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Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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F !LED 

United States Court of Appeals 

Tenth Cirr-nit 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

APR .. 2 1990 

ROBERT L. HOECKER 

Clerk IN RE: KAISER STEEL CORPORATION, ) 

) 

Debtor. ) ____________________ ) 

) 

PENSION BENEFIT GUARANTY CORPORATION, ) 

) 

Creditor-Appellant, ) 

) 

V • ) 

) 

KAISER COAL CORPORATION; KAISER STEEL ) 

CORPORATION; THE CHASE MANHATTAN BANK, ) 

N.A.; SUNWEST BANK GROUP; SANTA FE ) 

MINING; SALT RIVER PROJECT AGRICULTURAL) 

IMPROVEMENT & POWER DISTRICT; UNITED ) 

MINE WORKERS OF -AMERICA; MCNALLY ) 

PITTSBURGH; UNITED MINE WORKERS HEALTH ) 

& RETIREMENT FUND; MELLON FINANCIAL ) 

SERVICES #4; UNSECURED CREDITORS' ) 

COMMITTEE OF KAISER COAL; and UNSECURED) 

CREDITORS' COMMITTEE OF KAISER STEEL, ) 

) 

Appellees. ) 

) 

IN RE: KAISER STEEL CORPORATION, ) 

) 

Debtor. ) ____________________ ) 

) 

PENSION BENEFIT GUARANTY CORPORATION, ) 

) 

Creditor-Appellant, ) 

) 

V • ) 

) 

KAISER STEEL CORPORATION; KAISER COAL ) 

CORPORATION; SUNWEST BANK GROUP; SALT ) 

RIVER AGRICULTURAL IMPROVEMENT & POWER ) 

DISTRICT; UNSECURED CREDITORS' ) 

COMMITTEE OF KAISER COAL; LONG-AIRDOX ) 

CORPORATION; UNITED MINE WORKERS OF ) 

AMERICA; THE CHASE MANHATTAN BANK, ) 

N.A.; UNITED MINE WORKERS HEALTH & ) 

RETIREMENT FUND; MELLON FINANCIAL ) 

No. 89-1100 

(D. Colorado) 

(D.C. No. 89-Z-140) 

No. 89-1101 

(D. Colorado) 

(D.C. No. 88-Z-1470) 

Appellate Case: 89-1101 Document: 01019970740 Date Filed: 04/02/1990 Page: 1 
" SERVICES; ASSOCIATES COMMERCIAL ) 

CORPORATION; MCNALLY PITTSBURGH; ) 

UNSECURED CREDITORS' COMMITTEE OF ) 

KAISER STEEL; and SANTA FE MINING, ) 

) 

Appellees. ) 

ORDER & JUDGMENT* 

Before MCKAY, BARRETT and ANDERSON, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); -10th Cir. R. 34.1.9. The cause is therefore ordered 

submitted without oral argument. 

Appellant Pension Benefit Guaranty Corporation ("PBGC") 

appeals the district court's dismissal of its appeals of two 

orders of the bankruptcy court approving a settlement. We affirm. 

BACKGROUND 

In 1984, Citibank, N.A. financed a leveraged buyout ("LBO") 

of the Kaiser Steel Corporation ("Kaiser Steel"). Kaiser Coal 

Corporation ("Kaiser Coal") is a subsidiary of Kaiser Steel. Its 

primary assets were its long-term contract to sell coal to the 

Salt River Project Agricultural Improvement and Power District 

("SRP'') for substantially more than the current market price, and 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

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Appellate Case: 89-1101 Document: 01019970740 Date Filed: 04/02/1990 Page: 2 
its mines and reserves in New Mex i co. Kaiser Coal took various 

loans from Chase Manhattan Bank ("Chase"), Mellon Bank, N.A., the 

Royal Bank of Canada, and Banque Paribas (the four banks to which 

Kaiser Coal was indebted will be referred to collectively as "the 

secured creditors" or "the banks"). The loan proceeds were 

"upstreamed"- to Kaiser Steel, which used - the money to repay its 

LEO-related debt. The banks took security interests in Kaiser 

Coal's assets. 

In February 1987, Kaiser Steel and Kaiser Coal filed Chapter 

11 petitions. In March 1988, Kaiser Coal, because a debtor-inpossession has the same duties to the bankruptcy estate as a 

trustee, 11 u.s.c. § 1107(a), filed a fraudulent conveyance action 

against the secured creditors, claiming that reasonably equivalent 

value had not been received in exchange for the liens the banks 

had taken (because the loan proceeds were used by Kaiser Steel). 

The action sought to avoid the security interests. 

In September 1988, Kaiser Coal, SRP, and the secured 

creditors worked out a unified settlement under which SRP would 

buy out its contract, the banks would provide some much-needed 

interim financing (and receive a superpriority claim against the 

estate), and Kaiser Coal would withdraw its fraudulent conveyance 

action. 1· The -bankruptcy court -approved the settlement. PBGC, 

objecting to the dismissal of the fraudulent conveyance action, 

appealed the order to the district court. In January 1989, the 

1 Actually, the settlement was reached in stages. A settlement 

with the banks was reached in July. A mutually exclusive settlement was reached with SRP in August. The two plans were 

reconciled in September. 

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Appellate Case: 89-1101 Document: 01019970740 Date Filed: 04/02/1990 Page: 3 
bankruptcy court allowed Kaiser Coal to withdraw the · fraudulent 

conveyance action before a final order on PBGC's appeal. This 

order was also appealed to the district court. The district court 

dismissed PBGC's appeals as moot. 

DISCUSSION 

Under 11 u.s.c. § 363(m), the validity of a sale authorized 

by the bankruptcy court is not affected by the reversal or modification on appeal of the authorizing order. PBGC does not dispute 

that this section prevented the district court from reaching the 

sale of the coal contract back to SRP. Similarly, 11 U.S.C. 

· § 364(e) ~rotects the · validity· of security interests obtained for 

extensions of credit approved by the bankruptcy court. PBGC does 

not contest the applicability of this section to the interim 

financing portion of the settlement. Because the bankruptcy 

court's authorization of such transactions cannot be altered on 

appeal, in the absence of a stay an appeal of such an authorizat i on is moot. In re Onouli-Kona Land Co., 846 F.2d 1170, 1171 

(9th Cir. 1988); In re The Charter Co., 829 F.2d 1054, 1056 (11th 

Cir. 1987), cert. denied, 485 U.S. 1014 (1988); In re Sax, 796 

F.2d 994, 997 (7th Cir. 1986); Willemain v. Kivitz, 764 F.2d 1019, 

·1023-·(4th Cir. 1985); In re Vanguard Oil & Serv.- Co., 88 Bankr. 

576, 579 (E.D.N.Y. 1988); see also In re Bel Air Assocs., Ltd., 

706 F.2d 301, 304-05 (10th Cir. 1983); In re Bleaufontaine, Inc., 

634 F.2d 1383, 1390 & n.14 (5th Cir. Unit B Jan. 1981). We must 

decide whether these sections also render entirely moot the appeal 

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Appellate Case: 89-1101 Document: 01019970740 Date Filed: 04/02/1990 Page: 4 
,/ 

- Of an order- which authorizes such ·transactions as part of a 

settlement. 

In In re Ellingsen MacLean Oil Co., 834 F.2d 599 (6th Cir. 

1987), cert. denied, 109 S. Ct. 55 (1988), the bankruptcy authorized an agreement under which several banks provided the debtor 

with interim financing in exchange for superpriority liens and the 

waiver of any objections to the banks' pre-petition security 

interests. Id. at 600-01. The Sixth Circuit held that 11 U.S.C. 

§ 364(e} rendered the appeal of the order entirely moot, rejecting 

the argument that the statute applied only to the liens and the 

propriety of the waiver could still be reviewed. Id. at 604; see 

also,~, In re Adams Apple, Inc., 829 F.2d 1484, 1488 (9th Cir. 

1987) (holding entirely moot appeal of order authorizing interim 

financing in exchange for which creditor received superpriority 

liens and security of its previously unsecured pre-petition 

loans). "[T]he portion in which the debtors agreed to 'settle all 

controversies regarding the validity of the Banks' security 

interests' . • • was part of the whole 'package.'" In re 

Ellingsen MacLean Oil Co., 834 F.2d at 602. 

Ellingsen is very similar to the case at hand. Just as 

Ellingsen held that the entire appeal, including the part about 

the waiver ·of the objecti'OI1S ' to the banks' security interests, was 

moot, we hold that PBGC's entire appeal, including the part about 

the dismissal of the fraudulent conveyance action, was moot. We 

agree with the courts below that the settlement of that action was 

part of one single "package." See, ~, R. Vol. XV at 36, 40; R. 

Vol. · XVII at · 4-:-8. Our review of the record and the relevant 

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Appellate Case: 89-1101 Document: 01019970740 Date Filed: 04/02/1990 Page: 5 
authorities _leaves us disinclined to permit this settlement to be 

unwound for any of the reasons propounded by PBGC. 2 

The judgment of the district court dismissing PBGC's appeals 

as moot is AFFIRMED. 

2 

ENTERED FOR THE COURT 

Stephen H. Anderson 

Circuit Judge 

One final note: Tenth Circuit Rule 31.4 states that 

"all parties on a side [of an appeal] shall join in a 

single brief to the greatest extent practicable. Any 

brief filed separately by one of the multiple parties 

shall contain a certificate of counsel plainly stating 

the reasons why the separate brief is necessary." 

10th Cir. R. 31.4. We received a brief from appellees Kaiser Coal 

and Kaiser Steel and a brief from the appellee banks, but only the 

banks filed a certificate explaining the need for separate briefs. 

Moreover, no impracticability is apparent from the briefs, which 

essentially mirror each other. Superfluous briefs add to both our 

toil and the parties' expenses. We look with disfavor upon such 

conduct. 

In addition, all of the parties failed to fulfill their 

responsibility to the court to make specific citations to the 

record for each significant factual assertion in the briefs. This 

can also hinder the resolution of an appeal. 

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