Courts Overuse ‘Equitable Mootness’ to Avoid Bankruptcy Appeals

District courts overly rely on a legal doctrine to avoid hearing appeals from bankruptcy plan confirmations even though they have a “virtually unflagging obligation” to hear such appeals, the Eighth Circuit said.

The doctrine of “equitable mootness” allows district courts to avoid ruling on the merits of bankruptcy plan confirmation appeals. But reviewing courts must conduct a “rigorous test” of the confirmation order—including examining whether the parties were treated equitably and the plan is legally sufficient—before invoking the doctrine, the U.S. Court of Appeals for the Eighth Circuit said Thursday.

The appeals court’s decision stems from a federal district ...