In Re: Energy Future Holdings Corp.

Filing 68

MEMORANDUM OPINION regarding Motion for Leave to File an Amicus Brief (D.I. 36 , Motion to Dismiss (D.I. 38 ), Motion for Leave to File Sur-Reply (D.I. 53 ) and Motion for Joinder (D.I. 59 ). Signed by Judge Richard G. Andrews on 9/26/2016. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
In re:
ENERGY FUTURE HOLDINGS CORP.,
et al.,

Chapter 11
Bankruptcy Case No. 14-10979 (CSS)
(Jointly Administered)

Debtors.

SHIRLEY FENICLE, INDIVIDUALLY,
AND AS SUCCESSOR-IN-INTEREST TO
THE ESTATE OF GEORGE FENICLE,
AND DAVID WILLIAM FAHY,

Bankruptcy Adv. No. 15-51

Civil Action No. 15-cv-1183-RGA

Appellants,

v.
ENERGY FUTURE HOLDINGS CORP.,
et al.,
Appellees.
MEMORANDUM OPINION
Leslie M. Kelleher, Esq. (argued), CAPLIN & DRYSDALE, CHARTERED, Washington, DC;
Jeanna M. Koski, Esq., CAPLIN & DRYSDALE, CHARTERED, Washington, DC; Elihu
Inselbuch, Esq., CAPLIN & DRYSDALE, CHARTERED, New York, NY.
Attorneys for Appellant Shirley Fenicle
Daniel K. Hogan, Esq., HOGAN MCDANIEL, Wilmington, DE.
Attorney for Appellants Shirley Fenicle and David William Fahy
Mark D. Collins, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE; Daniel J.
Defranceschi, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE; Jason M.
Madron, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE; Brenton A. Rogers,
Esq. (argued), KIRKLAND & ELLIS LLP, Chicago, IL; Mark E. McKane, P.C., Esq.,
KIRKLAND & ELLIS LLP, San Francisco, CA.
Attorneys for Appellees Energy Future Holdings Corp., et al.
September

16 ,2016

Presently before the Court are Amicus Curiae Public Justice's Motion for Leave to File an
Amicus Brief (D.I. 36), Appellants' Motion for Leave to File a Surreply in Opposition to
Appellees' Motion to Dismiss Fenicle and Fahy Appeal (D.I. 53) and related briefing (D.I. 57, 58),
Appellants' Motion for Joinder of Putative Appellant John H. Jones (D.I. 59), and Appellees'
Motion to Dismiss Fenicle and Fahy Appeal (D.I. 38) and related briefing (D.I. 47, 52).
For the reasons set forth below, Amicus Curiae Public Justice's Motion for Leave to File
an Amicus Brief (D.I. 36) is GRANTED. Appellants' Motion for Leave to File a Surreply in
Opposition to Appellees' Motion to Dismiss Fenicle and Fahy Appeal (D.I. 53) is GRANTED.
Appellants' Motion for Joinder of Putative Appellant John H. Jones (D.I. 59) is DISMISSED.
Appellees' Motion to Dismiss Fenicle and Fahy Appeal (D.I. 38) is GRANTED.
I. BACKGROUND

Debtors/Appellees filed voluntary petitions for relief in the United States Bankruptcy Court
for the District of Delaware under Chapter 11 of the Bankruptcy Code. On December 21, 2015,
Appellants Fenicle and Fahy 1 filed an appeal with this Court, seeking relief from a provision of an
order of the Bankruptcy Court dated December 9, 2015 confirming Debtors' Sixth Amended Plan
of Reorganization. (D.I. 47, p. 1). The provision at issue would discharge future claims held by
claimants who were exposed to asbestos but who have not yet manifested any illness and who
failed to submit a proof of claim by the bar date of December 14, 2015. (D.I. 47, p. 4). 2

1

Appellants have filed a Motion for Joinder of Putative Appellant John H. Jones, a claimant who manifested after
the bar date and whose claim would be discharged under the Plan at issue in this appeal. (D.1. 59, p. 7). Appellants
seek to join Mr. Jones to forestall a possible argument by Appellees that Appellants lack standing to pursue this
appeal. (Id. at p. 4). In light of the ruling on Appellees' Motion to Dismiss, Appellants' Motion for Joinder of
Putative Appellant John H. Jones is dismissed as moot.
2
Public Justice, P.C. has filed a Motion for Leave to File an Amicus Brief (D.I. 36). Public Justice represents that
Appellants consented but that Appellees wished to defer a decision on whether to oppose until after reviewing the
proposed brief. (Id. at p. 2). Appellees have not since indicated whether they consent to or oppose Public Justice's
Motion. In light of this lack of opposition, the Motion for Leave to File an Amicus Brief (D.I. 36) is granted.

1

The order approving the Plan provided that the Plan would be rendered "null and void" if
the Plan was not consummated by April 30, 2016. (D.I. 38, if4). That date passed without
consummation of the Plan. (Id. at if7). On May 1, 2016, Debtors filed a new Joint Plan of
Reorganization with the Bankruptcy Court that had yet to be confirmed at the time briefing on this
motion concluded. 3 (Id.). Appellees have moved to dismiss the Fenicle and Fahy appeal. (D.I.
38). 4 The Court heard oral argument on September 9, 2016.

II.

DISCUSSION
This Court has jurisdiction to hear appeals from the Bankruptcy Court pursuant to 28

U.S.C. § 158(a). District courts have mandatory jurisdiction to hear appeals "from final judgments,
orders, and decrees ... of bankruptcy judges entered in cases and proceedings." 28 U.S.C. §
158(a)(l).

District courts also have discretionary jurisdiction over appeals "from other

interlocutory orders and decrees" of bankruptcy judges. § 158(a)(3).
A Bankruptcy Court order confirming a plan is a final order immediately appealable as of
right under § 158(a)(l). Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015). An order
denying plan confirmation, however, is not a final order as long as the debtor may propose an
alternate plan. Id. The parties do not dispute that the confirmation order of December 9, 2015
was final and immediately appealable. Rather, the issue in this Motion to Dismiss is the effect of
the failure of consummation on the finality and, therefore, the appealability of the confirmation
order.

3

On August 29, 2016, the Bankruptcy Court entered an order confirming the Third Amended Joint Plan of
Reorganization. (Bankr. No. 14-10979 (CSS) D.I. 9421). Appellants filed a Notice of Appeal on September 12,
2016. (Bankr. No. 14-10979 (CSS) D.I. 9521, Civ. Act. No. 16-802 D.I. 1).
4
Appellants have filed a Motion for Leave to File a Surreply in Opposition to Appellees' Motion to Dismiss Fenicle
and Fahy Appeal. (D.I. 53). In the Motion to Dismiss, Appellees argue that the appeal is moot. (D.I. 38, if9). In
their Reply brief, however, Appellees further argue that this Court lacks jurisdiction to hear this appeal because there
is no order to appeal. (D.I. 52, p. 4). This is a new argument that Appellants should have an opportunity to address.
Therefore, Appellants' Motion for Leave to File a Surreply (D.l. 53) is granted and the Surreply will be considered.

2

Finality with respect to plan confirmation proceedings rests on whether the order in
question "alters the status quo and fixes the rights and obligations of the parties." Bullard, 135 S.
Ct. at 1692. This is why an order denying confirmation is not a final order as long as the debtor
has the option to amend or propose another plan. Id. at 1693. Such an order "does rule out the
specific arrangement of relief embodied in a particular plan," but does not eliminate the possibility
of confirmation of an alternate plan. Id.
The effect of the failure of consummation of Debtor's confirmed plan in the instant case is
similar to the effect of a denial of a plan with leave to amend. The original confirmed plan "has
been rendered null and void in all respects." (D.I. 38, if8). In other words, "[t]he parties' rights
and obligations remain unsettled." Bullard, 135 S. Ct. at 1693. In this case, the Bankruptcy Court
proceedings have not been dismissed and Debtor has proposed an alternate plan that is the subject
of ongoing litigation. That plan is subject to further amendment and may be objected to during
this ongoing proceeding. "'Final' does not describe this state of affairs." Id.
Appellants also request that if the order is deemed interlocutory, Appellants be granted
leave to appeal under 28 U.S.C. § 158(a)(3). (D.I. 54-1, p.8). The failure of consummation,
however, has not converted the confirmation order from a final order into an interlocutory order.
Rather, the original confirmation order is simply no longer operative. In other words, the original
order has not settled any disputes between the parties and has not conclusively determined any
issues in the case. Therefore, leave to appeal under§ 158(a)(3) is denied as the order in question
is not interlocutory.
Appell~ts

note that the discharge provisions of Debtors' new proposed plan are identical

to those in the original confirmed plan that are the subject of this appeal. (D.I. 47, p. 6). This is
irrelevant to the finality analysis, however, as the provisions of the new plan are not finally

3

determined until the Bankruptcy Court enters an order confirming the new plan. 5 If and when this
happens, Appellants will be free to appeal the new confirmation order.

For these reasons,

Appellees' Motion to Dismiss is granted.

III.

CONCLUSION
For the reasons set forth herein, Amicus Curiae Public Justice's Motion for Leave to File

an Amicus Brief is GRANTED. Appellants' Motion for Leave to File a Surreply in Opposition
to Appellees' Motion to Dismiss Appeal is GRANTED. Appellants' Motion for Joinder of
Putative Appellant John H. Jones is DISMISSED. Appellees' Motion to Dismiss Fenicle and
Fahy Appeal is GRANTED.
An appropriate order will be entered.

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5

As noted in footnote 3, the Bankruptcy Court has confirmed a new plan for some portion of the proceedings, and
an appeal has been taken from it. The parties, however, appear to agree that it is the second portion of the
proceedings, scheduled for the first half of December 2016, in which the underlying issue is again scheduled to be
decided. (D.I. 67 at 34-36, 60-61, 69-70, 109-10).

4