etations of f the Const titution, de e novo. In r re Barnet, 7 737 F.3d 23 38, 246 (2d Cir. 2013). Our clea ar error sta andard is a a deferentia al one, and d if the bankrup ptcy court t s accoun nt of the ev vidence is p plausible i in light of t the record d viewed in its entir rety, the co ourt of app peals may not revers se it even t though ced that ha ad it been s sitting as th he trier of fact, it wo ould have w weighed th he convinc evidenc ce di erently. Ama adeo v. Zant t, 486 U.S. 214, 223 (1 1988) (quo oting Ander rson v. Bessem mer City, 4 470 U.S. 564 4, 573 74 (1985)). A. A Notic ce The b bankruptcy y court rs st conclud ded that pla ainti s we ere not provide ed notice a as required d by proced dural due process. S See MLC II I, 529 B.R. a at 555 60. The bank kruptcy cou urt held th hat because e Old GM knew or w with reasona able diligen nce should d have kno own of the ignition sw witch claim ms, plainti i s were en ntitled to actual or di irect mail n notice, but t received o only publi ication not tice. 44 See id. at 557 60. The parties dispute the extent of Old GM s knowledge of the ignition switch problem. 1. Applicable Law The Due Process Clause provides, No person shall . . . be deprived of life, liberty, or property, without due process of law. U.S. Const. amend. V. Certain procedural protections attach when deprivations trigger due process. Connecticut v. Doehr, 501 U.S. 1, 12 (1991). Generally, legal claims are su cient to constitute property such that a deprivation would trigger due process scrutiny. See N.Y. State Nat l Org. for Women v. Pataki, 261 F.3d 156, 169 70 (2d Cir. 2001). Once due process is triggered, the question becomes what process is due. Morrissey v. Brewer, 408 U.S. 471, 481 (1972). An elementary and fundamental requirement of due process in any proceeding which is to be accorded nality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and a ord them an opportunity to present their objections. Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950). Courts ask whether the state acted reasonably in selecting means likely to inform persons a ected, not whether each property owner actually received notice. Weigner v. City of New York, 852 F.2d 646, 649 (2d 45 Cir. 1988). Notice is adequate if [t]he means employed [are] such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. Mullane, 339 U.S. at 315. This requirement also applies to bankruptcy proceedings. See Martin v. Wilks, 490 U.S. 755, 762 n.2 (1989), superseded by statute on other grounds, Civil Rights Act of 1991, Pub.L. No. 102–166, 105 Stat. 1071. Indeed, a fundamental purpose of bankruptcy is to discharge, restructure, or impair claims against the debtor in an orderly fashion. See Lines v. Frederick, 400 U.S. 18, 19 (1970). The general rule that emerges . . . is that notice by publication is not enough with respect to a person whose name and address are known or very easily ascertainable and whose legally protected interests are directly a ected by the proceedings in question. Schroeder v. City of New York, 371 U.S. 208, 212 13 (1962); accord Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 800 (1983). In other words, adequacy of notice turns on what the debtor . . . knew about the claim or, with reasonable diligence, should have known. DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 747 F.3d 145, 150 (2d Cir. 2014) (citing Chemetron Corp. v. Jones, 72 F.3d 341, 345 46 (3d Cir. 1995)). If the debtor knew or reasonably should have known about the claims, then due process entitles potential claimants to 46 actual notice of the bankruptcy proceedings, but if the claims were unknown, publication notice su ces. Chemetron, 72 F.3d at 345 46. If a debtor reveals in bankruptcy the claims against it and provides potential claimants notice consistent with due process of law, then the Code a ords vast protections. Both § 1141(c) and § 363(f) permit free and clear provisions that act as liability shield. These provisions provide enormous incentives for a struggling company to be forthright. But if a debtor does not reveal claims that it is aware of, then bankruptcy law cannot protect it. Courts must limit[] the opportunity for a completely unencumbered new beginning to the honest but unfortunate debtor. Grogan v. Garner, 498 U.S. 279, 286 87 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). 2. Application The parties do not dispute that plainti s received only publication notice. The question is whether they were entitled to more. The bankruptcy court found that because Old GM knew or reasonably should have known about the ignition switch defect prior to bankruptcy, it should have provided direct mail notice to vehicle owners. We nd no clear error in this factual nding. 47 As background, federal law requires that automakers keep records of the rst owners of their vehicles. 49 U.S.C. § 30117(b)(1) ( A manufacturer of a motor vehicle . . . shall cause to be maintained a record of the name and address of the rst purchaser of each vehicle . . . . ). This provision facilitates recalls and other consequences of the consumer automaker relationship. Thus, to the extent that Old GM knew of defects in its cars, it would also necessarily know the identity of a signi cant number of a ected owners. The facts paint a picture that Old GM did nothing, even as it knew that the ignition switch defect impacted consumers. From its development in 1997, the ignition switch never passed Old GM s own technical speci cations. Old GM knew that the switch was defective, but it approved the switch for millions of cars anyway. Once the ignition switch was installed, Old GM almost immediately received various complaints. News outlets reported about the faulty ignition switch. NHTSA approached Old GM about moving stalls and airbag non deployments. A police report, which Old GM s legal team possessed, linked these breakdowns to a faulty ignition switch. Old GM even considered warning dealers (but not consumers) about moving stalls. By May 2009, at the latest, Old 48 GM personnel had essentially concluded that the ignition switch, moving stalls, and airbag non deployments were related. Considering the airbag issues, they believed that one of the two most likely explanation[s] for the power mode signal change was . . . a problem with the Ignition Switch. J. App. 9783. A bankruptcy court could reasonably read from this record that Old GM knew about the ignition switch defect. Old GM knew that the defect caused stalls and had linked the airbag non deployments to the defect by May 2009. Even assuming the bankruptcy court erred in concluding that Old GM knew, Old GM if reasonably diligent surely should have known about the defect. Old GM engineers should have followed up when they learned their ignition switch did not initially pass certain technical speci cations. Old GM lawyers should have followed up when they heard disturbing reports about airbag non deployments or moving stalls. Old GM product safety teams should have followed up when they were able to recreate the ignition switch defect with ease after being approached by NHTSA. If any of these leads had been diligently pursued in the seven years between 2002 and 2009, Old GM likely would have learned that the ignition switch defect posed a hazard for vehicle owners. 49 Such reckless disregard of the facts [is] su cient to satisfy the requirement of knowledge. McGinty v. State, 193 F.3d 64, 70 (2d Cir. 1999). In the face of all the reports and complaints of faulty ignition switches, moving stalls, airbag non deployments, and, indeed, serious accidents, and in light of the conclusions of its own personnel, Old GM had an obligation to take steps to acquire full or exact knowledge of the nature and extent of the defect. United States v. Macias, 786 F.3d 1060, 1062 (7th Cir. 2015). Under these circumstances, Old GM had a duty to identify the cause of the problem and x it. Instead, the Valukas Report recounts a corporate culture that sought to pin responsibility on others and a Sisyphean search for the root cause. Further, even if the precise linkage between the ignition switch defect and moving stalls and airbag non deployments was unclear, Old GM had enough knowledge. At minimum, Old GM knew about moving stalls and airbag non deployments in certain models, and should have revealed those facts in bankruptcy. Those defects would still be the basis of claims, even if the root cause (the ignition switch) was not clear. New GM argues in response that because plainti s claims were contingent, those individuals were unknown creditors as a matter of law. But 50 contingent claims are still claims, 11 U.S.C. § 101(5), and claimants are entitled to adequate notice if the debtor knows of the claims. Moreover, as discussed above, the only contingency was Old GM telling owners about the ignition switch defect a contingency wholly in Old GM s control and without bearing as to Old GM s own knowledge. New GM essentially asks that we reward debtors who conceal claims against potential creditors. We decline to do so. See Grogan, 498 U.S. at 286 87. Finally, we address a theme in this case that the GM bankruptcy was extraordinary because a quick § 363 sale was required to preserve the value of the company and to save it from liquidation. See New GM Br. 34 ( Time was of the essence, and costs were a signi cant factor. ). Forty days was indeed quick for bankruptcy and previously unthinkable for one of this scale. While the desire to move through bankruptcy as expeditiously as possible was laudable, Old GM s precarious situation and the need for speed did not obviate basic constitutional principles. Due process applies even in a company s moment of crisis. Cf. Home Building & Loan Ass n v. Blaisdell, 290 U.S. 398, 425 (1934) ( The Constitution was adopted in a period of grave emergency. ). 51 We nd no clea ar error in the bankru uptcy cour rt s nding g that Old GM knew or should h have known with rea asonable di iligence ab bout the de efect. See MLC II, , 529 B.R. a at 556 60. I Individual ls with cla aims arising out of th he ignition switch d defect wer re entitled to notice b by direct m mail or som me equivale ent, as required d by proce edural due e process. B. B Prej judice After r concludin ng that Old d GM did not provid de adequate notice, t the bankrup ptcy court t nonethele ess enforce ed the Sale e Order. Se ee id. at 565 5 73. The bankrup ptcy court t held that prejudice e is an ess sential elem ment of p procedural l due pro ocess and t that plainti i s were n not prejudi iced exce ept as to in ndependen nt claims because the bankru uptcy cour rt would h have appro oved the Sa ale Order even if p plainti s w were provi ided adequ uate notice e. Id. at 56 65. The parties dispu ute whether prejudic ce is required and, i if it is, whe ether there e is prejudi ice here. 1. Applicab ble Law bankruptcy y court held that pr rejudice is s a requirement of th he The b Due Pro ocess Clau use and tha at even if in nadequate e notice de eprived an individua al of propert ty without a meaning gful oppor rtunity to b be heard, t there is no o prejudice e if in hinds sight the o outcome w would have e been the s same with h adequate e notice. Id d. 52 Some courts have indeed held that a party who claims to be aggrieved by a violation of procedural due process must show prejudice. Perry v. Blum, 629 F.3d 1, 17 (1st Cir. 2010). Other courts have held otherwise that a due process violation cannot constitute harmless error. In re New Concept Hous., Inc., 951 F.2d 932, 937 n.7 (8th Cir. 1991); see Fuentes v. Shevin, 407 U.S. 67, 87 (1972) ( The right to be heard does not depend upon an advance showing that one will surely prevail at the hearing. ).25 Courts have concluded that a free and clear clause was unenforceable because of lack of notice and a hearing in accordance with See, e.g., McNabb v. Comm r Ala. Dep t of Corr., 727 F.3d 1334, 1347 (11th Cir. 2013) ( Our cases have long held that certain procedural due process violations, such as the flat out denial of the right to be heard on a material issue, can never be harmless. ); Kim v. Hurston, 182 F.3d 113, 119 (2d Cir. 1999) (commenting that even though the minimal hearing that procedural due process requires would have done [the plaintiff] little good since she could not have realistically contested the changed reason, that [n]evertheless, the procedural due process requirement[s] . . . must be observed ); Lane Hollow Coal Co. v. Dir., Office of Workers Compensation Programs, 137 F.3d 799, 806 (4th Cir. 1998) ( [A] just result is not enough. ); In re Boomgarden, 780 F.2d 657, 661 (7th Cir. 1985) ( In bankruptcy proceedings, both debtors and creditors have a constitutional right to be heard on their claims, and the denial of that right to them is the denial of due process which is never harmless error. (internal quotation marks omitted)); In re George W. Myers Co., 412 F.2d 785, 786 (3d Cir. 1969) (holding that alleged bankrupt was denied procedural due process by the . . . refusal of its offer to present evidence at the close of the evidence and that such denial could not be harmless error ); Republic Nat l Bank of Dallas v. Crippen, 224 F.2d 565, 566 (5th Cir. 1955) ( The right to be heard on their claims was a constitutional right and the denial of that right to them was the denial of due process which is never harmless error. ); Phila. Co. v. SEC, 175 F.2d 808, 820 (D.C. Cir. 1948) ( Denial of a procedural right guaranteed by the Constitution in this instance denial of the type of hearing guaranteed . . . by the due process clause is never harmless error. ), vacated as moot, 337 U.S. 901 (1949). 25 53 procedural due process, without exploring prejudice. See In re Savage Indus., 43 F.3d 714, 721 22 (1st Cir. 1994); cf. Nolasco v. Holder, 637 F.3d 159, 164 (2d Cir. 2011) ( There may well be instances in which . . . failure to comply with [a procedural rule] results in a lack of notice or the denial of a meaningful opportunity to be heard such that . . . due process rights are violated. ). The § 363 sale context presents unique challenges for due process analysis. As seen here with over 850 objections led objections may often be duplicative. See GM, 407 B.R. at 500 ( nding successor liability most debatable of issues); cf. Mullane, 339 U.S. at 319 ( [N]otice reasonably certain to reach most of those interested in objecting is likely to safeguard the interests of all, since any objections sustained would inure to the bene t of all. ). Many of the objections, especially those made against a free and clear provision, are not likely to be grounded in any legal right to change the terms of the sale, but rather will be grounded in a particular factual context. Section 363 sales are, in essence, private transactions. On one side, the debtor in possession has ample administrative exibility in the conduct of sales, 3 Collier on Bankruptcy ¶ 363.02[2], and on the other side, the purchaser need not take on liabilities unless it wishes to do so, see id. ¶ 363.06[7]. A bankruptcy court reviews a proposed § 363 sale s terms only for 54 some minimal good business reason. Lionel, 722 F.2d at 1071; see also 3 Collier on Bankruptcy ¶ 363.02[1][e] ( One of the major policy decisions in drafting the Code was to separate the court from the day to day administrative activities in bankruptcy cases . . . . ). Many sale objections will thus sound in business reasons to change the proposed sale order, and not by reference to some legal requirement that the order must be changed.26 Assuming plainti s must demonstrate prejudice, the relevant inquiry is whether courts can be con dent in the reliability of prior proceedings when there has been a procedural defect. See Lane Hollow Coal Co. v. Dir., O ce of Workers Compensation Programs, 137 F.3d 799, 808 (4th Cir. 1998) (considering fairness of the trial and its reliability as an accurate indicator of guilt ); see also Rose v. Clark, 478 U.S. 570, 577 78 (1986) (asking whether adjudication in the criminal context without procedural protections can reliably serve its function as See A. Joseph Warburton, Understanding the Bankruptcies of Chrysler and General Motors: A Primer, 60 Syracuse L. Rev. 531, 531 (2010) ( Certain creditors, who saw their investments in the companies sharply reduced, vigorously objected to the role of the government in the bankruptcy process. Some charged that in protecting the interests of taxpayers, the Treasury Department negotiated aggressively with creditors but, in protecting the interests of organized labor, it offered the United Autoworkers union special treatment. ); see also GM, 407 B.R. at 496 ( The objectors real problem is with the decisions of the Purchaser, not with the Debtor, nor with any violation of the Code or caselaw. ). 26 55 a vehicle for determination of a case). In considering reliability, [t]he entire record must be considered and the probable e ect of the error determined in the light of all the evidence. 11 Charles Alan Wright, Arthur R. Miller, et al., Federal Practice & Procedure § 2883 (3d ed. 2016) [hereinafter Wright & Miller ]; see Matusick v. Erie Cty. Water Auth., 757 F.3d 31, 50 51 (2d Cir. 2014). [I]f [the court] cannot say, with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error, then it must nd a procedural due process violation. Kotteakos v. United States, 328 U.S. 750, 765 (1946). 2. Application We need not decide whether prejudice is an element when there is inadequate notice of a proposed § 363 sale, for even assuming plainti s must demonstrate prejudice, they have done so here. After examining the record as a whole, we cannot say with fair assurance that the outcome of the § 363 sale proceedings would have been the same had Old GM disclosed the ignition switch defect and these plainti s voiced their objections to the free and clear provision. Because we cannot say with any con dence that no accommodation would have been made for them in the Sale Order, we reverse. 56 At the outset, it is di cult to evaluate in hindsight what the objections would have been had plainti s participated in the § 363 sale. Perhaps they would have tried to identify some legal defect in the Sale Order, asked that economic losses or pre closing accidents arising from the ignition switch defect be exempted from the free and clear provision, or requested greater priority in any GUC Trust distribution. But this uncertainty about the content of plainti s objections is the natural result of the lack of any meaningful opportunity to be heard in the § 363 sale proceedings. Cf. Lane Hollow, 137 F.3d at 808 ( If there has been no fair day in court, the reliability of the result is irrelevant, because a fair day in court is how we assure the reliability of results. ). This lack of certainty in turn in uences our degree of con dence in the outcome. The bankruptcy court instead concluded that it would have reached the same decision that it would have entered the Sale Order on the same terms even if plainti s had been given an opportunity to be heard. The bankruptcy court concluded that these plainti s o er no legally based arguments as to why they would have, or even could have, succeeded on the successor liability legal argument when all of the other objectors failed. MLC II, 529 B.R. at 567; see GM, 57 407 B.R. at 499 506 (considering objections). The bankruptcy court found that other arguments were too speculative. MLC II, 529 B.R. at 567 68, 573. We disagree. The bankruptcy court failed to recognize that the terms of this § 363 sale were not within its exclusive control. Instead, the GM sale was a negotiated deal with input from multiple parties Old GM, New GM, Treasury, and other stakeholders. The Sale Order and Sale Agreement re ect this polycentric approach: it includes some fteen sets of liabilities that New GM voluntarily, and without legal compulsion, took on as its own. The process of how New GM voluntarily assumed liabilities is most apparent with its assumption of Lemon Law claims.27 Following the proposed sale order, numerous state attorneys general objected that the proposed sale would bar claims based on state Lemon Laws. But their objections were not particularly legal in character that is, no state attorney general focused on how a liability shield that barred Lemon Law claims would be illegal. Citing no law, the objection was that New GM should assume these liabilities [i]n light of the relationship between [Old GM] and [New GM] . . . , as well as the statements by the United States government promising that all warranty obligations would be New GM informs the Court that a similar process occurred with respect to New GM accepting responsibility for post closing accidents. 27 58 honored. Bankr. ECF No. 2043, at 39; accord Bankr. ECF No. 2076, at 10. In other words, because President Obama had promised to back warranties, the state attorneys general argued that that Lemon Laws should be honored as well. Following these objections, Lemon Law claims were added as an assumed liability during the course of the 363 Sale hearing after negotiation with the [state attorneys general]. MLC II, 529 B.R. at 534 n.36. The state attorneys general had made a practical, business minded argument, which brought Old GM, New GM, and Treasury to the negotiating table. At the sale hearing, counsel to the National Association of Attorneys General commented that the state attorneys general have worked very hard since the beginning of the case with debtors counsel initially, with Treasury counsel, almost everybody in this room at some point or another. J. App. 2084. The result of these negotiations was an understanding that lemon laws were covered under the notion of warranty claims and inclusion in the Sale Agreement of language re ecting this agreement. Id. at 2086. Opportunities to negotiate are di cult if not impossible to recreate. We do not know what would have happened in 2009 if counsel representing plainti s with billions of dollars in claims had sat across the table from Old GM, 59 New GM, and Treasury. Our lack of con dence, however, is not imputed on plainti s denied notice but instead bolsters a conclusion that enforcing the Sale Order would violate procedural due process. Indeed, for the following reasons, while we cannot say with any certainty that the outcome would have been di erent, we can say that the business circumstances at the time were such that plainti s could have had some negotiating leverage, and the opportunity to participate in the proceedings would have been meaningful. First, it is well documented that one of the primary impetuses behind a quick § 363 sale was to restore consumer con dence. GM, 407 B.R. at 480. The problem is that if the 363 Transaction got o track . . . , the U.S. Government would see that there was no means of early exit for GM; . . . customer con dence would plummet; and . . . the U.S. Treasury would have to keep funding GM. Id. at 492. If consumer con dence dissipated, neither Treasury loans nor a § 363 sale could save GM: nobody would buy a GM car. These concerns were re ected in President Obama s $600 million guarantee of GM and Chrysler warranties. The business of cars is unique, dependent largely on the goodwill of consumers. Cars are owned for years and form the cornerstones of quintessentially American activities: dropping o and 60 picking up children from school, drive ins and drive thrus, family vacations and road trips. [T]he road and the automobile are, in American history, sanctuaries, hidden from the intrusive gaze of the state, [where] individuals live freely. Sarah Seo, The New Public, 125 Yale L.J. 1616, 1620 (2016). The safety and reliability of a car are central to these activities. As the head of President Obama s auto task force put it, in relation to Chrysler s bankruptcy: what consumer would buy another Chrysler if the company didn t honor its warranties? Rattner, supra note 8, at 181. In other words, plainti s could have tried to convince the bankruptcy parties that it made good business sense to spend substantial sums to preserve customer goodwill in the GM brand and, in turn, GM s business value. Second, New GM was not a truly private corporation. Instead, the President and Treasury oversaw its a airs during the bailout and Treasury owned a majority stake following the bankruptcy. While private shareholders expect their investments to be pro table, the government does not necessarily share the same pro t motive. Treasury injected hundreds of billions of dollars into the economy during the nancial crisis, not on the expectation that it would make a reasonable rate of return but on the understanding that millions of 61 Americans would be a ected if the economy were to collapse. If the ignition switch defect were revealed in the course of bankruptcy, plainti s could have petitioned the government, as the majority owner of New GM, to consider how millions of faultless individuals with defective Old GM cars could be a ected. Indeed, during the later congressional hearings, Representatives and Senators questioned New GM s CEO on her invocation of the liability shield when the government guided the process. See supra note 13. Senator Richard Blumenthal, for instance, indicated that he would have objected in bankruptcy had he known, because he opposed it at the time, as Attorney General for the state of Connecticut, not [foreseeing] that the material adverse fact being concealed was as gigantic as this one. April 2, 2014 Senate Hearing, supra note 13, at 22 23 (statement of Sen. Richard Blumenthal, Member, S. Subcomm. on Consumer Prot., Prod. Safety & Ins.). Third, we must price in the real cost of disrupting the bankruptcy process. From the middle of 2007 through the rst quarter of 2009, Old GM s average net loss exceeded $10 billion per quarter; a day s worth of delay would cost over $125 million, a week almost a billion dollars. We do not know whether the proceedings would have been delayed, but some delay was certainly 62 possible. For instance, Congress called the GM CEO to testify over the course of four days.28 Old GM likewise conducted a thorough internal investigation on the ignition switch defect, and the Valukas Report took more than two and a half months to prepare. It seems unlikely that a bankruptcy court would have casually approved a free and clear provision while these investigations into the ignition switch defect s precise nature were still ongoing. Finally, there is the detriment of added litigation had the class actions been led in the midst of bankruptcy, the mere administration of those cases could have taken considerable resources. Had the government also brought criminal charges such as the charges now suspended by a deferred prosecution agreement with the U.S. Attorney s O ce for the Southern District of New York in which New GM forfeited $900 million managing how to juggle bankruptcy with a criminal prosecution could have taken even longer. United States v. $900,000,000 in U.S. Currency, No. 15 Civ. 7342 (S.D.N.Y.), ECF No. 1; see 11 U.S.C. § 362(b)(1) (exempting from usual automatic stay criminal actions against debtor). The reasonable conclusion is that, with the likelihood and price of disruption to the bankruptcy proceedings being so high, plainti s at least had See Rattner, supra note 8, at 304 ( The auto rescue succeeded in no small part because we did not have to deal with Congress. ). 28 63 a basis for making business minded arguments for why they should receive some accommodation in or carve out from the Sale Order. Under these circumstances, we cannot be con dent that the Sale Order would have been negotiated and approved exactly as it was if Old GM had revealed the ignition switch defect in bankruptcy. The facts here were peculiar and are no doubt colored by the inadequate notice and plainti s lack of any meaningful opportunity to be heard. See Kotteakos, 328 U.S. at 765 (directing courts to consider all that happened without stripping the erroneous action from the whole ). Given the bankruptcy court s focus on consumer con dence, the involvement of Treasury, the nancial stakes at the time, and all the business circumstances, there was a reasonable possibility that plainti s could have negotiated some relief from the Sale Order. We address two further concerns. First, the bankruptcy court stated that it would not have let GM go into the liquidation that would have resulted if [it] denied approval of the 363 Sale. MLC II, 529 B.R at 567; see J. App. 1623. In other words, the bankruptcy court suggested that it would have approved the § 363 sale anyway, because the alternative was liquidation and liquidation would have been catastrophic. While we agree that liquidation would have been 64 catastrophic, we are con dent that Old GM, New GM, Treasury, and the bankruptcy court itself would have endeavored to address the ignition switch claims in the Sale Order if doing so was good for the GM business. The choice was not just between the Sale Order as issued and liquidation; accommodations could have been made. Second, many of the peculiar facts discussed apply with less force to the Non Ignition Switch Plainti s, who assert claims arising from other defects. The bankruptcy court entered judgment against the Non Ignition Switch Plainti s based on its opinion determining the rights of the other plainti s, but left as an open question whether Old GM knew of the Non Ignition Switch Plainti s claims based in other defects. See MLC III, 531 B.R. at 360. Without factual ndings relevant to determining knowledge, we have no basis for deciding whether notice was adequate let alone whether enforcement of the Sale Order would violate procedural due process as to these claims. To conclude, we reverse the bankruptcy court s decision insofar as it enforced the Sale Order to enjoin claims relating to the ignition switch defect.29 See MLC II, 529 B.R. at 566 73. Because enforcing the Sale Order would violate In reversing, we express no views on the Groman Plaintiffs request for discovery to prove a procedural due process violation or fraud on the court. 29 65 procedural due process in these circumstances, the bankruptcy court erred in granting New GM s motion to enforce and these plainti s thus cannot be bound by the terms of the [Sale] Order[]. In re Johns Manville Corp., 600 F.3d 135, 158 (2d Cir. 2010). As to claims based in non ignition switch defects, we vacate the bankruptcy court s decision to enjoin those claims, see MLC III, 531 B.R. at 360, and remand for further proceedings consistent with this opinion. IV. Equitable Mootness Finally, we address the bankruptcy court s decision that relief for any would be claims against GUC Trust was equitably moot. MLC II, 529 B.R. at 583 92. We ordinarily review dismissal on grounds of equitable mootness for abuse of discretion, under which we examine conclusions of law de novo and ndings of fact for clear error. In re BGI, Inc., 772 F.3d 102, 107 (2d Cir. 2014) (citation omitted). There were, however, no claims asserted against Old GM or GUC Trust in bankruptcy court or in the multi district litigation. Under these circumstances, we exercise our independent obligation to ensure that the case satis es the case or controversy requirement of Article III, Section 2 of the Constitution. United States v. Williams, 475 F.3d 468, 478 9 (2d Cir. 2007). 66 A. A Appl licable Law w The d doctrine of f equitable e mootness s allows ap ppellate co ourts to dismiss s bankrupt tcy appeals s when, d during the pendency of an appeal, events s occur s such that even thou ugh e ectiv ve relief co ould concei ivably be f fashioned, implem mentation o of that relie ef would b be inequita able. In re e Chateauga ay Corp. ( Chatea augay II ), 9 988 F.2d 32 22, 325 (2d d Cir. 1993 ). [A] ban nkruptcy a appeal is presum med equitab bly moot w when the d debtor s reo organizatio on plan ha as been substan ntially cons summated d. In re BG GI, 772 F.3d d at 108. T To obtain r relief in the ese circums stances, a c claimant m must satisfy y the so ca alled Chat teaugay factors. See Chateau ugay III, 10 F.3d at 952 2 53. The e equitable m mootness d doctrine ha as enigmatic origins, , and the range o of proceedi ings in wh hich it appl lies is not w well settled d. See In re e Continent tal Airlines, 91 F.3d 553, 567 (3d d Cir. 1996 6) (en banc) (Alito, J., dissenting g) (labeling g it a ). Our Circuit has a acknowled dged that th he doctrin ne draws on n curious doctrine ble conside erations as s well as th he constitu utional req quirement t that there be a equitab case or controvers sy. Chatea augay III, 1 10 F.3d at 9 952. Other r courts ha ave focused d atutory underpinnin ngs and rol le in ll[in ng] the instead on the doctrine s sta ces of the C Code. In re UNR Indus., Inc., 2 20 F.3d 766 6, 769 (7th h Cir. 1994) ) interstic 67 (explaining also di erence between inability to alter the outcome (real mootness) and unwillingness to alter the outcome ( equitable mootness ) ). Indeed, several provisions of the Code prohibit modi cation of bankruptcy orders unless those orders are stayed pending appeal. See, e.g., 11 U.S.C. §§ 363(m), 364(e). However broad the doctrine of equitable mootness, Article III requires a case or controversy before relief may be equitably mooted.30 [E]quitable mootness bears only upon the proper remedy, and does not raise a threshold question of our power to rule. In re Metromedia Fiber Network, Inc., 416 F.3d 136, 144 (2d Cir. 2005) (emphasis added). We do not resolve whether it is appropriate for a bankruptcy court as opposed to an appellate court to apply equitable mootness, which appears to be a recent phenomenon. E.g., In re Innovative Clinical Sols., Ltd., 302 B.R. 136, 141 (Bankr. D. Del. 2003) (citing In re Circle K Corp., 171 B.R. 666, 669 (Bankr. D. Ariz. 1994), which nominally applied constitutional mootness); see also Alan M. Ahart, The Limited Scope of Implied Powers of a Bankruptcy Judge: A Statutory Court of Bankruptcy, Not A Court of Equity, 79 Am. Bankr. L.J. 1, 32 33 (2005) ( Since a bankruptcy court is not a court of equity, a bankruptcy judge ought not resort to non statutory equitable principles, defenses, doctrines or remedies to excuse compliance with or to override provision(s) of the Bankruptcy Code or rules, or nonbankruptcy federal law. (footnotes omitted)). Indeed, this Circuit s equitable mootness cases have all involved an appellate body applying the doctrine in the first instance. See, e.g., BGI, 772 F.3d 102; In re Charter Commc ns, Inc., 691 F.3d 476 (2d Cir. 2012); In re Metromedia Fiber Network, Inc., 416 F.3d 136 (2d Cir. 2005); In re Burger Boys, Inc., 94 F.3d 755 (2d Cir. 1996); In re Chateaugay Corp., 94 F.3d 772 (2d Cir. 1996); In re Best Prods. Co., 68 F.3d 26 (2d Cir. 1995); Chateaugay III, 10 F.3d 944; Chateaugay II, 988 F.2d 322. 30 68 The oldest and most consistent thread in the federal law of justiciability is that federal courts will not give advisory opinions. 13 Wright & Miller § 3529.1. A controversy that is appropriate for judicial determination . . . must be de nite and concrete, touching the legal relations of parties having adverse legal interests. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 41 (1937); see Flast v. Cohen, 392 U.S. 83, 95 (1968) ( limit[ing] the business of federal courts to questions presented in an adversary context and in a form historically viewed as capable of resolution through the judicial process ). [F]ederal courts are without power to decide questions that cannot a ect the rights of litigants in the case before them. North Carolina v. Rice, 404 U.S. 244, 246 (1971) (emphasis added). That is, courts may not give an opinion advising what the law would be upon a hypothetical state of facts, Aetna Life Ins., 300 U.S. at 241, for instance, where a party did not seek the adjudication of any adverse legal interests, S. Jackson & Son, Inc. v. Co ee, Sugar & Cocoa Exch. Inc., 24 F.3d 427, 432 (2d Cir. 1994). These limitations apply to bankruptcy courts. See Wellness Int l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1945 (2015) ( Bankruptcy courts hear matters solely on a district court s reference [and]possess no free oating authority to decide claims traditionally heard by Article III courts. ). In 69 bankrup ptcy, more eover, the adjudication of claim ms may be subject to o other prepara atory steps s. Bankrup ptcy courts s will gene erally set a a bar date that xes s the time to le a proo of of claim against th he bankrup ptcy estate. . See Fed. R. Bankr. P P. (3). If the b bar date has passed, then the i initial step for an ind dividual 3002(c)( seeking g relief aga ainst the es state would d be to see ek permissi ion to le a late proo of of claim: o only after permission n is grante ed can that t individua al claim th hat she is entitled d to relief. See Fed. R R. Bankr. P. 9006(b)(1 1); see also P Pioneer Inv v. Servs. Co o. v. Brunswick Assocs. Ltd., 507 U U.S. 380, 39 94 95 (1993 3) (setting forth stand dard for able neglec ct for late claims und der Rule 9006(b)(1)). . excusa B. B Appl lication Here e, the bankruptcy cou urt held th hat any reli ief from GU UC Trust would b be equitab bly moot. B But plainti i s never s sought reli ief from GU UC Trust. advisory. The ban nkruptcy c court s ruling on equitable moo otness was s therefore Neith her GUC T Trust nor O Old GM are parties to o the mult ti district litigatio on now ong going in d district court. Only o one defend dant is nam med: New GM. Li ikewise, as s GUC Tru ust con rm med at oral argument t, plainti s s have not led an ny proofs o of claim wi ith GUC Tr rust, nor h have they e even asked d the 70 bankruptcy court for permission to le late proofs of claim or to lift the bar date, as would be required before relief could be granted.31 Instead, it appears from the record that GUC Trust became involved at New GM s behest. New GM noted well there is a GUC Trust and suggested that because of the Sale Order s bar on successor liability, any claims remained with Old GM and thus GUC Trust. J. App. 11038. But New GM has not sought to implead and bring cross claims against GUC Trust in the multi district litigation under Federal Rule of Civil Procedure 14 or to do the same in the Groman Plainti s adversary proceeding in bankruptcy under Federal Rule of Bankruptcy Procedure 7014. Moreover, GUC Trust has protested its involvement in the case. At a May 2, 2014 hearing, GUC Trust noti ed the bankruptcy court that it was frankly [a] stranger[] to these proceedings. Id. at 11093. This was, according to GUC Trust s uncontested representation, because: The bankruptcy court lifted the bar date for independent claims as a remedy. See MLC II, 529 B.R. at 583. We note, however, that neither the Groman Plaintiffs nor Ignition Switch Plaintiffs requested this as relief. The Ignition Switch Plaintiffs only mentioned in a footnote in their opposition to the motion to enforce that Old GM failed to provide notice of the bar date. The Pre Closing Accident Plaintiffs stated on behalf of all plaintiffs that Plaintiffs are not asserting a due process challenge to a bar date order or a discharge injunction issued in favor of a debtor. Bankr. ECF No. 13021, at 48 n.26. 31 71 No claimants, none of the plainti s, no claimants or potential claimants had raised this as a possibility. No one has led a motion to lift the bar date. The only person that has raised it has been New GM, based upon, you know, some statements of fact in some pleadings. But the only person that has actually moved forward with it is New GM, and frankly, you know, it s our view that this is essentially a way to de ect liability away, and you know, the attention away from New GM and put it on a third party. Id. at 11090. At a July 2, 2014 hearing, GUC Trust continued to push that litigation of the equitable mootness issue was premature, and dependent on whether the Sale Order could be enforced. Id. at 8485.32 Nonetheless, the bankruptcy court asked the parties (including GUC Trust) to brief initially whether claims against New GM were really claims against Old GM s bankruptcy estate or GUC Trust. As the bankruptcy court stated: we re going to consider as [a] threshold issue[] . . . the possibility that the claims now being asserted may be claims against Old GM or the GUC Trust. J. App. 11103 (emphases added). Following a later hearing, the bankruptcy court The bankruptcy court seemingly agreed momentarily, commenting at the hearing that they could proceed without now addressing and while maintaining reservations of rights with respect to issues such as . . . equitable [moot]ness. Id. at 8491. 32 72 added an issue of whether claims, if any, against GUC Trust should be disallowed/dismissed on grounds of equitable mootness. Id. at 5780. GUC Trust was thus not a litigant[] in the case before [the bankruptcy court], Rice, 404 U.S. at 246, who s[ought] the adjudication of any adverse legal interests, S. Jackson & Son, Inc., 24 F.3d at 432. GUC Trust sought not to be involved, but the bankruptcy court ordered otherwise. In doing so, the bankruptcy court was concerned with a hypothetical scenario, see Aetna Life Ins., 300 U.S. at 241 the possibility that there may be late led claims against GUC Trust, J. App. 11103. The bankruptcy court s decision on equitable mootness that followed essentially advised on this hypothetical controversy. We acknowledge that the parties have expended considerable time arguing about equitable mootness. We are likewise cognizant that plainti s at one point sent a letter to GUC Trust suggesting that it should freeze its distributions pending the bankruptcy proceedings. See MLC II, 529 B.R. at 537 38. But plainti s did not pursue any claims. Ultimately, it is the parties, and not the court, that must create the controversy. See Dep t of Envtl. Prot. & Energy v. Heldor Indus., Inc., 989 F.2d 702, 707 (3d Cir. 1993) (rendering advisory an answer to a question not asked by the parties). 73 We thus conclude that the bankruptcy court s decision on equitable mootness was advisory and vacate that decision. See MLC II, 529 B.R. at 583 92. CONCLUSION For the reasons set forth above, with respect to the bankruptcy court s decisions below, we: (1) AFFIRM the decision not to enforce the Sale Order as to the independent claims; (2) REVERSE the decision to enforce the Sale Order as to the Used Car Purchasers claims and claims relating to the ignition switch defect, including pre closing accident claims and economic loss claims; (3) VACATE the decision to enforce the Sale Order as to claims relating to other defects; and (4) VACATE the decision on equitable mootness as advisory. We REMAND the case for further proceedings consistent with this opinion. 74

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