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Court Denies Asbestos Committee’s Motion for Leave to Appeal Bankruptcy Court’s Denial Order Regarding George-Pacific

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Court: United States District Court for the Western District of North Carolina, Charlotte Division

As previously reported here in the Asbestos Case Tracker, in 2017 Bestwall LLC became solely responsible for all asbestos-related liabilities of Georgia-Pacific LLC following a divisional merger. After the restructuring, Bestwall filed a voluntary petition for chapter 11 bankruptcy in the Western District of North Carolina to resolve asbestos-related claims against it by way of a trust under 524(g) of the Bankruptcy Code. The Bankruptcy Court subsequently approved the appointment of an Official Committee of Asbestos Claimants to represent asbestos claimants’ interests.

On August 15, 2018, the committee filed a motion to dismiss, requesting that the Bankruptcy Court either dismiss Bestwall’s bankruptcy case as a bad faith filing, or in the alternative, transfer venue. Ultimately, the Bankruptcy Court denied the committee’s motion, finding that the bankruptcy case was not objectively futile of any possible reorganization, nor subjectively filed in bad faith. The committee appealed the Bankruptcy Court’s Denial Order and filed a request for certification of a direct appeal to the Fourth Circuit Court of Appeals. The Bankruptcy Court certified the direct appeal to the Fourth Circuit; however, the Fourth Circuit denied the committee’s petition for direct appeal to the Court of Appeals. Thus, in the instant matter, pending before the court, the committee asserts that the Bankruptcy Court’s Denial Order was a final, appealable order and, in the alternative, seeks leave to appeal the Denial Order.

First, the court determined that the Bankruptcy Court’s Denial Order was not a final order. The finality of a bankruptcy order is determined by whether it “alters the status quo and fixes the rights and obligations of the parties” as opposed to when the parties “rights and obligations remain unsettled.” Bullard v. Blue Hills Bank, 575 U.S. 496, 501 (2015). According to the court, the Denial Order did not determine any claims or rights of the committee, nor did it dismiss the bankruptcy case. Rather, the Denial Order “simply allowed the [Committee’s] bankruptcy proceeding to continue, and the parties and claimants’ rights and obligations remained the same.

In addition, the court denied the committee’s request for leave to appeal the Bankruptcy Court’s Denial Order. Pursuant to 28 U.S.C. § 158(c)(2), bankruptcy appeals “shall be taken in the same manner as appeals in civil proceedings generally and are taken to the courts of appeals from the district courts.” Thus, district courts look to 28 U.S.C. § 1292(b), which states that leave to file an interlocutory appeal should be granted only when: (1) the order to be appealed involves a controlling question of law, (2) as to which there is substantial ground for difference of opinion, and (3) that an immediate appeal from the order may materially advance the ultimate termination of the litigation. Ultimately, the court determined that the Bankruptcy Court applied the correct and binding standard when determining that the case was not objectively futile. Thus, the issue on appeal is a pure factual question, which is not appealable, rather than a controlling question of pure law.

For these reasons, the court denied the committee’s motion in its entirety. 

Read the full decision here.