Canyon Capital Advisors LLC v. PG&E Corporation

Background

PG&E Corporation and Pacific Gas and Electric Company, referred to collectively as the debtors, filed Chapter 11 bankruptcy cases. Their reorganization plan provided for postpetition interest on certain allowed unsecured claims at the Federal Judgment Rate, as required by the bankruptcy court’s decision applying Ninth Circuit precedent.

Canyon was among the noteholders that entered into a settlement agreement with the debtors. Under that agreement, Canyon agreed to support the plan, vote for it, accept the Federal Judgment Rate for postpetition interest, and refrain from actions that could interfere with confirmation or implementation of the plan. The bankruptcy court approved the agreement and later confirmed the plan.

Canyon did not object to plan confirmation. It voted for the plan on behalf of some of its debt and voluntarily accepted the plan’s releases. Canyon filed its notice of appeal from the Confirmation Order on July 17, 2020. The bankruptcy court had entered that order on June 20, 2020, and another party had filed the first notice of appeal on July 2, 2020.

Motion to Dismiss

The reorganized debtors moved to dismiss Canyon’s appeal. They argued that the appeal was untimely, that Canyon had waived its right to appeal by agreeing to and supporting the plan without objecting, and that the plan’s release and injunction provisions independently barred the appeal. Canyon also moved to reset the hearing after its counsel failed to appear at the noticed telephonic hearing and instead attempted to access a Zoom link.

Court’s Analysis

The court held that Bankruptcy Rule 8002 required Canyon to file its notice of appeal no later than July 16, 2020. The first notice of appeal from the Confirmation Order, filed on July 2, extended the deadline under Rule 8002(a)(3), but did not make the July 17 filing timely. The court rejected Canyon’s argument that a separate notice concerning the postpetition-interest order created another extension. Because the notice was untimely, the court held that it lacked jurisdiction to review the bankruptcy court’s order.

The court addressed two additional grounds in the alternative. First, it held that Canyon had waived its right to object to, and therefore appeal, the Confirmation Order. Canyon’s agreement to support the plan, vote for it, accept the specified interest rate, and refrain from interfering with the plan, combined with its failure to object at confirmation, meant that Canyon had not preserved its challenge. The court rejected Canyon’s argument that the agreement’s support period had ended before the appeal was filed.

Second, the court held that the plan and Confirmation Order released Canyon’s relevant claims and permanently barred proceedings related to the treatment of its prepetition claims, including the postpetition-interest rate. The court explained that these provisions did not bar all appeals, but did bar this appeal because Canyon was a releasing party and the appeal sought a different interest rate.

Disposition

The court denied Canyon’s request to reset the hearing because the record and prior instructions were sufficient to decide the motion. It granted the reorganized debtors’ motion to dismiss the appeal, directed the Clerk to close the case, and terminated the appeal. The dismissal rested on lack of jurisdiction from the untimely notice and, alternatively, Canyon’s waiver and release of the appeal. The court did not decide the merits of the postpetition-interest dispute.