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April 1, 2021 - Source: Norton Journal of Bankruptcy Law and Practice

Prejudice to Third Parties is the Moot of All Evil: The Underlying Basis for the Invocation of the Equitable Mootness Doctrine After Plan Confirmation


The equitable mootness doctrine in the bankruptcy context is affected by two fundamental and inter-connecting principles.  First, is the recognition that bankruptcy proceedings often involve the restructuring of an ongoing, dynamic business, and the importance of achieving finality at a specific moment in time (plan consummation) to accomplish the fresh-start public policy objective of Chapter 11. Second, bankruptcies are generally multi-party proceedings with intersecting rights over a finite set of assets, and when a plan of reorganization is consummated, the status quo is often irretrievably altered, especially with the increasing passage of time for the numerous third parties involved in, or affected by, the consummation of the bankruptcy plan.