## Facts

- Tribune Media Company underwent a 2007 leveraged buyout that added about $8 billion in new debt guaranteed by subsidiaries, making the new lenders structurally senior to roughly $5 billion of existing unguaranteed debt.
- Tribune filed for Chapter 11 in December 2008.
- During the bankruptcy, Aurelius acquired about $2 billion of pre-buyout debt and opposed a plan that settled major buyout-related claims; it preferred litigating those claims.
- A competing Chapter 11 plan (the DCL Plan) settled the principal buyout-related causes of action for about $369 million and created a litigation trust for remaining, narrower claims.
- The bankruptcy court confirmed the DCL Plan; the plan was substantially consummated in December 2012 through distributions, issuance of new securities, and implementation of settlements.
- Aurelius and certain indenture trustees appealed the confirmation order; Aurelius sought relief that would effectively revive settled buyout-related claims, while the trustees sought reallocation of about $30 million among creditor groups on intercreditor/subordination grounds.
- The district court dismissed Aurelius’s appeal as equitably moot but permitted the trustees’ appeal to proceed; both matters reached the Third Circuit.

## Issues

1. Whether Aurelius’s appeal was equitably moot because the plan had been substantially consummated and the requested relief would disrupt a central settlement and harm reliance interests.
2. Whether the trustees’ appeal over a discrete intercreditor allocation dispute was equitably moot, or instead could be decided without unraveling the plan or harming third parties.

## Decision

- The court affirmed dismissal of Aurelius’s appeal as equitably moot.
- The court reversed equitable-mootness dismissal as to the trustees’ appeal and remanded for merits consideration.
- The court emphasized that the plan had been substantially consummated and that Aurelius failed to obtain a stay pending appeal.
- The court concluded Aurelius’s requested relief would undo or seriously disrupt the plan’s core bargain by destabilizing the global buyout-related settlement and requiring broad redistribution.
- The court concluded the trustees sought limited monetary relief that could be granted without destabilizing the plan or injuring reliance interests of third parties.

## Legal Principles

- Equitable mootness is a prudential doctrine permitting dismissal of Chapter 11 plan-confirmation appeals when granting relief would be inequitable after plan consummation.
- Key considerations include substantial consummation, whether the appellant sought and obtained a stay, and whether the requested relief would “fatally scramble” the plan or harm reliance interests of nonparties.
- Relief targeting a central plan settlement is more likely equitably moot after consummation because it threatens the plan’s overall structure and transactions completed in reliance on confirmation.
- Limited, discrete intercreditor allocation disputes may remain reviewable post-consummation when effective relief can be fashioned through monetary adjustments without undoing core plan terms.
- The doctrine is to be applied narrowly; courts must distinguish between appeals that require unwinding the plan and those that permit tailored relief consistent with finality and reliance interests.

## Conclusion

The Third Circuit held that a substantially consummated reorganization plan may bar an appeal under equitable mootness when the appellant seeks to reopen a core settlement, but equitable mootness does not automatically defeat a post-confirmation appeal seeking limited reallocation among creditors that can be granted without destabilizing the plan.


In re Tribune Media Co., 799 F.3d 272 (3d Cir. 2015)