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In re Scopac

This appeal involves a dispute over compensation for diminution in the value of collateral during the pendency of a Chapter 11 bankruptcy. The appellants, holders of notes secured by the timber and nontimber assets of the Scotia Pacific Co. LLC (Scopac), seek review of the district court's dismissal of their appeal for lack of subject matter jurisdiction and contend that the bankruptcy court erred in denying their "superpriority" administrative claim on the bankruptcy estate under 11 U.S.C. �507(b). The appellees, supporters of Scopac's reorganization plan, argue that the district court lacked jurisdiction due to the noteholders' separate appeal of the plan confirmation order, an order this court affirmed, in large part, last year. They further assert that the bankruptcy court correctly calculated the value of the noteholders' administrative claim: zero. The court holds that jurisdiction exists and, on the merits, uphold an administrative priority claim of $29.7 million. The judgment of the district court is vacated, and the case is remanded with instructions to enter judgment for the noteholders for a $29.7 million administrative priority claim against the reorganized debtor. 5th U.S. Circuit Court of Appeals, No. 09-40307, 10-21-2010

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Published opinion

Before JONES, Chief Judge, PRADO, Circuit Judge, and OZERDEN,*fn1 District Judge.

This appeal involves a dispute over compensation for diminution in the value of collateral during the pendency of a Chapter 11 bankruptcy. The appellants, holders of notes secured by the timber and non-timber assets of the Scotia Pacific Co., LLC (“Scopac”), seek review of the district court’s dismissal of their appeal for lack of subject matter jurisdiction and contend that the bankruptcy court erred in denying their “superpriority” administrative claim on the bankruptcy estate. 11 U.S.C. § 507(b). The Appellees, supporters of Scopac’s reorganization plan, argue that the district court lacked jurisdiction due to the Noteholders’ separate appeal of the plan confirmation order, an order this court affirmed, in large part, last year. See In re Pacific Lumber Co., 584 F.3d 229 (5th Cir. 2009) (Jones, C.J.). They further assert that the bankruptcy court correctly calculated the value of the Noteholders’ administrative claim: zero. We hold that jurisdiction exists and, on the merits, uphold an administrative priority claim of $29.7 million.

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