GLM DFW, Inc. v. Windstream Holdings, Inc.

This case concerns the dismissal of bankruptcy appeals as equitably moot without evaluating the merits of the appeals. Early in the Windstream bankruptcy case, the bankruptcy court authorized Windstream to pay $80 million to so-called “critical vendors,” whose unsecured claims were otherwise of the same priority as GLM’s claim. The bankruptcy court permitted Windstream to determine which creditors were “critical,” thus delegating its core judicial fact-finding function; it permitted the process to be secret such that Windstream did not have to publicly disclose who was being paid, thus violating the core bankruptcy principle of transparency; and it permitted the payments without requiring that Windstream satisfy strict elements governing criticality, thus violating the core bankruptcy principle of equality. In the end, the bankruptcy court allowed Windstream to pay these chosen creditors 100% of their prepetition claims, while most other creditors, like GLM, received nothing, not even a penny. The Second Circuit dismissed GLM’s appeal as equitably moot. Accordingly, the questions presented are: 1. Whether the doctrine of equitable mootness is a valid doctrine that can be applied to deny appellate review of bankruptcy court orders that are not expressly mooted by statute and that do not directly involve a challenge to a confirmed plan and, if so, what elements or factors govern the doctrine?