PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JOHN R. BEHRMANN; NANCY
BEHRMANN; HIGHBOURNE
FOUNDATION; MAURICE TOWNSLEY;
THERESA TOWNSLEY; TOWNSLEY
FAMILY FOUNDATION, THE; DOLORES
F. ANDERSON, a/k/a Dodie
Anderson; DODIE ANDERSON
FOUNDATION,
No. 10-2015
Plaintiffs-Appellants,
v.
NATIONAL HERITAGE FOUNDATION,
INCORPORATED; OFFICIAL
COMMITTEE OF UNSECURED
CREDITORS,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Senior District Judge.
(1:10-cv-00040-CMH-IDD)
Argued: September 20, 2011
Decided: December 9, 2011
Before TRAXLER, Chief Judge, and AGEE and DIAZ,
Circuit Judges.
2 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
Vacated and remanded by published opinion. Judge Diaz
wrote the opinion, in which Chief Judge Traxler and Judge
Agee joined.
COUNSEL
ARGUED: Glenn W. Merrick, G. W. MERRICK & ASSO-
CIATES, LLC, Greenwood Village, Colorado, for Appellants.
Erika Lynn Morabito, PATTON BOGGS, LLP, Washington,
D.C., for Appellees. ON BRIEF: Gregory H. Counts,
TYLER, BARTL, RAMSDELL & COUNTS, PLC, Alexan-
dria, Virginia, for Appellants.
OPINION
DIAZ, Circuit Judge:
We consider in this case the circumstances under which a
bankruptcy court may approve nondebtor release, injunction,
and exculpation provisions as part of a final plan of reorgani-
zation under Chapter 11 of the Bankruptcy Code.
We hold that equitable relief provisions of the type
approved in this case are permissible in certain circumstances.
A bankruptcy court must, however, find facts sufficient to
support its legal conclusion that a particular debtor’s circum-
stances entitle it to such relief. Because the bankruptcy court
in this case failed to make such findings, the district court
erred in affirming the bankruptcy court’s confirmation order.
Accordingly, we vacate the judgment of the district court and
remand for further proceedings consistent with this opinion.
I.
Appellee National Heritage Foundation ("NHF") is a non-
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 3
profit public charity that administers and maintains Donor-
Advised Funds ("DAFs").1 Appellants John R. Behrmann,
Nancy Behrmann, the Highbourne Foundation, Dolores F.
Anderson, and the Dodie Anderson Foundation are among the
more than 9000 donors that established DAFs to be adminis-
tered by NHF.
Following a state court judgment of over six million dollars
entered against NHF in Texas, NHF filed a voluntary petition
in the U.S. Bankruptcy Court for the Eastern District of Vir-
ginia, seeking to reorganize under Chapter 11 of the Bank-
ruptcy Code. NHF notified its donors and other parties in
interest, including Appellants, of the deadline for filing proofs
of claim in its bankruptcy proceeding.
As part of its reorganization plan, NHF proposed three cat-
egories of unsecured claims: Class III(A), consisting of a
claim by the Mancillas family, the holder of the Texas state
court judgment; Class III(B), consisting of claims held by
NHF’s charitable gift annuitants; and Class III(C), consisting
of all other general unsecured claims. Although NHF con-
tended that its donors were not creditors, it provided that a
donor’s claim would be treated as an unsecured Class III(C)
claim provided that the claim was allowed.2
1
DAFs are funds that are owned and controlled by a sponsoring charita-
ble organization that separately identifies contributions made by donors.
26 U.S.C. § 4966(d)(2). Donors may make non-binding recommendations
regarding how their donations are invested or distributed, but otherwise
relinquish all right and interest in the donated assets.
2
The bankruptcy court ultimately dismissed the claims of Appellants
Dolores F. Anderson and the Dodi Anderson Foundation as untimely. The
district court affirmed and the dismissal has likewise been affirmed by this
court. Anderson v. Nat’l Heritage Found., Inc., No. 10-2186, 2011 WL
2745764 (4th Cir. July 13, 2011). The bankruptcy court overruled NHF’s
objection to the Behrmann claims, determining that the Behrmanns may
have stated claims for rescission under 11 U.S.C. § 101(5). The Behr-
manns, however, subsequently withdrew their claims.
4 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
NHF’s proposed plan of reorganization also included cer-
tain release, injunction, and exculpation provisions (collec-
tively, the "Release Provisions") that prevented potential
claimants from asserting claims against NHF, the Official
Committee of Unsecured Creditors (the "Committee"), and
other parties closely connected with NHF or the Committee,
such as NHF’s officers and directors, that accrued on or
before the effective date of the reorganization plan. At a hear-
ing before the bankruptcy court, NHF representative Janet
Ridgely testified that the Release Provisions were essential to
NHF’s successful reorganization as a going concern. Specifi-
cally, Ridgely asserted that (1) NHF’s proposed plan of reor-
ganization and bylaws required NHF to indemnify its officers
and directors for costs, expenses, and liabilities arising out of
lawsuits filed against them relating to acts taken in their offi-
cial capacities; (2) NHF’s officers and directors were con-
cerned about the possibility of protracted litigation against
them relating to acts predating NHF’s petition for bankruptcy,
and in particular litigation initiated by donors; (3) NHF’s offi-
cers and directors might be unwilling to continue to serve
after confirmation of NHF’s proposed plan of reorganization
if third parties could sue them for their pre-petition conduct;
and (4) retaining NHF’s officers and directors was essential
to NHF’s success as a reorganized debtor. The bankruptcy
court, however, declined to approve the Release Provisions,
concluding that they were overly broad.
NHF’s counsel subsequently filed revisions to the Release
Provisions that (1) narrowed the definition of "Released Par-
ties" to include only NHF, the Committee, any designated
representatives of the Committee, and any officers, directors,
or employees of NHF, the Committee, or their successors and
assigns (the "Released Parties"); (2) exculpated the Released
Parties only with respect to claims brought by parties in inter-
est that had filed a proof of claim or were given notice of
NHF’s bankruptcy proceeding, and then only for acts or omis-
sions arising out of the operation of NHF’s business through
the effective date of the reorganization plan; and (3) explicitly
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 5
provided that no parties would be released from liability stem-
ming from NHF’s failure to comply with its obligations under
the reorganization plan. Following argument, the bankruptcy
court approved the Release Provisions as amended and con-
firmed NHF’s plan of reorganization (hereafter, the "Con-
firmed Plan").
In its written order, the bankruptcy court found that the
Release Provisions were (1) "essential" to NHF’s reorganiza-
tion and appropriate given NHF’s "unique circumstances"; (2)
an "essential means" of implementing the Confirmed Plan; (3)
an "integral element" of the transactions contemplated in the
Confirmed Plan; (4) a "material benefit" for NHF, its bank-
ruptcy estate, and its creditors; (5) "important" to the Con-
firmed Plan’s overall objectives; and (6) consistent with
applicable provisions of the Bankruptcy Code. J.A. 886-87.
The bankruptcy court’s order also adopted all oral findings
of fact made on the record during the two days of confirma-
tion hearings. These findings included that (1) NHF’s bank-
ruptcy was "quite a unique case," id. 1375; (2) there were
"legitimate interests" for approving the Release Provisions in
the reorganization plan, id. 1382; (3) the "potential for mis-
chief" was "very, very high" for a dissatisfied party whose
claim was disallowed in the bankruptcy proceeding to sue
NHF’s officers and directors "seriatim," id. 1383-84; (4)
NHF’s obligations to indemnify its officers and directors
could cause it to incur substantial legal costs in defending
such claims; and (5) the Release Provisions served the pur-
pose of "preventing an end-run around the plan" by not allow-
ing dissatisfied claimants to attempt "second and third bites at
the apple in another forum," id. 1416.
Appellants thereafter appealed to the district court and also
moved for a stay of enforcement of the Release Provisions,
which the bankruptcy court granted through the pendency of
the first level of review before the district court. The district
court affirmed the confirmation order. Appellants timely
6 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
appealed to this court, and moved before the bankruptcy court
for a limited stay pending appeal, which the court denied
because it no longer had jurisdiction. Appellants then moved
before the district court for a stay, which the district court also
denied.
II.
The parties articulate differing standards of review. Appel-
lants claim that whether the Confirmed Plan satisfies the
requirements of the Bankruptcy Code (to include whether the
plan was proposed in good faith) and whether the Release
Provisions are permissible present questions of law that are
reviewed de novo. NHF responds that, however framed by
Appellants, the ultimate issue in this case is the propriety of
the bankruptcy court’s approval of the Release Provisions.
NHF argues that such a decision implicates a bankruptcy
court’s equitable powers, and that it is well established that a
court’s grant or denial of equitable relief is reviewed for abuse
of discretion.
As to Appellants’ claim that the Confirmed Plan was not
proposed in good faith, and thereby fails to satisfy the require-
ments of the Bankruptcy Code, the standard of review is well
settled: a court’s finding with respect to the good faith
requirement imposed under 11 U.S.C. § 1129(a)(3) is
reviewed for clear error. In re PWS Holding Corp., 228 F.3d
224, 242 (3d Cir. 2000); accord Schwarzmann v. First Union
Nat’l Bank (In re Schwarzmann), No. 95-2512, 1996 WL
698072, at *4 (4th Cir. Dec. 6, 1996) (stating that the factual
findings of the bankruptcy court, including a finding of good
faith under § 1129(a)(3), are subject to a "clearly erroneous"
standard of review).
We need not resolve the separate question of which stan-
dard of review governs the bankruptcy court’s approval of the
Release Provisions. Instead, we conclude that a remand is
necessary because the bankruptcy court’s failure to make suf-
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 7
ficient factual findings in support of its legal conclusions does
not allow for meaningful appellate review under any standard.
III.
A.
Before we address the deficiencies in the bankruptcy
court’s confirmation order, we first consider (and reject)
Appellants’ broadside contention that the Confirmed Plan
fails to satisfy the requirements of the Bankruptcy Code.
Confirmation of a Chapter 11 plan of reorganization
requires that the plan satisfy all of the confirmation criteria set
forth in 11 U.S.C. § 1129(a). In re Byrd Foods, Inc., 253 B.R.
196, 199 (Bankr. E.D. Va. 2000). Appellants argue that the
Confirmed Plan fails this basic requirement because (1) the
Plan was not proposed in good faith, in contravention of 11
U.S.C. § 1129(a)(3), and (2) 11 U.S.C. § 524(e)—providing
in pertinent part that "discharge of a debt of the debtor does
not affect the liability of any other entity on . . . such
debt"—forecloses approval of the Release Provisions.
On the question of NHF’s good faith in proposing the Con-
firmed Plan, Appellants essentially contend that the Chapter
11 filing was a sham perpetrated by NHF’s officers and direc-
tors to secure immunity for their fraudulent and misleading
conduct in soliciting donations for DAFs and in administering
those funds. Appellants claim that the Confirmed Plan "evi-
dences a concentrated effort by the Houk family [whose
members largely comprise NHF’s officers and directors] to
extend to itself comprehensive clemency . . . in respect of rep-
rehensible and tortious practices." Appellants’ Br. 16.
Here, however, the bankruptcy court specifically examined
the totality of the circumstances surrounding the formulation
of the plan and NHF’s negotiations with the Committee and
holders of claims against NHF, all objections filed and
8 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
responses thereto, and all other evidence presented during the
two days of confirmation hearings. The bankruptcy court con-
cluded specifically that NHF was a "debtor" as that term is
defined under the Code and that it "filed its case and proposed
its Plan with the legitimate and honest purpose of reorganiz-
ing and maximizing both the value of [NHF’s] Estate and the
recovery to Claimants." J.A. 881. Because Appellants have
not shown that the bankruptcy court clearly erred with respect
to this finding, we reject their contention that the Confirmed
Plan fails to satisfy the good faith requirement.
As to Appellants’ second broad challenge to the Confirmed
Plan, we have rejected the notion that 11 U.S.C. § 524(e)
forecloses bankruptcy courts from releasing and enjoining
causes of action against nondebtors. See Menard-Sanford v.
Mabey (In re A.H. Robins Co.), 880 F.2d 694 (4th Cir. 1989)
[hereinafter A.H. Robins]. A.H. Robins involved a reorganiza-
tion necessitated by a mass tort suit arising from the use of the
Dalkon Shield intrauterine device. In that case, the appellants
sought to sue the debtor’s directors and attorneys as joint tort-
feasors, but we permitted the bankruptcy court to enjoin these
suits on grounds of equity. We noted, "11 U.S.C. § 105(a)
gives a bankruptcy court the power to issue any order, process
or judgment that is necessary or appropriate to carry out the
provisions of this title, and confers equitable powers upon the
bankruptcy courts." Id. at 701 (internal quotations omitted).
We declined to retreat from this holding in Stuart v. First
Mount Vernon Indus. Loan Ass’n, 3 F. App’x 38 (4th Cir.
2001), stating as follows:
In A. H. Robins, we determined that section 524(e)
does not deny the bankruptcy court the power to
release liabilities of a non-debtor under the terms of
a Chapter 11 plan when the creditors of the non-
debtor approved of and accepted the terms of the
plan. We recognize that there are decisions to the
contrary in other circuits, but we reject First Mount
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 9
Vernon’s implication that we should abandon our
precedent.
Id. at 42 (citations and internal quotations omitted); accord In
re Drexel Burnham Lambert Grp., 960 F.2d 285, 293 (2d Cir.
1992) (upholding an injunction against creditors from suing a
third party, given that the injunction played an important part
in the debtor’s reorganization); In re Railworks Corp., 345
B.R. 529, 536 (Bankr. D. Md. 2006) (holding that a release
provision enjoining the commencement of actions against
nondebtors was enforceable even though "broad in nature").
Thus, Appellants’ blanket assertion that equitable relief in the
form of nondebtor releases is never permissible under the
Bankruptcy Code is also without merit.
B.
Next, we address whether—on this record—the bankruptcy
court erred in entering an order approving the Release Provi-
sions as part of the Confirmed Plan, and the district court
erred in affirming that order insofar as it included the Release
Provisions. Appellants contend that the Release Provisions far
exceed the narrow limits that courts have drawn in this area.
In support of that contention, Appellants direct us first to our
decision in A.H. Robins, where we approved a bankruptcy
court’s decision to enjoin third party suits in favor of a "chan-
neling" injunction that required claimants to assert their tort
claims against a $350 million trust res established by the debt-
or’s insurers, 880 F.2d at 701.
According to Appellants, however, we did so only after
finding that (1) the parties who benefited from the injunction
(the debtor’s insurers) had all contributed funds sufficient to
fully satisfy all claims asserted against the debtor; (2) the
reorganization plan afforded all parties, including those with
late-filed claims, a chance to be paid in full from the trust res;
(3) the injunction was necessary to prevent suits against par-
ties whose contribution rights against the debtor would defeat
10 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
the prospects of a successful reorganization; and (4) the
affected class of claimants voted overwhelmingly in favor of
the proposed reorganization plan.
In contrast, Appellants contend that (1) the beneficiaries of
the Release Provisions, NHF’s officers and directors, have not
contributed any funds to NHF’s reorganization; (2) the plan
does not afford recovery for late-filed claims, as evidenced by
NHF’s objection to the claim asserted by Appellant Anderson
on the ground that it was filed four months after the bar date;
(3) the Release Provisions do not promote the purpose of a
successful reorganization because continuation of NHF’s
operations is not necessary for a successful reorganization,
especially because there is no evidence that the service of
NHF’s present officers and directors is necessary to NHF’s
continued operations; and (4) the affected class of claimants
did not overwhelmingly favor the Confirmed Plan, as Appel-
lants—and all other potential Class III(C) creditors—were
barred from voting on the plan because they were classified
as "unimpaired."
In our view, however, a bankruptcy court need not find a
precise fit between the circumstances found in A.H. Robins
and the case before it as a precondition to granting equitable
relief. Rather, whether a court should lend its aid in equity to
a Chapter 11 debtor will turn on the particular facts and cir-
cumstances of the case, and our decision in A.H. Robins is not
to the contrary.
Appellants also look to decisions from other circuits hold-
ing that nondebtor releases are appropriate only in very lim-
ited circumstances. First, Appellants note the Second Circuit’s
observations that the only authority in the Bankruptcy Code
for nondebtor releases is 11 U.S.C. § 524(g), which is limited
to channeling injunctions in asbestos cases, and that nondeb-
tor releases pose a "potential for abuse" that "is heightened
when releases afford blanket immunity," Deutsche Bank AG
v. Metromedia Fiber Network, Inc. (In re Metromedia Fiber
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 11
Network, Inc.), 416 F.3d 136, 142 (2d Cir. 2005). The Appel-
lants also cite Alradigm Commc’ns, Inc. v. FCC (In re
Alradigm Commc’ns, Inc.), 519 F.3d 640, 657 (7th Cir. 2008),
in which the Seventh Circuit denounced nondebtor releases
that provided "blanket immunity" for pre- and post-petition
conduct and omissions. Finally, Appellants cite various other
circuit and bankruptcy court cases for the proposition that
only unique or unusual circumstances can justify approval of
nondebtor releases. Appellants’ Br. 20 (collecting cases). We
have reviewed these cases and find nothing therein inconsis-
tent with our conclusion that a bankruptcy court is authorized
to approve equitable relief in the form of the Release Provi-
sions where circumstances warrant.
Appellants next direct our attention to the seven-factor test
found in Class Five Nev. Claimants v. Dow Corning Corp. (In
re Dow Corning Corp.), 280 F.3d 648 (6th Cir. 2002), argu-
ing that bankruptcy courts frequently employ it to determine
if nondebtor releases are necessary and fair. In pertinent part,
the opinion states as follows:
We hold that when the following seven factors are
present, the bankruptcy court may enjoin a non-
consenting creditor’s claims against a non-debtor:
(1) There is an identity of interests between the
debtor and the third party, usually an indemnity rela-
tionship, such that a suit against the non-debtor is, in
essence, a suit against the debtor or will deplete the
assets of the estate; (2) The non-debtor has contrib-
uted substantial assets to the reorganization; (3) The
injunction is essential to reorganization, namely, the
reorganization hinges on the debtor being free from
indirect suits against parties who would have indem-
nity or contribution claims against the debtor; (4)
The impacted class, or classes, has overwhelmingly
voted to accept the plan; (5) The plan provides a
mechanism to pay for all, or substantially all, of the
class or classes affected by the injunction; (6) The
12 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
plan provides an opportunity for those claimants
who choose not to settle to recover in full and; (7)
The bankruptcy court made a record of specific fac-
tual findings that support its conclusions.
Id. at 658 (citing, inter alia, A.H. Robins, 880 F.2d at 701-02).
Appellants argue that the Release Provisions fail every prong
of this test and vastly exceed the scope of releases that have
been permitted in prior cases.
NHF responds that a party need not satisfy a specific test
or present evidence in support of specific findings for such
provisions to be upheld. Alternatively, NHF contends that the
following, narrower set of factors provides the proper frame-
work for a bankruptcy court to consider in deciding whether
to approve nondebtor releases: (1) overwhelming approval for
the plan; (2) a close connection between the causes of action
against the third party and the causes of action against the
debtor; (3) that the injunction is essential to the reorganiza-
tion; and (4) that the plan of reorganization provides for pay-
ment of substantially all of the claims affected by the
injunction. Appellee’s Br. 25-26 (citing In re Railworks
Corp., 345 B.R. at 536). NHF claims that the Release Provi-
sions satisfy each of these factors.
C.
We find the Dow Corning and In re Railworks Corp. fac-
tors instructive and so commend them to a bankruptcy court
when considering whether to approve nondebtor releases as
part of a final plan of reorganization. That said, we agree with
Appellants that approval of nondebtor releases in this context
should be granted cautiously and infrequently. See Deutsche
Bank AG, 416 F.3d at 142 ("No case has tolerated nondebtor
releases absent the finding of circumstances that may be char-
acterized as unique."); Dow Corning, 280 F.3d at 657-58
("[S]uch an injunction is a dramatic measure to be used cau-
tiously . . . ."); Gillman v. Cont’l Airlines (In re Cont’l Air-
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 13
lines), 203 F.3d 203, 212-213 (3d Cir. 2000) (recognizing that
nondebtor releases have been approved only in "extraordinary
cases"). Thus, while we are satisfied to leave to a bankruptcy
court the determination of which factors may be relevant in a
specific case, the meaningful exercise of appellate review at
a minimum requires that the court make specific factual find-
ings in support of its decision to grant equitable relief.
In this case, although the bankruptcy court did not explic-
itly state that it was applying the Dow Corning factors, it
clearly considered the case in deciding whether to approve the
Release Provisions. We find, however, that the bankruptcy
court’s ultimate decision to grant equitable relief lacks ade-
quate factual support. Put simply, to conclude, as the bank-
ruptcy court did, that the Release Provisions (1) were
"essential" to NHF’s reorganization and appropriate given
NHF’s "unique circumstances"; (2) were an "essential means"
of implementing the confirmed plan; (3) were an "integral ele-
ment" of the transactions contemplated in the Confirmed
Plan; (4) conferred a "material benefit" on NHF, its bank-
ruptcy estate and its creditors; (5) were "important" to the
plan’s overall objectives; and (6) were "consistent" with
applicable provisions of the Bankruptcy Code, is meaningless
in the absence of specific factual findings explaining why this
is so. Indeed, without more, the court’s conclusions could
apply just as well to any number of reorganizing debtors.
Because the present record does not allow us to assess-–under
any standard of review—whether NHF’s circumstances entitle
it to the benefit of the Release Provisions, we must vacate the
district court’s judgment and remand the case to allow the
bankruptcy court—if the record permits it—to set forth spe-
cific factual findings supporting its conclusions.
IV.
We turn next to NHF’s contention that the appeal should be
dismissed as equitably moot.3 Specifically, NHF argues that
3
Ordinarily, we would address this procedural question before turning
to the merits. In this case, however, "[b]ecause equitable mootness bears
14 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
it has substantially consummated the Confirmed Plan and
relied on its finality and that Appellants should be foreclosed
from relief because they failed to stay the distributions under
the Confirmed Plan. We have recognized that "[t]he doctrine
of equitable mootness represents a pragmatic recognition by
courts that reviewing a judgment may, after time has passed
and the judgment has been implemented, prove ‘impractical,
imprudent, and therefore inequitable.’ " Retired Pilots Ass’n
of US Airways, Inc. v. US Airways Grp., Inc. (In re US Air-
ways Grp., Inc.), 369 F.3d 806, 809 (4th Cir. 2004) (quoting
MAC Panel Co. v. Va. Panel Corp., 283 F.3d 622, 625 (4th
Cir. 2002)). In the bankruptcy context, a court "may dismiss
an appeal as equitably moot ‘when it becomes impractical and
imprudent to upset the plan of reorganization at [a] late date.’"
Id. (quoting MAC Panel Co., 283 F.3d at 625).
We look to the following factors to determine whether an
appeal should be dismissed because it is equitably moot:
(1) whether the appellant sought and obtained a stay;
(2) whether the reorganization plan or other equita-
ble relief ordered has been substantially consum-
mated; (3) the extent to which the relief requested on
appeal would affect the success of the reorganization
plan or other equitable relief granted; and (4) the
extent to which the relief requested on appeal would
affect the interests of third parties.
Id. Here, NHF contends that all of the factors favor dismissal
of the appeal.
Appellants do not contest that NHF substantially consum-
mated the Confirmed Plan by distributing approximately $20
only upon the proper remedy, and does not raise a threshold question of
our power to rule, a court is not inhibited from considering the merits
before considering equitable mootness." Deutsche Bank AG, 416 F.3d at
144.
BEHRMANN v. NATIONAL HERITAGE FOUNDATION 15
million of estate assets to holders of allowed claims on
November 12, 2009, more than a month before Appellants
docketed their appeal to the district court, and almost a year
before they docketed their appeal to this court. Instead, they
argue that substantial consummation alone is insufficient to
moot an appeal from an order of confirmation.
Without endorsing Appellants’ contention that substantial
consummation is alone insufficient, we find that the balance
of factors does not support dismissal of the appeal. First,
Appellants sought and obtained a stay, although limited in
scope, and then were rebuffed in their efforts to obtain a fur-
ther stay pending appeal.
NHF has also failed to demonstrate how the relief
requested by Appellants would jeopardize the success of the
Confirmed Plan. On this point, NHF argues that it could incur
substantial litigation costs in defending its directors and offi-
cers against claims brought by dissatisfied donors that would
threaten its ability to continue operations. However, here NHF
merely parrots certain conclusions of the bankruptcy court,
for example, that the Release Provisions are "important to the
overall objectives of the Plan," J.A. 887, and we have already
noted that such conclusions lack adequate factual support. We
also note that the Confirmed Plan expressly provides that any
clause may be severed should it be determined to be unen-
forceable, which suggests that the plan would remain viable
absent the Release Provisions.
Finally, NHF never explains how third-party interests
would be affected by the relief sought, merely articulating
potential harm that the organization itself might incur. By
contrast, in Retired Pilots Ass’n of US Airways, the reorga-
nized debtor had entered into countless transactions with third
parties, including the securing of loans from lenders. There
we found that if a central provision of the reorganization plan
was unwound, such action would likely effect a great harm on
these third parties. 369 F.3d at 810. On this record, we are
16 BEHRMANN v. NATIONAL HERITAGE FOUNDATION
unable to find that the interests of third parties would be
affected by the relief requested by Appellants.
In sum, we decline to exercise our discretion to dismiss this
appeal as equitably moot.
V.
For the foregoing reasons, we vacate the judgment of the
district court and remand this case with instructions to the dis-
trict court to remand it to the bankruptcy court for further pro-
ceedings consistent with this opinion.
VACATED AND REMANDED