compulsory release contained in a plan a reorganization was unconstitutional ok but you've got a lot to cover here so i just kind of figured we did your honor you start  all that's correct are the fact that you're starting with the constitutional argument is it fair to say that you think that that statutory argument is a weaker one not at all really would you could would you concede that that's the minority position that the majority of courts think that code does authorize rd party releases there is certainly a circuit split on the issue and i'll answer the question in two respects st there's certainly a split among if you don't have to get to constitution with a constitutional issue you should probably not do it so can we can we just decide this case on the basis of equitable butis no not with respect to the stern issue stern issue has to be decided st because it goes to the very question of the constitutional power of the bankruptcy court to act true but if there's no case or controversy isn't that a separate means to to to decide this case but equitable mutinous is not a case of controversy issue it's not an article isn't it a case or controversy issue will cause more harm than good by on winding the plant so it's not to article three four to article three requirements up against each other equitable is purely a judge made doctrine it has no constitutional foundation at all so where you're faced with a situation where the claim that's been proper for the court is that the bankruptcy court did not act with a it's constitutional court or exceeded its constitutional power that question has to be deciding st before the court can consider dismissing the case on a ground isn't it true that justice roberts were very narrow opinions stern if we take your position expanding stern to situations like this it would in essence it brings to word chief justice rober didn't want to go with the distribution of of work between a bankruptcy court in the district court so the way i would answer the question your honor is that while stern itself was a narrow holding i mean after all the only thing that was issue advocate in the case was a account a claim that had been asserted by the debtor against the creditor as both the th circuit and phrase in and now just of course which in renewable energy when he was on the th circuit in both pointed out while the holding was narrow the reasoning that underlines the opinion is actually extremely broad and as judged as now justice course it said himself in that opinion the renewable energy opinion the court said repeatedly that bankruptcy courts have no constitutional power to adjudicate claims that neither stem from the bankruptcy itself nor would necessarily be resolved as part of the claims and i want to process are you suggesting that the judge of course which was expanding the scope of starr not at all i think he was constru he was attempting to restate what stirred says right he was attempting to articulate the underlying principles and stern and apply it to a context outside stark stern says expressly and repeatedly that the question is whether that action being taken was in trouble to the restructuring of the debt or credit relationship right that is incorrect or are it doesn't say that again and again and again now quite the contrary what it says again and again and again is that the question supreme court reporter we explained he's talking about the lag com case that supports the solution that preferential transfer can be heard in bankruptcy when the alleged behavior creditor has a because then the ensuing preference action becomes intra gold to the restructuring of the debtor creditor relationship in other words it's the fact that something's become interpol to the restructuring of the debtor craver relationship that makes it something that the bankruptcy court can look at and that's that language that language does appear but this is the point ok what that language is referring to is the queen's allowance process and it works it says and not just that it is explaining why the claims allowance process is something that is in trouble it's not saying that the claims process is everything it's saying the claims process it becomes intra goal to the debt or create a relationship and that's why the bankruptcy court can get to it isn't it i was claims processing he could have been done with it if the whole universe of stuff that's covered by the bankruptcy is court's authority under the constitution these claims processing all that need to be said was not claims processing were done but that isn't what happened there was a careful walking through of things and a description of why claims processing is constitutional it's because it's quote trickle to the restructuring of the debt or credit relationship right and i would respectfully disagree with that in our because the task that is actually formulated in start is in either stems from the bankruptcy but the bankruptcy itself nor the claim is necessarily resolving the claims while the process the court does not go on to say and if you have some other claim that would not necessarily be of its article three and th amendment process precedents in the context of bankruptcy and all of those cases catching landing cannot grand caon stern they were all dealing with situations where claims have been asserted either by the doubters or by creditors and the distinct the dividing line what distinguishes the results in the two kate in the four cases is whether the claim that was being as to which judgment was being honored would have been endorsed the releases at all but nd of all the channeling that we didn't do or so we said they were certainly possible that you could do this what would be the what was the purpose of really ending if what we were saying was he took this back and do something unconstitutional i don't think that the court well i don't think the constitutional issue had been raised before the court the court didn't consider it with respect to the statutory issue i don't think the court made a definitive decision on that issue one way or another and didn't have to because they remanded for other reasons  remand it just as we did in earlier cases on the assumption that this was something that could be done that based on continental two based on us based  on other cases where you know the years that this was something that in fact rd party releases are ok under some certain limited circumstances connell lays out the factors that you've got to meet if you meet him you can have a rd party release and we said that is an unbiased court in re global house but how is it that in the face of that line of authority you can say there's no basis for that here in the rd circuit so the way i would respond to the that's your honour's i think continental actually how was that the release in that case violated five hundred and forty and the court panel went out of its way to say explicitly we are not adopting a general rule as to one rd party releases would be permissible but it we are issue here so even if even if if continent even if it of us was interpreted caught now in that wag it still doesn't lead to the conclusion that that there's statutory authority to do a rd party release on the lines of the bankruptcy court here don't get me confused based on the same confusion it is the district court had the argument you made in the district court was similar that you know those those were tangential releases but by their definition if they're releases they're releasing unconstitutional as i constitutional or is not or is not authorized by statute work and i didn't get to this point even if you take the fairness and assess it even reorganization standards in continental it's not fair because boy didn't actually receive consideration for the release but what we're asking the court to do is to reverse strike the release from the plan only just of oil and gas and oil wouldn't be allowed to keep its its portion of the consideration because that eighty percent creditor it didn't receive any consideration for the release and when you're talking about equity why people want it makes no sense to penalize the innocent party when the whole reason we're here is because l h and th tried to ram through awful releases in a planned way they knew they had everybody on the over a barrel because the government was threatening to kill the company if it didn't have a saddle made by the cemetery so those are pretty extraordinary circumstances i'm not sure i understand the question are we just said the government had everybody they were everybody was over a barrel because the government was ready to pull the plug and if they pulled the plug that was it it was game up the company was dead crap that's cracked i think that is what the record  and that's that's not good line one case where you don't usually have a case usually if you're in a restructuring situation may have bad financial circumstances but you don't have a circumstance where a government actor is saying if i don't get my money by date x this is all over your company is gone but it's not an extraordinary circumstance that justifies the releases that were could help here particularly in the absence or separation obviously that's your position but this is not the usual case is it's i would concede that you know it's not the usual  significantly last i described it would have been significantly last that is correct but that also isn't the standard fairness is the standard in ninety three percent of the credit claims in the case like this was fair because they voted for it and wanted the boy  the collection of opt out lenders under the name lawyer for purposes of convenience the only group that said we don't like their voice is the only group of voted against it that is true i'm not sure you can infer that the other ninety three percent thought that it was fair they need a different business decision and it will end up if they thought it was unfair they would like the business sure we can we did for we had fucked up thing from the fact that ninety three percent of the credit claims thought it was a good deal nothing that is relevant i'm sorry not john nothing that's relevant to the issues that are before the court and sure people make business decisions all the time where they accept a bad deal even though they know it's unfair and right is not the same as constitutional mootness and so it doesn't have an article three issue it comes from courts recognizing including this court ready in the in re continental case that sometimes you have a situation where it would be unfair in equitable ready and destroy the investment back expectations of rd parties to grant the relief ready that's being sought now the only argument that that doesn't get to the very permanent legal questions which is do we have to decide the constitutional question st because if the district if the bankruptcy court acted without any jurisdiction at all it can't be the case that we just let it stand so just jordan t court exercise this court exercise discretion not to treat an argument as having been waived and there in the really isn't true but that's because we said it implicates the jurisdiction of the bankruptcy court and therefore poacher's and judge gordon i think that that's because what the otherwise it would be inconsistent with the supreme court's decision in wellness because wilmot wellness finds that the right to an article three adjudicator is a personal right that is waive a ball and that would not be true if it was a true quote  can this case be decided solely on merit yeah i think the kink in a case can for two reason and we don't even have to get to the kind you don't even have to get to the constitutional issue and the reason is because the constitutional issue is not a jurisdictional issue it's no different going to have to be making the case that  mr bradbury and his clients waived any are you assuming for the sake of discussion that you were right that all we were saying in re electing was by jurisdiction we met jurisdiction it's personal which to the individual actor you've got to be making the argument that they waived any argument about jurisdiction i actually don't judge george i mean i think they did in the bankruptcy court certainly found that at a three hundred and twenty five but i'm not relying on that for these purposes my point is that the right to an article three adjudicator is no different than a th amendment right or a due process right the district court did big big wave those are going well though the district court said he specifically said he was not deciding think the way they raised the jurisdictional argument and it's in front of us you think that in the face of that we could still blow past and get straight to quibble but i do judge jordan for two reasons one is it's not need quote jurisdictional argument as opposed to an authority organ it no different than a th amendment issue like the one that the supreme court had before ready it in knees and that's how the supreme court in steel go distinguish the nice case nd is this issue i think has also do because the he could treat the underlying decision as a reporter recommendation and answer this since the district court repeatedly applies it clearly erroneous standard in reviewing the bankruptcy court how could we review how could we is that when you get to the back half of his opinion where he engages in his review of the releases ready he only makes reference to clear error once and that's on page that's on page three hundred and two i think his reliance there would be consistent with  but it was effective we did over a review so it's ok i'm not sure how that how does it right well joe jordan i think that it's often the case that the courts will say that they are doing two things at the same time and i think that if you look at that in two mutually exclusive things i don't know the you are can't do both those things at the same time that's one of those on off switches it's not a risk that you're either in the world of the nobel or you're in the world of clear air or if you know you can't be and both at the same time  gets back to the answering the ready question the judge has asked me a few minutes ago how can you approach this i think you can approach it in one of three ways and to the extent that you disagree with any one of them than there ready are the other twenty one is to do what i said which is is i apologize to join you when i mean i know this is difficult for the advocates you've got limited time and we're taking your places other than where you are maybe you want to carry it but gauge with here you you've now said on a number of quote jurisdiction i think they are referring to constitutional authority and there is a well known distinction between jurisdiction and authority it's the distinction that was recognized by judge becker in core  states judge becker pointed out the bankruptcy courts don't have jurisdiction at all it is that it's all the jurisdiction of the district court the question is whether or not you have authority by the decision maker a magistrate judge doesn't have  jurisdiction the question is whether or not they have authority and that's what i'm talking about and that's why i'm saying that it's alternately not a jurisdictional issue at all assume we got past that right assuming that just for purposes of discussion that that we thought there was a there was an argument that was preserved was of wave that it was of greater magnitude and equitable concerns inherent in equitable mootness and we thought we needed to deal with  public rights or you can say this much cases properly in federal court but a rising interstate law and not necessarily resolvable in the claims allowance process trigger article three's protections quote which seems to focus very clearly on the process yeah i think there's a lot of discussion about the claims allowance process and sturm and there's a reason for that and that's because stern is a specific application of marathon marathon of course doesn't mention the claims of mouth process at all doesn't rely on the claims of the elements process and if it did then marathon would have been an easier case a simpler opinion and with imbued constitutional significance to the claims allowance process what stern is dealing with in this becomes very relevant to what just what now justice gor such was talking about in renewable energy sterling was simply holding that one hundred and fifty seven c which which provided of the bankruptcy code which provided that all counter claims of the estate against persons filing claims against the estate could be adjudicated on the merits by a bankruptcy court that had court jurisdiction to do that and the supreme court just simply said i think that was going to be wrong to go to get you to respond to the language i'm quoting ready to you quote cases properly in federal court that are rising under state law and not necessarily resolvable in the claims allowance process trigger article three and judge gordon what he is referring to is the type of case that that they had before them which was  a malpractise case and he's saying those who have like it doesn't look like he's limiting that he's saying quite the contrary says whatever else you can say you can say this much and then he has a say the case before me is he says cases and then he makes a broad statement well he focuses dead on on the claims allowance process well i think that to the extent that he's making a a broad statement he then goes on to address what is the intertwining that can give rise to a bankruptcy court deciding particular issues and he says that the intertwining that stern cares about is a quote intertwining that stern cares about concerns the law not the facts the source of the law generating a claim may inform its categorization as involving a public or private right now see this week just as i think it has a different view from the majority of the supreme court on public rights we saw that borne out in oil states and so i don't i would be reluctant to read too much into his a into dick in his opinion when he was sitting as a judge on the  th circuit having said that what you have here is of course and one set of facts but two entirely separate sets of law there is a federal law that is being a federal standards that are being appl bankruptcy court in granting non debtor releases and the fact that that me impair the fact that that me in the words of this court's decision in lazy days surely impact the state law claim doesn't make it  is impacted it whites it out as your as your point quite rudely says this is not just well it's going to have some effect they have no claim it is it is as a matter of legal fact over for them now it's not decided on the merits but it doesn't mean that nonetheless means it doesn't make it any less the case that they have they no longer have any claim right and then judge jordan that's exactly what happened in this course decisions in both linear electric and lazy days where in linear electric they have a state law a lien against rd parties against non debtors and when one year electric was done they had no state law i mean why because of the preemptive effect of applying federal law standards and that is exactly what is that's true we so for sake of discussion ok that's true that our rd circuit precedent allows for for rd party releases how do we claims just by saying hey it's in the plan it's in the plan so it's got to be core so everything goes to church services where the guardrails in what you're asking us to do it's just jordan i think there are several sets of guard rails the court has has recognized those  substantive guardrails that doesn't implicate the constitutional issues those are substantive guardrails when it comes to the application of non debtor releases they are the continental hallmarks they are the fact that you have to have had to have been able to say that you would have related to jurisdiction she for goes further and says that is the way the courts approach have have approached this but asked the question is that really necessary and ponders whether it would be or not now the district court in making its own what i w to jurisdiction to decide whether or not a confirmed plan would have precludes the fact and that's what we're really ultimately talking about here is what are the precludes of the facts of the grant of these releases i'm confused a little bit because i thought if you said this is related the over plan conformation and the granting of the non debtor releases then there's the question of could the bankruptcy court have exercised and thank you the could the bankruptcy court have exercised related to jurisdiction over the rico claim now no such jurisdiction was x or size because those claims were not adjudicated by the bankruptcy court but she concluded that she could have exercised related to and that's what course states but but as the pla about whether or not there can be a prick loose of a fact the court recognizes that accord they didn't have authority can still in turn order that will have absolute precludes a fact over other proceedings but the guardrails the course states puts around that is that that would only be true if the bankruptcy court could have exercised related to jurisdiction and here there's there's no dispute and indeed you have to court separately finding that the bankruptcy a think we actually have kind of backed into them but there are three ways that you can deal with that one is to do exactly what the district court did which is to say i need to satisfy myself that the bankruptcy court had  constitutional authority and one side do that then i can and should apply at will move this and i think that there's certainly not an abuse of discretion now that you don't have to do it in that order to as as metromedia the nd circuit i think is tribune recognized you can take them in any order that you want you you can decide merits that you can then turn to economic mess or were vice versa the nd way you could deal with this is the point that i was making with with judge jordan is i do think that certainly the the excuse me the district court intended to make an alternative holding ready that was not the that was not dependent on the bankruptcy courts holding visa v the the the non debtor releases i understand there is one reference in his discussion to two clear erin so you may feel like that that's not something that you could do although that's not inconsistent with ready with rule seventy two a because in some circumstances a report you can review a report recommendation for  error and then my rd point was the one that we spent the most of the time on which is simply this it's not a jurisdictional issue you don't have to decide the stern issue because it doesn't implicate article three jurisdiction or statutory jurisdiction it is a question of authority just like it would have been if it was a magistrate i think in those circumstances just like the th circuit recently applied equitable witness in the face of what i think was a due process challenge a case called  with respect to the point you pointed out that your your adversary although the pursuit of state of the confirmation were bankruptcy court they didn't thereafter how does that work into our now says if at all well i think that there are significant i think there are a number of cases that have recognized that the failure to pursue all possible remedies is a factor in deciding to move this and i think this court's recent decision in allied nevada for example made a point to to that effect and so they absolutely could have could have sought a stay from the district court now they say that that would have been futile i don't know why they're ready saying that that if it may be a very significant concession but they could have sought a stay from the district court they could have sought a stay from this court and there are other things they could have done to for example they could have objected to plan confirmation on the basis of one thousand one hundred and twenty nine dollars a seven which would have been to say  better off in a liquidation i'd be better off if i could go pursue these rico claims and take the one to five percent that i would recover from the company now they didn't do that because they wanted the benefits and now what they want is they want to have the benefits but without the burdens and voyage had would have had the same putative rico claims would been exactly the same situated they said the value proposition of settling these claims for three hundred and twenty five million dollars pay payment in many ways undoes the purported damage done you take the business and  it grow so that you can get back what you lost in one track transaction or another that requires that you shield it and that is exactly why the bankruptcy court at eighty three thousand five hundred and ninety nine dollars found that it wasn't just the equity holders it wasn't just the debtors but it was the ad hoc group that was insisting on the releases why not just for the benefit of the equity holders but so that the debtor could truly obtain a fresh start because otherwise the equity holders would have had the claims against the debtor for  that there's a very good reason why after asking for a stay from the bankruptcy court once it was denied we decided not to pursue what we perceive to be a frivolous appeal and that is what i would do in my opening argument which is that the government was going to kill this company if this if the settlement was not consummated by december thirty if there was no way we had we would be able to challenge that so no we did not pursue a stay that would have been fruitless i also would point out that the holders have the right if they wished not to consummate the plan until all fields have been exhausted they chose to waive that right and the reason they chose to waive that right is because they wanted the settlement to go through they wanted to get the benefit of the releases from the company where they were facing potentially million dollars liability they wanted to get that release and they wanted to get peace with the government so they know we took the rescue a new boy was going to appeal the release issue out how to get past all and explain to not how is it possible to tease you a little piece of it and not undermine the benefit of oregon that everybody else has planned so to responses so st of all for the same reason that with that the court was able to do it completely different factual scenarios but the basic idea is you excites from the plan the releases as to voip there's nothing in equitable about that because it doesn't require undoing the entire plan there's nothing in the plan that indicates that the sponsors will be able to get anything any portion of their contribution back out was all there's nothing in a quibble about that the the record is replete with declarations findings by the bankruptcy court endorsed by the district court that this would never have happened this would never have happened as a reorganization but for those releases right i mean there of all the things you can disagree with you can't disagree that the record says that  was that so it would never have happened without them so how is it consistent with that to say it's ok for you to say yeah everybody got released and we wouldn't have gotten anything like this reorganization but for those releases but now let us see one how how do those things work together i'm out of time man i just leave the question please because we know that prior to the chapter eleven proceeding being otherwise they were lying well you can't really get that far with these the they would have done it otherwise because they said they do it before because the facts found by the district court by the bankruptcy court asserted in the declarations are it never would have happened without the releases that's the factual foundation we were operating off of i don't believe there there is no there is a factual finding that the release is as i said probably construed were necessary in order to obtain the funding for the plan i don't believe there is a specific factual finding because nobody testified about this that had their had had they not been able to obtain a we specifically from boy who are if the boys release had been excised on appeal so  they would have it and i actually don't i'm sort of position is when the court said this is the centerpiece it could it wasn't really saying the boy releases were essentially was saying everything but the boy releases were