The U.S. Court of Appeals for the Third Circuit has addressed the tension that may exist between the needs of a bankrupt debtor attempting to reorganize and the rights of nondebtor litigants in In re Philadelphia Newspapers, 2012 U.S. App. LEXIS 15419 (3d Cir. July 26, 2012). The Third Circuit held that the U.S. District Court for the Eastern District of Pennsylvania abused its discretion in finding that an appeal had been rendered equitably moot as a result of substantial consummation of the Philadelphia Newspapers debtors’ Chapter 11 plan of reorganization and the appellants’ failure to seek a stay. The Third Circuit held that the doctrine of “equitable mootness” may not be applied merely when a plan has been substantially consummated, but instead requires that the appeal at issue would actually undermine that plan.

Background

During the pendency of the cases in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, the debtors published an online editorial linking to certain articles published prepetition by The Philadelphia Inquirer regarding the management of a charter school. The managers of the school alleged that the articles were defamatory and that the online editorial constituted a “republication” of the allegedly defamatory material, and filed administrative expense requests in the Bankruptcy Court against the debtors, in the amount of $1.8 million, for the alleged damages caused by such postpetition act.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]