Adeli v. Barclay, No. 14-55854 (9th Cir. 2016)
Annotate this CasePlaintiff appealed the bankruptcy court's approval of a settlement agreement regarding a parcel of land in Berkeley, California, but failed to seek a stay of the sale order. The district court dismissed the appeal as moot. The court concluded that the bankruptcy court had the discretion to apply 11 U.S.C. 363 to the settlement involving a sale of the estate’s potential claims, and did not clearly err in determining that First-Citizens was a good faith purchaser of those claims. Therefore, under section 363(m), the court concluded that the sale may not be modified or set aside on appeal unless it was stayed pending appeal. Because plaintiff failed to seek a stay, the appeal is moot. The court did not reach plaintiff's challenges to the propriety of the sale of claims under section 363, as such an analysis would require the court to impermissibly reach the underlying merits of the settlement.
Court Description: Bankruptcy The panel affirmed the district court’s order dismissing a bankruptcy appeal as moot under 11 U.S.C. § 363(m). The debtor’s owner appealed the bankruptcy court’s approval of a settlement agreement between the Chapter 7 trustee and a creditor that had sought to foreclose on the debtor’s construction project. The panel held that the appeal was moot because the owner did not seek a stay of the bankruptcy court’s order allowing the sale to the creditor of the bankruptcy estate’s legal claims arising out of a state court case filed by the debtor against the creditor. Agreeing with other circuits and with the Ninth Circuit Bankruptcy Appellate Panel, the panel held that a bankruptcy court has discretion to apply the procedures of § 363(m) to a sale of claims pursuant to a settlement approved under Bankruptcy Rule 9019. In addition, the bankruptcy court did not clearly err in determining that the creditor was a good faith purchaser of the debtor’s claims. Under § 363(m), therefore, the sale could not be modified or set aside on appeal unless it was stayed pending appeal.
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