1 The briefs filed in this appeal reference a single Debtor,

“Berryman Products, Inc.,” but the appellees are listed as

“Berryman Products, Inc. and Berryman Products of Delaware, Inc.”

We refer to a sing le Debtor throughout the opinion, but to the

extent that both Berryman Products, Inc. and Berryman Products of

Delaware, Inc. are affected, the term Debtor i n the singular

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 98-10046

Summary Calendar

__________________________

In The Matter Of: BERRYMAN PRODUCTS, INC.

Debtor

__________________________

NATIONWIDE MUTUAL INSURANCE COMPANY;

MATT VAN HART

Appellants,

versus

BERRYMAN PRODUCTS, INC.;

BERRYMAN PRODUCTS OF DELAWARE, INC.

Appellees.

___________________________________________________

Appeal from the United States District Court

for the Northern District of Texas

___________________________________________________

Before WIENER, BARKSDALE, and EMILIO M. GARZA, Circuit Judges.

WIENER, Circuit Judge:

This appeal arises from the Chapter 11 bankruptcy proceeding

of Berryman Products, Inc. and Berryman Products of Delaware, Inc.

(“Berryman” or “the Debtor”). 1 Appellants Nationwide Mutualreferences both entities.

2

Insurance Company and Matt Van Hart (collectively “Nationwide”)

appeal the district court’s grant of the Debtor’s motion to dismiss

Nationwide’s appeal of plan confirmation on the ground of mootness.

Based on the facts before us, we conclude that the merits of the

appeal are moot and therefore, dismiss the appeal.

I.

FACTS AND PROCEEDINGS

In March of 1993, the Debtor voluntarily filed for relief

under Chapter 11 of the Bankruptcy Code (the “Code”) as a result of

being cast in judgment for $7.5 million in a products liability

suit. That case arose from an accident that occurred in California

on which Matt Van Hart (“Hart”) sued Berryman and others alleging

that he sustained inj uries in a car that had been serviced with

brake cleaner manufactured by Berryman (the “Hart Lawsuit”). Among

others, Hart also sued the distributor of the brake cleaner, C.P.

Hunt Company (“Hunt”). After a jury trial, the California court

found Berryman an d Hunt jointly and severally liable for $7.5

million, being 80% of the damages sustained by Hart.

At the time of the accident, Berryman was insured by Corporate

Underwriters, Ltd., which failed to indemnify Berryman for losses

it suff ered by virtue of the Hart judgment. The specter of this

judgment motivated Berryman to file voluntarily for reorganization

under Chapter 11 of the Code. Hunt, the party jointly and2 Unlike Berryman, Nationwide did not appeal the verdict in the

Hart Lawsuit.

3 severally liable with Berryman for the Hart judgment, was insured

by Nationwide, which then settled with Hart. Nationwide agreed to

pay Hart $6 million in exchange for a release from liability and

the authority to pursue claims in Hart’s name.

One month after Nationwide settled with Hart, Berryman filed

suit against its own risk manager a nd Nationwide (the “Berryman

Lawsuit”), alleging negligence, breach of express and i m plied

contracts and warranties, breach of fiduciary duties, and negligent

misrepresentation in connection with their conduct during the Hart

Lawsuit. Additionally, Berryman appealed the verdict in the Hart

Lawsuit, which was eventually reversed for tria l errors and

remanded in early 1995 for a new trial. 2 Both the Hart and

Berryman Lawsuits are still pending.

At the onset of the Berryman bankruptcy proceeding,

Nationwide, on behalf o f Hunt, filed a proof of claim for $6

million, the amount paid on the personal injury/products liability

claim. On the recommendation of Berryman, the court estimated

Nationwide’s claim to be $6 million for purposes of voting and

evaluating the feasibility of a plan; resolution of the Hart and

Berryman Lawsuits was not predicted to occur until three to five

years after plan confirmation. Hart too filed a claim for the

remaining $1.5 million of the net $7.5 million personal injury3 During the pendency of the bankruptcy proceeding and the Hart

Lawsuit appeal, Matt Van Hart died and all claims in his name have

subsequently inured to his estate.

4 See 11 U.S.C. § 502(c) (1994); B A NKR

. R. 3018(a) (providing

for the estimation of claims for purposes of voting to accept or

reject a plan).

4 judgment. 3

The Debtor’s Reorganization Plan (the “Plan”) was structured

to assure repayment of 100% of the present va lue of the claims

through issuance of interest-bearing, fifteen year notes for the $6

million and $1.5 million, respectively. As state court litigation

was ongoing, the term of the notes was set to commence on entry of

final orders re solving all contested matters in the Hart and

B erryman Lawsuits. In other words, in an effort to avoid undue

delay in the administration of the Plan, Nationwide’s claims were

characterized as contingent and unliquidated. 4 Nationwide objected

to the Plan on various grounds and was the only class of creditors

to vote against it. The bankruptcy court held a two-day hearing to

evaluate the Plan and contemplate Nationwide’s objections,

ultimately confirming the Plan in July, 1994.

The next month, Nationwide sought a stay from the bankruptcy

court to prevent the Plan’s execution and appealed the bankruptcy

court’s order of confirmation to the district court. The

bankruptcy court denied the stay on the merits, and Nationwide

appealed its request for a stay to the district court. Citing the5 Bankruptcy Rule 8005 provides that a motion for stay pending

appeal made to the district court must show why the relief was not

obtained from the bankruptcy judge. B A NKR

. R. 8005. The district

court found that “appellant in no way indicates the reasons for the

bankruptcy judge’s denial of its request for a stay.” The district

court further noted that notwithstanding the procedural deficiency,

appellants failed to make the necessary showing that they were

entitled to a stay pending appeal.

5 failure to follow Bankruptcy Rule 8005, 5 the district court

likewise denied the stay. Nationwide neither filed an amended

request to correct the deficiencies noted by the district court nor

appealed the denial of the stay to this court. In the absence of

a stay to prevent execution of the Plan, the Debtor commenced

implementation by paying its creditors (with the exception of the

Nationwide claims, which were contingent).

As noted, Nationwide had also appealed the bankruptcy court’s

order confirming the Plan to the district court. Arguing that this

appeal was moot, the Debtor filed a motion to dismiss, which was

followed by an exchange of response and reply memos. More than a

year after the appeal of plan confirmation was filed

—— in January,

1996

—— Nationwide requested a hearing on the matter, which the

district court denied. Although it eventually set a hearing in

December, 1997, the district court ultimately canceled the hearing

and granted the Debtor’s motion, finding the appeal moot and

i nequitable. The district court focused on (1) Nationwide’s

failure to obta in or diligently seek a stay of the Plan, (2) the

Plan’s resulting implementation, and (3) the inevitable prejudice

that the Debtor would incur from a reversal. Nationwide timely6 Matter of Crowell

, 138 F.3 d 1031, 1033 (5th Cir. 1998);

Matter of U.S. Abatement Corp. , 79 F.3d 393, 397 (5th Cir. 1996);

In re Block Shim Dev. Co.-Irvi ng , 939 F.2d 289, 291 (5th Cir.

1991). Nationwide urges this court to adopt a plenary standard of

review because the district court on appeal did not have access to

the entire bankruptcy court record. In our review, we are not

limited to the record examined by the district court, but refuse to

adopt a plenary standard of review as it applies to issues of fact.

As we have repeatedly held, findings of fact are reviewed under the

clearly erroneou s standard. S ee Block Shim

, 939 F.2d at 291 (in

evaluating dismissal of a case as moot, the court “reviews factual

findings of the district court using a clearly erroneous standard

in light of the entire record.”).

6 filed this appeal.

II.

ANALYSIS

A. Standard of Review

In the bankruptcy appellate process, we perform the same

function as did the district court: Fact findings of the

bankruptcy court are reviewed under a clearly erroneous standard

and issues of law are reviewed de novo

. 6

B. Applicable Law

Nationwide contests the district court’s dismissal of its

appeal challenging confirmation of the Plan. Nationwide urges us

to reverse the order of dismissal an d reach the merits of the

appeal, contending that the mootness analysis appli ed by the

district court was flawed. Nationwide focuses on the district

court’s finding that reversal of the Plan would d isrupt trade

relationships and jeopardize the Plan’s economic core . Instead,

Nationwide asserts, the Debtor, in its exclusive discretion, could7 In re Manges

, 29 F.3d 1034, 1038-39 (5th Cir. 1994 ), c ert.

denied , 513 U.S. 1152 (1995).

8 Id. at 1039; s ee also In re Andreuccetti

, 975 F.2d 413, 418

(7th Cir. 1992); In re Crystal Oil Co. , 854 F.2d 79, 82 (5th Cir.

1988); In re Roberts Farms, Inc.

, 652 F.2d 793, 798 (9th Cir.

1981).

9 Manges , 29 F.3d at 1039; Block Shim , 939 F.2d at 291.

7 choose to forego repayment from its creditors, thereby maintaining

the status of the Plan and precluding a finding of mootness.

The standard for mootness in the bankruptcy context differs

from a constitutional mootness analysis. Article III of the United

States Constitution requires an inquiry into whether a live case or

controversy exists; in contrast, reviewing courts considering

bankruptcy appeals such as the one now before us seek to determine

whether implementation of the reorganization plan has progressed to

a point at which fundamental changes in the plan would jeopardize

its success. 7 Stated differently, we may decline to consider the

merits of confirmat ion when a plan has been so substantially

consummated that effective judicial relief is no longer available

— — even though the parties may have a viable dispute on appeal. 8

Historically, when evaluating dismissal of challenges to

reorganization plans in a bankruptcy case as moot, we have looked

to see whether (1) a stay has been obtained, (2) the plan has been

substantially con s ummated, and (3) the relief requested would

affect either the rights of parties not before the court or the

success of the plan. 9 Nationwide argues that in this case each of10 See In re Public Serv. Co. , 963 F.2d 469, 471-72 (1st Cir.)

(“the equitable component [to the mootness doctrine] centers on the

important public policy favoring orderly reorganization and

settlement of debtor estates”), cert. denied

, 506 U.S. 908 (1992);

In re Information Dialogues, Inc. , 662 F.2d 475, 476-77 (8th Cir.

1981) (“[T]he mootness doctrine promotes an important policy of

bankruptcy law —— that court-appointed reorganizations be able to

go forward in relian ce on such approval unless a stay has been

obtained.”).

11 Nationwide cites In re Federated Dept. Stores, Inc.

, 44 F.3d

1310 (6th Cir. 1995) and Matter of 203 LaSalle St. Partnership

, 126

F.3d 955 (7th Cir. 1997), cert. granted

, 118 S.Ct. 1674 (1998), to

support its proposition. In our view, however, neither of these

cases provide guidance. F ederated involved the appo intment of a

financ ial advisor, which the court termed a “collateral

consequence” to reorganization, 44 F.3d at 1315-16, and 203 LaSalle

St. involved the reversal of a bankruptcy plan because innocent

third parties were unharmed. 126 F.3d at 961.

12 29 F.3d at 1039-40.

8 the elements is lacking in some respect ; accordingly, we now

evaluate each in turn.

1. Failure to obtain a stay

The first question in a mootness inquiry is whether the

appellants secured a stay to prevent execution of the P lan. As

correctly noted by the Debtor, the requirement of a stay

encapsulates the fundamental bankruptcy policy of reliance on the

finality of confirmation orders by the bankrupt cy court. 1 0

Nationwide asserts that because it diligently pursued a stay, its

failure to obtain the stay does not require dismissal of the

proceeding as moot. 11 We rejected this argument in I n re Manges

. 12

In response to a similar argument, we cited with approval a Seventh

Circuit opinion that stated, “[a] stay not sought, and a stay13 Manges

, 29 F.3d at 1040, quoting In re UNR Indus., Inc.

, 20

F.3d 766, 769-70 (7th Cir.), cert. denied , 513 U.S. 999 (1994).

14 Manges

, 29 F.3d at 1040 (citing to sections of the Bankruptcy

Code and Bankruptcy Rules that prohibit reversal or modification

of unstayed bankruptcy orders).

9 sought and denied, lead equally to the implementation of the plan

of reorganization.” 13 In M anges we recognized that a reviewing

court’s decision not to grant a stay is often dispositive of a

mootness challenge on appeal, but that provisions of the Bankruptcy

Code “preordain” such a consequence. 14

In this case, Nationwide unsuccessfully petition ed both the

bankruptcy and district courts to obtain a stay, yet failed to

appeal the stay to this court or to amend its motion in the

district court to comply with procedural inadequacies. In the

absence of a stay, the Plan became effective and was implemented

over the course of four years. Consistent with our M anges opinion,

we conclude that even though Nationwide sought a stay

—— pursued

with a marked lack of diligence, we might add

—— the stay was

denied and the Plan was largely implemented. Consideration of this

factor thus militates in favor of dismissal for mootness.

2. Substantial consummation of the Plan

The second ques tion in the mootness inquiry is whether the

Plan has been substantially consummated, which the Code defines as:

(a) transfer of substantial ly all property the plan proposes to

transfer; (b) the debtor’s assumption of the business or management

of substantially all property dealt with by the plan; and (c)15 11 U.S.C. § 1101(2) (1994).

16 The district concluded that substantial consummation had

occurred based on 150 distribu tions to trade creditors totaling

$337,000. Subsequent to the briefings in the district court, the

Debtor made additional payments under the Plan. We evaluate all

payments made by the Debtor at the time this appeal, which includes

these additional payments. S ee Manges

, 29 F.3d at 1041 (“[T]his

court may review evidence as to subsequent events not before the

courts below which bears upon the issue of mootness.”)

10 commencement of distribution under the plan. 15 At this time —— more

than four years after the effective date of the Plan

—— the Debtor

has repaid $1.37 million in trade debt and has retired $2.15

million in secured debt owe d to an insider of the company; the

allowed claims has been effectively repaid in full. 16

Nationwide argues that because distributions have never

commenced on its $6 million claim, the plan cannot have been

substantially consummated. Nationwide attempts to characterize its

claim as non-contingent and liquidated because the bankruptcy

court, in an estimation proceedin g, recognized the indemnity

obligation owed to Nationwide by the Debtor. Nationwide supports

its argument by attempting to distinguish its right to indemnity

from the personal injury judgment in the Hart Lawsuit, insisting

that its indemnity claim is not c ontingent on the outcome of the

Hart Lawsuit appeal. We disagree. The judgment in the Hart

Lawsuit was partially satisfied by Nationwide, which sought

indemnity for its payment. This payment, however, is the basis of

t he Debtor’s claim against Nationwide on grounds of breach of

warranty and fiduciary duties (the Berryman Lawsuit).17 S ee Block Shim

, 939 F.2d at 291 (finding substantia l

consummation under the Code because “Block Shim and its creditors

have completed every transfer contemplated by the plan.”).

11 Consequently, the indemnity obligation owed by the Debtor to

Nationwide is directly contingent on the outcome of both the Hart

and Berryman Lawsuits.

Furth e rmore, the bankruptcy court estimated the value of

Nationwide’s claim at $6 million solely for voting and feasibility

purposes

—— not for allowance. Nationwide’s claim will not become

an “allowed” claim until the conclusion of all the state court

litigation. At the present time, the Debtor has fulfilled all

obligations allowed under the Plan, thereby res ulting in its

substantial consummation. 17 We find Nationwide’s arguments

unavailing and conclude that the second factor in this analysis

weighs in favor of dismissal as moot.

3. Effect on parties not before the court

The final question in the mootness inquiry is whether the

requested relief would affect the rights of parties not before the

court or the success of the Plan. Nationwide assures us that it

does not seek piecemeal revision or amendment of the Plan, but

requests reversal of Plan confirmation in its entirety. In seeking

reversal of confirmation, Nationwide contends that the Debtor need

not restore distributions made under the Plan, citing section 549

of the Code to support this proposition. Nationwide’s argument,

however, has no applicability in this context. Section 54918 11 U.S.C. § 549(a) (1994).

19 Id. (emphasis added). The Debtor in this case would be

outside of the two year limit.

20 See e.g. Manges

, 29 F.3d at 1043 (do ubting that the status

quo as it existed before the confirmation order could be attained

if the court unraveled the Plan); Miami Ctr. Ltd. Partnership v.

Bank of New York

, 838 F.2d 1547, 1557 (11th Cir. 1988 ) (holding

that it would be legally and practically impossible to restore the

status quo before confirmation), cert. denied

, 488 U.S. 823 (1989).

12 provides, in pertinent part: “[T]he trustee may avoid a transfer of

property of the estate . . . that is not authorized by this title

or by the court.” 18 Under this section, a two year statute of

limitations is placed on recovery of such post-petition transfers

unauthorized by the Code. 19 In contrast to the situation addressed

in section 549, the Plan expressly authorized the payments made by

the Debtor in accordance with the Bankruptcy Code. Section 549

does not address Nationwide’s argument, and Nationwide doe s not

cite any authority for the proposition that, in reversing the Plan,

the Debtor can forgo repayment from creditors. To the contrary, we

remain satisfied that reversal of the Plan means exactly that

——

placing the parties in the status quo pre-confirmation. 20

Unraveling the Plan at this time clearly would affect the

position of trade creditors who granted concessions to the Debtor

under the reorg anization. In fact, trade creditors reinstated

favorable pre-bankruptcy terms to the Debtor in exchange for full

satisfaction of their claims. The restored terms fueled the

success of the reorganization and allowed the Debtor to pass21 S ee Crystal Oil , 854 F.2d at 81 (“loss of this plan would

disrupt a very successful organization”).

13 savings on to its customers. Reversal of these payments would

frustrate creditor relations and the emergence of the Debtor as a

viable going concern in the economy. 21 We are satisfied that, like

t he first two factors, this third one weighs against interfer ing

with the Plan after the passage of some four years.

III.

CONCLUSION

The district court properly granted the Debtor’ s motion to

d ismiss because Nationwide’s appeal met the test for mootness

.

Nationwide did not secure or diligently pursue a stay to prevent

execution of the Pl an, as a result of which the Plan was

substantially consummated. The Debtor has extinguished 100% of the

obligations provided for in the Plan, with the exception of the

Nationwide claims, which presumably will be allowed when all state

court litigation is finally resolved. Returning the Debtor to the

pre-confirmation status quo now would undermine the success of the

Plan and jeopardize critical trade relations of the Debtor. For

the forgoing reasons, we decline to reach the merits of the Plan,

and we dismiss the appeal of confirmation order as moot.

APPEAL DISMISSED.