Justices Urged to Review Judge-Made Bankruptcy Appeal Roadblock

Creditors who feel they got a raw deal in corporate bankruptcies are asking the U.S. Supreme Court to scrap a legal doctrine that judges increasingly are using to block appeals from court-approved Chapter 11 plans.

Federal courts often cite the doctrine of “equitable mootness” to deny appeals from creditors, the U.S. Trustee, or other parties to review bankruptcy plans that have been approved. The judge-made doctrine dictates that once a company starts using the approved plan to restructure and make payments, undoing that process would be both difficult and unfair to both the debtor and other creditors.

Once a plan ...