First Circuit Leaves Bankruptcy Court Orders Intact Despite Moot Appeal Ordinarily, when a civil case becomes moot pending appeal, the judgment below

First Circuit Leaves Bankruptcy Court Orders Intact Despite Moot Appeal Ordinarily, when a civil case becomes moot pending appeal, the judgment below

is vacated and remanded with instructions to dismiss. However, vacatur is not justified when mootness arises from a settlement or when the party who seeks relief from the lower court judgment causes the

mootness through voluntary actions. In a recent case before the First Circuit, the latter occurred, leading to an interesting discussion of appellate law in the bankruptcy context.

ORIL appealed a bankruptcy court order that authorized a debtor to lease his milk quota to a willing lessee for a term of six months so that the debtor could obtain an income source out of which he could pay the Chapter 12 trustee. ORIL did not object to the debtor’s request for such authorization.

While on appeal, the lease's term expired without ever being implemented because ORIL denied the required registration. Despite concerns about mootness, the BAP affirmed on the merits. The First Circuit reversed the BAP’s judgment, finding that the BAP “had no warrant to proceed” because the mooting event occurred while the case was pending before the BAP.

Despite the First Circuit reversing the BAP's judgment that affirmed the bankruptcy court orders, it chose to leave those orders intact. It concluded that the balance of equities weighed against vacatur of the bankruptcy court orders, for three reasons.

First, ORIL did not seek to stay the orders. In bankruptcy appeals involving sales and leases, an appellant should always do so. Otherwise, appellate relief might be deemed inequitable.

Second, ORIL “slept on its rights” by failing to timely object to the debtor’s motion requesting permission to enter the lease in the first place, and the bankruptcy court relied on that lack of objection.

And third, even after the bankruptcy court denied a reconsideration of the order approving the lease, ORIL chose not to register it, thereby preventing its implementation. The First Circuit emphasized that such choice contributed to the action's mootness because it minimized any concrete impact of the lease and ORIL's stake in challenging it.