IN RE: BGI, INC. f/k/a BORDERS GROUP, INC., Debtor.
BGI CREDITORS' LIQUIDATING TRUST, CURTIS R. SMITH, in his capacity as the Liquidating Trustee, Appellees ERIC BEEMAN, JANE FREIJ, and ROBERT TRAKTMAN, Appellants,
Argued May 14, 2014
Appeal from a May 28, 2013 1 judgment of the United States District Court for the Southern District of New York (Andrew L. Carter, Jr., Judge) dismissing as equitably moot appeals filed by Appellants Eric Beeman, Jane Freij, and Robert Traktman from three orders issued by the Bankruptcy Court (Martin Glenn, Bankruptcy Judge) in the Chapter 11 liquidation proceedings of debtor BGI, Inc., f/k/a Borders Group, Inc. The Bankruptcy Court orders: (1) denied Beeman and Freij's motion for leave to file late proofs of claim; (2) rejected and discharged Traktman's untimely proof of claim; and (3) denied as moot Beeman, Freij, and Traktman's motion for class certification. We conclude that the doctrine of equitable mootness applies in Chapter 11 liquidations, and that Appellants have not overcome the presumption that their appeals, which relate to a substantially consummated liquidation plan, are equitably moot. Accordingly, we AFFIRM the judgment of the District Court dismissing the appeals.
CLINTON A. KRISLOV (Kenneth T. Goldstein, on the brief), Krislov & Associates, Ltd., Chicago, Illinois, and Jay Teitelbaum, Teitelbaum & Baskin, LLP, White Plains, New York, for Appellants.
BRUCE D. BUECHLER (Andrew D. Behlmann, on the brief), Lowenstein Sandler LLP, Roseland, New Jersey, for Appellees.
Before: KEARSE, STRAUB, and CARNEY, Circuit Judges.
Susan L. Carney, Circuit Judge:
In these appeals that were consolidated for argument, holders of unredeemed consumer gift cards issued by the former book retailer BGI Inc., f/k/a Borders Group, Inc. and its affiliates (" Borders" or " Debtors" ) seek to vacate a May 28, 2013 judgment of the District 1 Court (Andrew L. Carter, Jr., Judge ) dismissing as equitably moot Appellants' challenges to three Bankruptcy Court orders.
In the three challenged orders, the Bankruptcy Court (Martin Glenn, Bankruptcy Judge ) denied motions filed by Appellants after Borders--which had earlier filed for protection under Chapter 11--obtained confirmation of its liquidation plan (the " Plan" ). In those orders, the Bankruptcy Court found that the Plan was substantially consummated, and (1) denied the motion of Appellants Eric Beeman and Jane Freij for leave to file untimely proofs of claim; (2) rejected and discharged Appellant Robert Traktman's untimely proof of claim; and (3) denied as moot the motion for class certification pursued by all three Appellants, none of whom appeared in the case until after the Plan was confirmed. See In re BGI, Inc., 476 B.R. 812 (Bankr. S.D.N.Y. 2012) (" BGI I " ); Joint Appendix (" JA" ) 700.
On review, the District Court accepted the Bankruptcy Court's determination that the Plan was substantially consummated and accordingly found Appellants subject to a presumption that their appeals were equitably moot. Concluding further that Appellants had failed to overcome that presumption, the District Court dismissed 1 the appeals. See In re BGI, Inc., Nos. 12 Civ. 7714 (ALC), 12 Civ. 7715 (ALC), 13 Civ. 0080 (ALC), (S.D.N.Y. May 22, 2013) (" BGI II " ).
We AFFIRM the District Court's ruling. At the threshold, we hold that the analysis outlined in Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944 (2d Cir. 1993) (" Chateaugay II " )--which governs our Circuit's equitable mootness analysis in Chapter 11 reorganizations--also governs our mootness analysis in Chapter 11 liquidations. We then conclude that Appellants are subject to the presumption of mootness created by the liquidation Plan's substantial consummation, and have failed to satisfy the five Chateaugay factors, as would be necessary to rebut that presumption. Accordingly, we hold that the District Court acted within its discretion in dismissing these appeals as equitably moot.
We recite only those facts necessary to this appeal. A full recitation of the facts may be found in the Bankruptcy Court and District Court opinions. BGI I, 476 B.R. at 815-20; BGI II, at *1-17.
Each Appellant holds an unused 1 consumer gift card issued by Borders, the now-defunct retail bookstore chain. In February 2011, Borders and certain of its affiliates filed voluntary petitions for relief through reorganization under Chapter 11 of the Bankruptcy Code. 11 U.S.C. § 1101, et seq. In April 2011, the Bankruptcy Court entered an order (the " Bar Date Order" ) establishing June 1, 2011 (the " Bar Date" ), as the deadline for claims to be filed by purported creditors of Borders on debts arising before Borders filed its bankruptcy petition (the " prepetition creditors" ).
Pursuant to Bankruptcy Rule 2002, the Bar Date Order required Borders to notify potential prepetition creditors of the bankruptcy proceedings in several ways, including by publishing notice of the Bar Date in the national edition of The New York Times at least twenty-eight days before the Bar Date, and by serving notice of the Bar Date via first-class mail to, among others, " all known ...