NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 12-1290

_____________

IN RE: ALABAMA AIRCRAFT INDUSTRIES, INC., et al.,

Debtors

_____________

THE BOEING COMPANY,

Appellant

v.

_____________

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 1:11-cv-01003)

District Judge: Hon. Joseph E. Irenas

_____________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

December 21, 2012

BEFORE: McKEE, Chief Judge, and SLOVITER, VANASKIE, Circuit Judges.

(Opinion Filed: March 5, 2013)

_____________

OPINION

_____________
2

McKee, Chief Judge.

The Boeing Company (“Boeing”) appeals an order of the District Court affirming 

the Bankruptcy Court‟s judgment approving the vesting of certain causes of action 

belonging to Alabama Aircraft Industries, Inc. (“AAII”), in a litigation trust whose 

proceeds benefit both AAII and Kaiser Aircraft Industries, Inc. (“Kaiser”), a third-party 

acquirer. For the reasons set forth below, we will dismiss the appeal as moot. 

I.

As we write primarily for the parties, it is unnecessary to provide the factual or 

procedural history of this litigation except insofar as it helps our discussion.1

Boeing appealed the Bankruptcy Court‟s judgment to the District Court, and 

Kaiser moved to dismiss Boeing‟s appeal, claiming it was moot under 11 U.S.C. 

§ 363(m). That provision of the Bankruptcy Code protects a sale if bankruptcy estate 

property has been sold to a good faith purchaser and the party seeking reversal has failed 

to obtain a stay. On January 17, 2012, the District Court entered an order ruling in favor 

of Kaiser and the Debtors. See In re Alabama Aircraft Indus., 464 B.R. 120, 123-26 (D. 

Del. 2012). This appeal followed. 

 

1

The Bankruptcy Court had jurisdiction under 28 U.S.C. §§ 157 and 1134. The District 

Court had subject matter jurisdiction over Boeing‟s appeal of the Bankruptcy Court‟s 

order under 28 U.S.C. § 158(a). We have jurisdiction over Boeing‟s appeal from the 

District Court‟s order pursuant to 28 U.S.C. §§ 158(d) and 1291. Our review of the legal 

conclusions of both the Bankruptcy Court and the District Court is plenary. In re 

Heritage Highgate, Inc., 679 F.3d 132, 139 (3d Cir. 2012). We review the District 

Court‟s findings of fact for clear error. In re Marvel Entm’t Grp., Inc., 140 F.3d 463, 470 

(3d Cir. 1998). 
3

II.

Section 363(b)(1) of the Bankruptcy Code provides that the “trustee, after notice 

and a hearing, may . . . sell . . . other than in the ordinary course of business, property of 

the estate.” Section 363(m) then provides that “[t]he reversal or modification on appeal 

of an authorization under subsection (b) or (c) of this section of a sale . . . of property

does not affect the validity of a sale . . . under such authorization to an entity that 

purchased or leased such property in good faith . . . unless such authorization and such 

sale . . . were stayed pending appeal.” 

We have held that an appeal of the denial of a challenge of a sale of estate 

property may be dismissed as moot if (1) the sale was not stayed pending appeal, and (2) 

reversal or modification of the Bankruptcy Court‟s authorization would affect the validity 

of the sale. See Krebs Chrysler-Plymouth, Inc. v. Valley Motors, Inc., 141 F.3d 490, 499 

(3d Cir. 1998).

Here, Boeing failed to move for a stay of the sale after its oral request for a stay 

was denied in the District Court. Boeing also failed to move for a stay of the formation 

of the Trust in either the District Court or this court. Accordingly, the appeal should be 

dismissed as moot if reversal or modification of the Bankruptcy Court‟s sale order would 

“affect the validity of the sale.”2 Id.

 

2 Boeing contends that the Trust‟s creation is not a “sale” that would benefit from 

§ 363(m) protection and relies primarily on the fact that the Bankruptcy Court‟s order 

described it as a “fair and appropriate use” of estate property. J.A. at 422 (emphasis 

added). However, even if the Bankruptcy Court at some point referred to the Trust as a 

“use” instead of a “sale,” it is demonstrably clear that the Court intended the Trust be 

entitled to protection from appeal under § 363(m). Most notably, the Bankruptcy Court‟s 
4

In considering whether reversal or modification would affect the validity of a sale, 

courts must look to the remedies sought and assess whether these would impact the terms 

of the bargain struck by the buyer and seller. See id. A challenge to an authorized 

transaction will necessarily impact that transaction‟s validity if it seeks to affect “the 

validity of a central element,” such as the sale price. Pittsburgh Food & Beverage v. 

Ranallo, 112 F.3d 645, 649 (3d Cir. 1997).

In the present case, Boeing asks us to either reverse the vesting of the causes of 

action in the Trust or, in the alternative, to vacate the Bankruptcy Court‟s ruling so that 

the question of whether it was proper to create the Trust can be litigated anew at a later 

date. We agree with the District Court‟s conclusion that either of these remedies would 

inevitably undermine the validity of the sale. It is clear that the value of the assets that 

Kaiser purchased would be affected if the contract terms that Boeing challenges – i.e., 

those that entitle Kaiser to 90% of proceeds obtained from causes of action vested into 

the Trust – are either excised from the APA or burdened with the threat of further 

litigation. Accordingly, Boeing‟s appeal is moot.3

 

order included language stating that “the establishment of the Litigation Trust, and the 

vesting of the Trust Causes of Action in the Litigation Trust shall be protected by Section 

363(m) of the Bankruptcy Code in the event that this Order is reversed or modified on 

appeal.” J.A. at 185. This language reiterates what the Bankruptcy Court had already 

communicated to the parties during the September 1, 2011 hearing and clears any doubt 

regarding the Court‟s intention to protect the creation of the Trust under § 363(m).

3 Boeing also claims that Kaiser and the Debtors should not benefit from § 363(m) 

protection because, according to Boeing, they argued that the Trust‟s creation was not a 

“sale” at the Bankruptcy Court only to switch positions before the District Court. 

Boeing‟s argument is grounded on estoppel principles. This court has recognized that 

judicial estoppel is properly reserved for particularly egregious litigation practices. See 

Chao v. Roy’s Constr., Inc., 517 F.3d 180, 186 n.5 (3d Cir. 2008) (“[J]udicial estoppel is 
5

III.

For the reasons set forth above, we will dismiss the appeal as moot. 

 

an extreme remedy, to be used only „when the inconsistent positions are tantamount to a 

knowing misrepresentation to or even fraud on the court.‟” (quoting Krystal CadillacOldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 324 (3d Cir. 2003)). 

We do not believe that Kaiser‟s characterizations to this court or to the courts below rise 

to this level and find Boeing‟s estoppel argument unavailing.