South River Capital, LLC v. Kane
- William Orrick
- 3:21-cv-03493
- U.S. District Court · Northern District of California
- 5
In South River Capital v. Kane, Judge Orrick denied Kane’s motion to dismiss South River’s bankruptcy appeal as moot because meaningful relief remained possible.
Evander Frank Kane, South River Capital, LLC, and Kane’s other creditors. The ruling keeps South River’s appeal alive but does not decide whether Kane’s bankruptcy case should be converted to Chapter 11.
What happened
South River Capital, LLC appealed a bankruptcy court decision refusing to convert Evander Frank Kane’s Chapter 7 bankruptcy case to Chapter 11. Kane asked the district court to dismiss the appeal because the San Jose Sharks had terminated his contract, which South River had relied on when arguing for conversion.
The court ruled that the appeal was not moot, meaning the court could still provide meaningful relief. Kane had signed a one-year contract with the Edmonton Oilers, and the court concluded that some of that income could still benefit creditors if the appeal succeeded and the case were converted.
The court denied Kane’s motion to dismiss. Judge Orrick did not decide whether Kane’s bankruptcy case should be converted; he decided only that South River’s appeal could proceed.
The detailed version
- South River Capital, LLC v. Kane · No. 3:21-cv-03493
- William Orrick
- Apr. 5, 2022
Background
Evander Frank Kane filed for Chapter 7 bankruptcy on January 9, 2021. The opinion states that he reported owning $10,224,743.65 in property and owing $30,191,340 in liabilities. At that time, he was in the third year of a seven-year contract with the San Jose Sharks.
A creditor moved to convert Kane’s case from Chapter 7 to Chapter 11, and South River Capital, LLC joined that motion. The bankruptcy court denied the motion on April 19, 2021. South River appealed, arguing, among other things, that Kane’s earnings under the Sharks contract could provide money for creditors and support a repayment plan in a Chapter 11 case.
While the appeal was pending, the Sharks terminated Kane’s contract. Kane then signed a one-year contract with the Edmonton Oilers. South River alleged that the Oilers contract would pay Kane approximately $975,000.
Motion to Dismiss
Kane moved to dismiss the appeal as moot. Mootness means that a court can no longer provide any effective relief. Kane argued that because the Sharks contract had ended, it could no longer be used to fund a Chapter 11 plan, leaving no basis to reconsider the bankruptcy court’s decision. He also argued that his future professional hockey income was uncertain.
South River responded that its appeal did not depend solely on the Sharks contract. It argued that Kane’s disposable income—including income from the Oilers contract—could still be used to pay creditors through a Chapter 11 plan.
Court’s Analysis
The court explained that an appeal is not moot if the court can provide some meaningful relief, even if it cannot fully restore the earlier situation. The party asserting mootness bears a heavy burden to show that no effective relief is possible.
The court concluded that Kane had not met that burden. Although the Oilers contract provided less income than the Sharks contract, the court found that some portion of the approximately $975,000 allegedly payable under the Oilers contract could still benefit South River and other creditors if the appeal succeeded and the case were ultimately converted to Chapter 11. The court also reasoned that if the case had already been converted and Kane later lost the Sharks contract, the Oilers contract would have required modification of a Chapter 11 plan but could still have provided relief to creditors.
The court distinguished a case involving property that the debtor no longer owned after an agreed foreclosure. Unlike that situation, the opinion notes that Kane said the National Hockey League Players’ Association intended to pursue a grievance on his behalf regarding the Sharks contract. The court therefore found that the circumstances did not make effective relief impossible.
Disposition
The court denied Kane’s motion to dismiss. The order allowed South River’s appeal to proceed but did not decide whether Kane’s bankruptcy case should be converted from Chapter 7 to Chapter 11.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.