Green v. Nosek

Background

Carl Green appealed four orders entered by the United States Bankruptcy Court for the District of Minnesota in Schuldner, LLC’s Chapter 11 bankruptcy case. Green is Schuldner’s sole shareholder. Schuldner owned fifteen residential rental properties, and Wilmington Trust, National Association, as trustee for the benefit of the holders of B2R Mortgage Trust 2016-1 Mortgage Pass-Through Certificates, held a lien on the properties and was identified as the principal creditor. Steven B. Nosek had been appointed as the subchapter V bankruptcy trustee.

The four challenged orders were two orders approving the trustee’s motions to sell properties, an order denying Green’s second motion to reinstate Schuldner or dismiss the Chapter 11 case, and an order denying Green’s request for an evidentiary hearing. Wilmington Trust moved to dismiss the district-court appeal.

Sale Orders

The court agreed that Green had not objected to the two specific sale motions underlying the orders he appealed. Although he had objected to two earlier sale motions, the court concluded that he could not seek appellate review of the later orders after failing to object to those motions in the bankruptcy court.

The court also held that the challenges to the sale orders were moot. The sales had been completed, and no party had obtained a stay preventing them. Under 11 U.S.C. § 363(m), reversing an unstayed sale authorization generally does not affect a sale to a good-faith purchaser. The court found that Green had not alleged that the purchasers acted in bad faith. It therefore dismissed Green’s appeal of the sale orders as moot.

Reinstatement and Evidentiary-Hearing Orders

The court held that the bankruptcy court’s denial of Green’s request for an evidentiary hearing was not a final order. It was an intermediate decision on a particular issue and did not end the bankruptcy proceedings.

The court described the finality of the order denying Green’s second motion for reinstatement or dismissal as a closer question, but reached the same result. After that order, the bankruptcy proceedings continued, with the subchapter V trustee continuing to act as the debtor in possession. The court found no clear indication that the bankruptcy court considered its decision to be the end of the case, and it found no basis to conclude that reversing the decision would require the entire bankruptcy proceeding to begin again.

Because both orders were interlocutory—meaning they were not final—the district court could review them only if it granted permission to appeal. Green had not sought that permission. Although the court could have treated his notice of appeal as a request for permission, it declined to do so because the notice did not include the required information and Green had submitted nothing further supporting the appeal. The court therefore held that it lacked jurisdiction to review those two orders.

Disposition

The court granted Wilmington Trust’s motion to dismiss and dismissed Green’s appeal. It declined to retain jurisdiction over the proceedings and stated that they were fully returned to the bankruptcy court.