Opportunity Finance, LLC v. Kelley, No. 15-2060 (8th Cir. 2016)
Annotate this CaseThe trustee for PCI and eight associated special-purpose entities (SPEs) filed Chapter 11 bankruptcy petitions in the aftermath of Thomas Petters' Ponzi scheme. The bankruptcy court consolidated the bankruptcy estates of PCI and the SPEs “for all purposes substantive and administrative.” Lenders to PCI and the SPEs appealed. The district court dismissed, holding the Lenders did not have standing to appeal the consolidation order because they were not “persons aggrieved.” The court concluded that the district court did not abuse its discretion in declining to estop the trustee from asserting that the Lenders are not persons aggrieved; having held that the persons aggrieved doctrine survives the 1978 amendments to the Bankruptcy Code, the court declined to reconsider the doctrine; and the district court did not err in dismissing the Lenders under the persons aggrieved doctrine. In this case, the Lenders’ interests here are not central to the bankruptcy process, and allowing them to appeal the bankruptcy court’s order would completely undermine the rationale behind the standard and bring bankruptcy proceedings to a grinding halt. Accordingly, the court affirmed the judgment.
Court Description: Benton, Author, with Smith and Bye, Circuit Judges] Civil case - Bankruptcy. The district court did not err in affirming the bankruptcy court's orders consolidating the bankruptcies of the Petters Company and eight of its associated special-purpose entities on the ground the appealing parties - the lenders to the debtors - did not have standing to appeal because they were not persons aggrieved by the consolidation order; claim that the trustee was estopped from asserting this defense rejected. Judge Bye, dissenting.
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