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NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. EC-15-1202-KuMaJu

 )

KEYSTONE MINE MANAGEMENT II, ) Bk. No. 13-16845

 )

Debtor. )

_______________________________)

 )

KEYSTONE MINE COMPANY, LTD; )

KEYSTONE MINE MANAGEMENT, LTD.;)

KIRK L. DUSHANE; ROGER SMITH; )

PATRICK O'BRIEN, )

 )

Appellants, )

 )

v. ) MEMORANDUM*

 )

VINCENT A GORSKI, Chapter 7 )

Trustee; BUSH MANAGEMENT )

COMPANY; KEYSTONE MINE )

MANAGEMENT II, )

 )

Appellees. )

_______________________________)

Argued and Submitted on October 20, 2016

at Sacramento, California

Filed – December 2, 2016

Appeal from the United States Bankruptcy Court

for the Eastern District of California

Honorable W. Richard Lee, Bankruptcy Judge, Presiding

 

Appearances: Meir J. Westreich argued for the appellants; Lisa

Anne Holder of Klein Denatale Goldner Cooper

Rosenlieb & Kimball, LLP argued for appellee

Vincent A. Gorski, Chapter 7 Trustee; Charles A.

Bird of Dentons US LLP argued for appellee Bush

Management Company.

 

FILED

DEC 02 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

*This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8024-1.
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Before: KURTZ, MARTIN** and JURY, Bankruptcy Judges.

INTRODUCTION

The appellants herein are all creditors or equity interest

holders of the debtor Keystone Mine Management II. Over the

course of roughly 14 months, they opposed every step the

chapter 71 trustee Vincent A. Gorski attempted to take to

liquidate the debtor’s assets and reduce them to cash, in

accordance with his duties under § 704(a).

Ultimately, the bankruptcy court approved Gorski’s proposed

sale and compromise transaction with Bush Management Company,

pursuant to which Bush purchased all of Keystone Mine Management

II’s assets. The bankruptcy court’s bidding procedures order

provided interested parties with an opportunity to make competing

bids for the assets, but no competing bids were made, even though

Gorski had advertised the sale of the assets for a number of

months.

Appellants appealed both the bankruptcy court’s bidding

procedures order and its sale order, but they did not obtain 

a stay pending appeal. In addition, the bankruptcy court made

ample findings to support its determination that Bush was a good

faith purchaser and was entitled to the benefit of § 363(m),

which prevents appellate courts from disturbing the validity of a

bankruptcy sale even when the appellant prevails on appeal. The

**Hon. Brenda K. Martin, United States Bankruptcy Judge for

the District of Arizona, sitting by designation.

1Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all "Rule" references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037.

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bankruptcy court’s findings related to Bush’s good faith were not

clearly erroneous, so § 363(m) applies; it renders moot the

appellants’ appeals from the bidding procedures order and the

sale order.

The appellants also have appealed from the bankruptcy

court’s order approving the compromise aspects of the transaction

between Gorski and Bush. Under the particular circumstances of

this case, we decline to hold that § 363(m) applies to the

compromise order. Even though § 363(m) has not rendered moot the 

appeal from the compromise order, the appellants did not include

in their appeal brief any arguments specifically and distinctly

challenging the compromise order. Nor did they order a

transcript of the final compromise hearing, at which the

bankruptcy court stated its findings of fact and conclusions of

law orally on the record. As a result, we have not been

presented with (nor are we aware of) any grounds that would

justify reversal of the court’s compromise order.

Accordingly, we DISMISS AS MOOT the appeals from the

bankruptcy court’s bidding procedures order and its sale order. 

The compromise order is AFFIRMED.

FACTS

The litigation history surrounding Keystone Mine Management

II’s bankruptcy case is voluminous, but most of that history need

not be recounted here in order to dispose of this appeal.

1. Key Parties

We start with the key parties. At all relevant times before

the appointment of Gorski as chapter 7 trustee, Kirk DuShane had

been serving as the manager of the debtor and its two affiliates:

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Keystone Mine Management, Ltd. (“KMM”) and Keystone Mining

Company (“Company”). Debtor (“KMM II”) is a limited partnership

in which KMM holds a 60% partnership interest and DuShane holds a

40% partnership interest. In turn, Company nominally is the

general partner of KMM, but DuShane is Company’s general partner,

pursuant to which he exercised management control over all three

entities.

The other two named appellants – Patrick O’Brien and Roger

Smith – are, respectively, an accountant and a geologist who have

provided services over the years to the Keystone entities and who

claim to be creditors and/or equity investors in one or more of

these entities.2

The Keystone entities’ only significant assets consisted of

some mining equipment, 44 mining claims and 4 mill site claims

granted by the U.S. Bureau of Land Management, which claims

entitled the Keystone entities to conduct mining and milling

operations on the applicable U.S. government land.

William Weyerhaeuser is the sole trustee of a trust which,

over several years, beginning in 1988, lent the Keystone entities

roughly $2.6 million and received in exchange a deed of trust

encumbering 20 of the mining claims and a security interest in

the mining equipment. Weyerhaeuser’s trust also made a $500,000

equity investment in the Keystone entities in 1989.

John Hagestad was a relatively minor equity investor in the

2For ease of reference, our recitation of facts sometimes

refers to the appellants as “DuShane and the non-debtor Keystone

entities” because they are the most involved participants on

behalf of the appellants. No disrespect is intended to O’Brien

or Smith.

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Keystone entities who, in addition, loaned $60,000 directly to

DuShane. In 2012, Hagestad filed a state court lawsuit against

DuShane and KMM II, which lawsuit ultimately led to DuShane

filing a chapter 11 bankruptcy petition on behalf of KMM II in

October 2013.3 Hagestad also owns and controls a company known

as Bush Management Company. In June 2014, after KMM II commenced

its bankruptcy case, Bush acquired all of the Weyerhaeuser

trust’s loan and lien rights arising from the Weyerhaeuser

trust’s loans to the Keystone entities. By way of Bush’s

acquisition of the Weyerhaeuser trust’s rights and interests,

Hagestad transformed himself from a minor equity investor into

the Keystone entities’ sole significant secured creditor.

Gorski is the duly-appointed chapter 7 trustee for KMM II.

Almost immediately after he was appointed (in February 2014), he

commenced efforts to liquidate the estate’s assets by proposing

to sell those assets to Bush. 

2. Gorski’s Efforts to Sell the Keystone Assets

Over the course of a year and a half, Gorski persistently

sought to sell the mine and mill site claims and the mining

equipment on behalf of KMM II’s bankruptcy estate. At each step

of the way, DuShane and the non-debtor Keystone entities

vigorously opposed the trustee’s sales efforts. Initially,

before the Weyerhaeuser trust sold its loan and lien rights to

Bush, Gorski filed a motion seeking to sell the Keystone assets

to Bush free and clear of all liens and interests, including

3The bankruptcy court converted KMM II’s bankruptcy case

from chapter 11 to chapter 7 in February 2014.

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Weyerhaeuser’s loan and lien rights, which Gorski at the time

believed were subject to legitimate dispute. 

DuShane and the non-debtor Keystone entities opposed

Gorski’s first sale motion largely on the ground that the

$250,000 proposed sale price was – according to them – grossly

inadequate and the trustee’s marketing efforts were grossly

inadequate. According to DuShane and the non-debtor Keystone

entities, Gorski should have been marketing the assets for

somewhere between $10 million and $20 million, not including

royalty payments.4

In June 2014, after the bankruptcy court continued the

hearing on Gorski’s first sale motion, Bush acquired the

Weyerhaeuser trust’s loan and lien rights and expressed to Gorski

its desire to credit bid for the Keystone entities’ assets. The

trustee initially maintained that the loan and lien rights were

still subject to dispute and that Bush’s request to credit bid

should be restricted or prohibited.

However, by September 2014, Gorski had changed his mind

regarding the validity of Bush’s loan and lien rights. By then,

Gorski had completed his review and analysis of Bush’s proof of

claim, in which Bush asserted its rights as the successor to the

Weyerhaeuser trust’s loan and lien rights. In light of his

complete review and analysis, Gorski reached a new agreement with

4It is somewhat difficult to reconcile the Keystone

entities’ asserted market value with: (1) the Keystone entities’

admission that tens of millions of dollars in capital investment

were necessary before the mining and milling operations could be

rendered fully operational; and (2) the apparently undisputed

fact that the Keystone entities had not been able to adequately

capitalize or operate the mines and mill sites for decades.

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Bush for the sale of the Keystone assets and for the allowance of

Bush’s secured claim in the amount of $8.1 million.

The proposed agreement additionally contemplated a complex

set of bidding procedures aimed at permitting Bush to credit bid

while at the same time attempting to minimize the chilling effect

Bush’s credit bidding might have on competing bids. Under the

agreed bidding procedures, the Keystone assets were broken into

two groups: Group A – consisting of those assets over which Bush

held lien rights – and Group B – consisting of those assets over

which Bush held no lien rights. The Group A assets were subject

to an initial Bush credit bid of $500,000 and, if the Group A

assets were subject to competing overbids, Bush was permitted to

credit bid up to 50% of its $8.1 million allowed secured claim. 

To the extent Bush’s bid exceeded 50% of its allowed secured

claim, the bid would be considered a cash bid subject, however,

to offset against the remainder of its allowed secured claim. On

the other hand, the Group B assets were subject to an all cash

sale pursuant to which Bush committed to an initial bid of

$250,000.

In furtherance of his newly-proposed sale and compromise

transaction with Bush, Gorski filed his first bidding procedures

motion and his first compromise approval motion. Meanwhile, Bush

filed a motion for relief from stay seeking – in the event

Gorski’s proposed sale and compromise failed to occur by

January 15, 2015 – court authorization to proceed with

foreclosure pursuant to its lien rights.

In support of the compromise approval motion, Gorski

submitted a declaration specifically identifying many of the

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issues regarding the validity of Bush’s loan and lien rights and

generally explaining why the trustee determined that the

compromise and sale transaction was in the best interests of the

KMM II bankruptcy estate. In essence, after fully reviewing and

analyzing the arguments challenging Bush’s loan and lien rights,

and after reviewing the documentation supporting Bush’s proof of

claim, Gorski concluded that none of the arguments challenging

Bush’s loan and lien rights had any merit. Gorski then

summarized his reasoning why he believed that the compromise and

sale transaction should be approved, as follows:

Because the settlement with [Bush] allows me to sell

the Mining Claims, including [Bush's] collateral,

without the need to file an adversary proceeding to

determine the nature, extent, and validity of [Bush’s]

Debt and lien, limits [Bush's] credit bid to a low

opening amount, provides other cash and economic

benefits to the Bankruptcy Estate, and sets a cap on

[Bush’s] credit bid as a maximum of 50% of its claim, I

believe that the settlement should be approved as being

in the best interest of the creditors and the estate.

Gorski Decl. (Sept. 4, 2014) at ¶¶ 7-8.

Additionally, Gorski described the arm’s-length nature of

his negotiations with Bush:

The settlement was negotiated at arm's length between

[Bush] and me through a lengthy and vigorous

give-and-take process. It took weeks of negotiation,

dozens of emails, and multiple telephone conference

calls between [Bush's] attorney, representative, me,

and my attorney, and the provision by [Bush] of a

149 page proof of claim, to reach resolution. Every

possible challenge was raised to [Bush’s] Debt and

lien, and was thoroughly analyzed. Debtor has

challenged every action by me related to [Bush] as a

buyer, and [Bush] as creditor and lien holder.

Id. at ¶ 13.

To bolster Gorski’s proposed sale and compromise, Bush filed

a detailed legal memorandum asserting that all of the challenges

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to its loan and lien rights lacked merit. 

At the October 2014 hearing on Gorski’s and Bush’s motions,

the bankruptcy court indicated that it was not prepared to grant

relief as requested in any of the motions unless and until the

parties resolved a pending dispute regarding which of the

Keystone entities was entitled to legal title over the Keystone

assets. The court noted that the title dispute was the subject

of a pending adversary proceeding (Adv. No. 14-1112), denied

Bush’s relief from stay motion without prejudice and suspended

Gorski’s motions pending a final resolution in the adversary

proceeding.

In April 2015, after the court resolved the title dispute in

favor of Gorski and against DuShane and the non-debtor Keystone

entities, Gorski resumed his efforts to obtain bankruptcy court

approval of his sale and compromise with Bush. Gorski filed a

new compromise motion and a new bidding procedures motion. For

purposes of this appeal, these two motions did not materially

differ from the motions Gorski had filed in September 2014. 

Gorski also filed a new sale motion. In support of the sale

motion, Gorski detailed his marketing efforts, as follows:

8. I advertised the sale of the mining-related assets

with:

(a) the International Mining Journal (both print and

on-line publications (icmj.com)), which have run

continuously since September 2014 (see Exhibit “M” to

the Supplemental Exhibits in Support of the Motion);

(b) minelistings.com which has run continuously since

July 2014 (see Exhibit “N” to the Supplemental

Exhibits);

(c) Junior Miners (juniorminers.com/gold-miningclaims-for-sale.html) which has run continuously since

July 2014 (see Exhibit “O” to the Supplemental

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Exhibits);

(d) National Association of Bankruptcy Trustees

(marketassetsforsale.com), which was posted in May 2014

(see Exhibit “P” to the Supplemental Exhibits); and

(e) Loopnet.com, a real estate listing service, which

was posted in May 2014 (see Exhibit “Q” to the

Supplemental Exhibits).

I advanced all marketing costs. All online ads

pour-over to my firm's website, where voluminous

information is posted:

http://www.thegorskifirm.com/#!bankruptcy-sales/c18d4

According to the counter on my website, the page has

1,257 hits. (See Exhibit “R” to the Supplemental

Exhibits).

9. I reviewed Alibaba.com and found no listings for

gold mining claims – although there were listings for

gold mining equipment. I determined Alibaba.com was not

an appropriate marketing vehicle for Debtor's

mining-related assets. My review of The Northern Miner

indicated it does not offer classified ads.

10. I also worked to find a broker to list the mining

claims. I contacted two real estate brokerage firms

(one in Bakersfield and one in Ridgecrest), and

requested referrals when those firms could not assist

[me]. Even so, I did not find a broker who dealt in

unpatented BLM mining claims such as those owned by

debtor.

Gorski Decl. (June 25, 2015) at ¶¶ 8-10.

DuShane and the non-debtor Keystone entities, once again,

opposed Gorski’s motions. According to the appellants, Gorski

incorrectly had concluded: (1) that the arguments challenging

Bush’s loan and lien rights had no merit; and (2) that Bush

should be permitted to credit bid for the Keystone assets while

its loan and lien rights remained the subject of bona fide

dispute. Furthermore, the appellants argued, Hagestad’s efforts

to acquire (through Bush) Keystone’s assets constituted a breach

of his fiduciary duties to his fellow Keystone partners. They

further maintained that the assets should be marketed for at

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least 90 days – free of any credit bid by Bush to potentially

chill competing bidders.

3. The Bankruptcy Court’s Rulings

In June 2015, the bankruptcy court granted Gorski’s bidding

procedures motion, thereby permitting Bush to bid up to 50% of

its allowed secured claim. And in July 2015, the bankruptcy

court granted Gorski’s sale motion and his compromise motion. 

Because no one else bid for KMM II’s assets, Bush was the

successful bidder and purchaser of KMM II’s assets.

The bankruptcy court issued a memorandum decision in which

it made a number of factual findings in support of its

determination in favor of the sale. Among other things, the

bankruptcy court found that the sale was in the “best interest of

the estate and its creditors,” “was fair and reasonable” under

the circumstances, “was negotiated and proposed in good faith,”

“was subject to competitive bidding at the hearing” and was “the

result of an arm's length transaction between the parties after

lengthy negotiations.”

The court additionally found that the trustee had adequately

marketed KMM II’s assets and had fully complied with the

procedures set forth in the sale motion and in the bidding

procedures order.

Furthermore, the bankruptcy court noted that the proposed

sale was the only currently-available means for the estate to

realize any value from the estate’s assets and that a failure to

approve the sale would almost certainly lead to Bush obtaining

relief from stay and foreclosing on the estate’s most valuable

assets. Even more to the point, the court opined that, without

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the sale, the trustee likely never would acquire any funds for

distribution to creditors.

As for Bush, the court found that it qualified as a good

faith purchaser under § 363(m) and that the consideration to be

paid by Bush was “fair and reasonable” under the circumstances,

was the “highest or best offer for the assets,” and constituted

“reasonably equivalent value.”

Moreover, the court pointed out that neither the trustee nor

any of the parties objecting to the sale had commenced any action

to challenge Bush’s lien rights or to object to Bush’s proof of

claim. As a result, the court determined that Bush’s proof of

claim was prima facie valid under Rule 3001(f) and deemed allowed

under § 502(a). The court thus concluded that there was no bona

fide dispute as to Bush’s loan or lien rights.

 DuShane and the non-debtor Keystone entities timely

appealed the bidding procedures order, the sale order and the

compromise order.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(N). Except as otherwise indicated below,

we have jurisdiction under 28 U.S.C. § 158.

ISSUES

1. Do the appellants have standing to appeal?

2. Is this appeal moot?

3. To the extent the appeal from the compromise order is not

moot, have the appellants presented us with a sufficient record

and briefing that would enable us to reverse the bankruptcy

court’s compromise order?

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STANDARDS OF REVIEW

The appellants’ standing is a question of law we consider de

novo. Menk v. LaPaglia (In re Menk), 241 B.R. 896, 903 (9th Cir.

BAP 1999).

The bankruptcy court’s determination that Bush qualified as

a good faith purchaser for purposes of § 363(m) is a finding of

fact reviewed for clear error. Adeli v. Barclay (In re Berkeley

Delaware Court, LLC), 2016 WL 4437616, *4 (9th Cir. 2016); 

Thomas v. Namba (In re Thomas), 287 B.R. 782, 785 (9th Cir. BAP

2002). A finding of fact is not clearly erroneous unless it is

illogical, implausible, or without support in the record. Retz

v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).

DISCUSSION

1. Appellate Standing

The appellants lack appellate standing unless they were

directly and adversely affected pecuniarily by the orders on

appeal. Fondiller v. Robertson (In re Fondiller), 707 F.2d 441,

442 (9th Cir. 1983); Cheng v. K & S Diversified Invs., Inc.

(In re Cheng), 308 B.R. 448, 455 (9th Cir. BAP 2004), aff'd,

160 Fed.Appx. 644 (9th Cir. 2005); In re Menk, 241 B.R. at 917. 

Gorski and Bush argue on appeal that the appellants do not

satisfy this “person aggrieved” standard because there is no

practicable means by which appellants, under any scenario,

reasonably could expect any distribution from the KMM II

bankruptcy estate. According to Gorski and Bush, the estate is

administratively insolvent, and the appellants, as unsecured

creditors and/or equity interest holders in KMM II, consequently

have no prospect of receiving any distribution regardless of the

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efficacy of the orders on appeal.

It is true that, when an appellant’s chances of receiving a

distribution from the bankruptcy estate are hopeless, the

appellant may lack standing to appeal orders affecting the size

of the bankruptcy estate. See In re Fondiller, 707 F.2d at 442;

see also Duckor Spradling & Metzger v. Baum Trust

(In re P.R.T.C., Inc.), 177 F.3d 774, 778 n.2 (9th Cir. 1999). 

That being said, Gorski’s and Bush’s standing argument assumes

that Bush’s secured claim is valid and unassailable for purposes

of determining the appellants’ standing. In other words, Gorski

and Bush seek to deny the appellants a merits determination on

the primary issue the appellants seek to raise on appeal – the

enforceability of Bush’s loan and lien rights.

Admittedly, the reasons Gorski and Bush offer about why the

enforceability of Bush’s loan and lien rights are not properly at

issue in this appeal are compelling. As Gorski and Bush point

out, the appellants never objected to Bush’s claim, never

commenced an adversary proceeding challenging Bush’s loan and

lien rights, and never took any other action they might have

taken to place Bush’s loan and lien rights squarely at issue

before the bankruptcy court. 

Gorski and Bush contend that, as a result of the appellants’

failures, the appellants should be determined to lack bankruptcy

appellate standing. But we are not convinced. The same points

that Gorski and Bush make in their appellate standing argument

can be considered, if necessary, in addressing the merits of the

appellants’ appeal. Indeed, the appellants’ failure in the

bankruptcy court to squarely place at issue Bush’s loan and lien

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rights ultimately might be fatal to their appeal, but we don’t

think that this failure should deprive them of appellate

standing.

Our decision not to dismiss these appeals on appellate

standing grounds is supported by the fact that the appellate

standing doctrine is not a constitutional mandate but rather is a

prudential, judge-made rule applied in the interests of judicial

economy and efficiency. See generally In re P.R.T.C., Inc.,

177 F.3d at 778 (describing nature of appellate standing

doctrine). In light of the circumstances described immediately

above, we decline to dismiss these appeals on appellate standing

grounds.

2. Application of Section 363(m) and Mootness

Gorski and Bush also argue on appeal that § 363(m) applies

to this matter and has rendered these appeals moot. 

Section 363(m) limits the remedies available on appeal when the

purchaser has acted in good faith. Section 363(m) provides as

follows:

The reversal or modification on appeal of an

authorization under subsection (b) or (c) of this

section of a sale or lease of property does not affect

the validity of a sale or lease under such

authorization to an entity that purchased or leased

such property in good faith, whether or not such entity

knew of the pendency of the appeal, unless such

authorization and such sale or lease were stayed

pending appeal.

11 U.S.C. § 363(m).

The Bankruptcy Code does not define the term “good faith”

for purposes of § 363(m), but the Ninth Circuit Court of Appeals

repeatedly has stated that, in this context, a lack of good faith

“typically [is] shown by fraud, collusion between the purchaser

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and other bidders or the trustee, or an attempt to take grossly

unfair advantage of other bidders.” In re Berkeley Delaware

Court, LLC, 2016 WL 4437616 at *4 (citing Paulman v. Gateway

Venture Partners III, L.P. (In Re Filtercorp, Inc.), 163 F.3d

570, 577 (9th Cir. 1998)); see also Onouli-Kona Land Co. v.

Estate of Richards (In re Onouli-Kona Land Co.), 846 F.2d 1170,

1173 (9th Cir. 1988); Community Thrift & Loan v. Suchy

(In re Suchy), 786 F.2d 900, 902 (9th Cir. 1985). The Ninth

Circuit also has said that a good faith purchaser is “one who

buys in good faith and for value.” Ewell v. Diebert

(In re Ewell), 958 F.2d 276, 281 (9th Cir. 1992) (citations and

internal quotation marks omitted).

Based on these and other Ninth Circuit authorities, we have

held that the following factors are relevant to the good faith

determination: (1) compliance with approved sale procedures;

(2) arms-length negotiations, leading to a sale reflecting a

purchase price at or near the market value of the property;

(3) opportunity for competitive bidding; (4) knowledge in advance

of the sale of who the proposed purchaser is; and (5) the absence

of any evidence of fraud, collusion or grossly unfair advantage

over other bidders. Zuercher Trust of 1999 v. Schoenmann

(In re Zuercher Trust of 1999), 2016 WL 721485, at *9 (Mem. Dec.)

(9th Cir. BAP Feb. 22, 2016).

Here, the bankruptcy court considered all of these factors

and concluded that the factors militated in favor of a finding

that Bush was a good faith purchaser for purposes of § 363(m). 

The court found that the sale “was negotiated and proposed in

good faith,” “was subject to competitive bidding at the hearing”

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and was “the result of an arm's length transaction between the

parties after lengthy negotiations.” The court also found that

the proposed sale was the only currently available means for the

estate to realize any value from the estate’s assets and that a

failure to approve the sale would almost certainly lead to Bush

obtaining relief from stay and foreclosing on the estate’s most

valuable assets. 

The appellants on appeal have not directly challenged any of

these findings. Nor did they specifically and distinctly argue

that the bankruptcy court’s good faith finding was clearly

erroneous. 

Even so, appellants did argue some points that, if proven

correct, arguably would undermine the bankruptcy court’s good

faith finding. The appellants primarily contend that Bush’s loan

and lien rights were unenforceable under Washington law. They

essentially argue that Gorski must have been acting collusively

with Bush because he refused to commence and pursue an action in

Washington state court to invalidate Bush’s loan and lien rights. 

The appellants further maintain that, had Gorski done so, the

value of KMM II’s assets would have been rendered largely

unencumbered, and then those assets could have been sold for

millions of dollars, without the chilling cloud of Bush’s credit

bid and Bush’s $8.1 million allowed secured claim hanging over

KMM II’s assets. 

The appellants additionally assert that Gorski initially

realized and acknowledged (in May and June 2014) that the loan

and lien rights were unenforceable but later made a 180-degree

turn (in September 2014) in order “to make the easiest sale to a

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party who made sure [Gorski] was being adequately compensated,”

and Gorski therefore permitted Bush to buy “a valuable asset for

a song, without even a semblance of competitive bidding.” Aplt.

Opn. Br. (Jan. 12, 2016) at p. 23.

Unfortunately for the appellants, the bankruptcy court found

and determined to the contrary. The bankruptcy court’s findings

reflect its belief that Gorski had diligently determined that

allowance of Bush’s secured claim for $8.1 million and the

proposed compromise and sale with Bush were in the best interests

of the bankruptcy estate and its creditors. In so finding, the

bankruptcy court apparently credited Gorski’s declaration

testimony representing that he painstakingly analyzed each and

every grounds for attacking Bush’s loan and lien rights and

ultimately determined that he could not prevail on any of them

even if he were to pursue them. The appellants obviously have a

different belief; however, the bankruptcy court’s findings are

not illogical, implausible or without evidentiary support, so we

must uphold them. See Wells Fargo Bank, N.A. v. Loop 76 LLC

(In re Loop 76, LLC), 465 B.R. 525, 544 (9th Cir. BAP 2012)

(citing In re Retz, 606 F.3d at 1196).

It is worth noting that the appellants never fully

articulated their argument on how Gorski could have defeated

Bush’s loan and lien rights in Washington state court. All they

ever presented to Gorski and the bankruptcy court were two or

three Washington decisions holding that a six-year statute of

limitations applies to actions on promissory notes and that the

statute of limitations defense can be asserted in Washington to

prevent a secured creditor from conducting a nonjudicial

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foreclosure under a deed of trust encumbering Washington real

property. See, e.g., Westar Funding Inc. v. Sorrels, 239 P.3d

1109, 1113 (Wash. Ct. App. 2010); Walcker v. Benson and

McLaughlin, P.S., 904 P.2d 1176, 1177-78 (Wash. Ct. App. 1995). 

They never offered any analysis or case citations establishing

that Washington law can and should be applied to determine the

enforceability of a deed of trust encumbering California real

property. In fact, the appellants never attempted to present,

either in the bankruptcy court or on appeal, any sort of choice

of law analysis. In contrast, the choice of law analysis that

Bush presented to the court indicated that California law would

apply to a mortgage or deed of trust encumbering California real

property, even if a lawsuit was commenced elsewhere.

More importantly, the bankruptcy court did not adjudicate 

the issue of the validity of Bush’s loan and lien rights, nor

would it have been appropriate for it to do so in the context of

the sale and compromise motion. The appellants never placed the

validity of Bush’s loan and lien rights squarely at issue before

the bankruptcy court. The appellants never objected to Bush’s

proof of claim and never commenced an adversary proceeding

seeking to determine the extent and validity of Bush’s lien. 

On appeal, the appellants essentially concede that, if they

had done so, they would have lost because of the forum-related

choice of law rules applicable to California bankruptcy courts. 

Aplt. Opn. Br. at p. 17; see also Sterba v, PNC Bank

(In re Sterba), 516 B.R. 579, 584-85 (9th Cir. BAP 2014). 

Appellants, nonetheless, claim on appeal that Gorski should have

authorized them to pursue the issue in Washington state court if

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Gorski was unwilling to pursue it there himself. Aplt. Opn. Br.

at p. 17. But there is nothing in the record indicating that

appellants asked for such authority, either from Gorski or the

bankruptcy court. The law is clear that the appellants could

have done so. See Avalanche Mar., Ltd. v. Parekh

(In re Parmetex, Inc.), 199 F.3d 1029, 1031 (9th Cir. 1999);

Hansen v. Finn (In re Curry and Sorensen, Inc.), 57 B.R. 824, 827

(9th Cir. BAP 1986). 

In sum, § 363(m) applies to the appellants’ appeals from the

bidding procedures order and the sale order. Consequently,

appellants could not unwind the sale to Bush even if they were to

prevail on appeal. Without this remedy, there is no meaningful

relief we could grant to appellants in their appeals from the

bidding procedures order and the sale order, so these two appeals

are moot. See Motor Vehicle Cas. Co. v. Thorpe Insulation Co.

(In re Thorpe Insulation Co.), 677 F.3d 869, 880 (9th Cir. 2012) 

(stating that an appeal is moot if it is impossible for the court

to grant any effective relief to the appellant).

Alternately, the appellants contend that their appeals from

the sale order and the bidding procedures order are not moot

because both California and Washington grant to the debtor a

right of redemption – and other rights – upon the occurrence of a

foreclosure sale. We acknowledge that there are a number of

Ninth Circuit cases recognizing a redemption right exception to

the mootness rules covering bankruptcy-court-issued sale orders;

however, all of these cases involved appeals from bankruptcy

court orders pertaining to foreclosure sales. See, e.g., Mann v.

ADI Invs., Inc. (In re Mann), 907 F.2d 923, 926 (9th Cir. 1990);

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Phoenix Bond & Indem. Co. v. Shamblin (In re Shamblin), 890 F.2d

123, 125 n.1 (9th Cir. 1989); Onouli-Kona Land Co. v. Estate of

Richards (In re Onouli-Kona Land Co.), 846 F.2d 1170, 1171-73

(9th Cir. 1988); Sun Valley Ranches, Inc. v. Equitable Life

Assurance Soc'y of the United States (In re Sun Valley Ranches,

Inc.), 823 F.2d 1373, 1375 (9th Cir. 1987). Here, in contrast,

the sale at issue was a trustee-initiated bankruptcy sale, rather

than a creditor-initiated foreclosure sale. We know of no Ninth

Circuit, California or Washington authority indicating that a

debtor has a right of redemption following a trustee-initiated

bankruptcy sale, nor have appellants pointed us to any such

authority.

3. Appellate Review of Compromise Order

This only leaves for our consideration the appellants’

appeal from the compromise order. Arguably, the compromise order

appeal also has been rendered moot under § 363(m). The Ninth

Circuit has applied § 363(m) to the approval of a settlement when

the settlement involved a sale of the bankruptcy estate’s legal

claims and the bankruptcy court invoked and followed the legal

standards applicable to § 363 sales. See In re Berkeley Delaware

Court, LLC, 2016 WL 4437616 at *3.

That being said, it is questionable whether we should extend

the holding of In re Berkeley Delaware Court, LLC to the present

compromise order appeal. Unlike in Berkeley Delaware Court, the

estate property sold here really did not include the estate’s

legal claims, per se. Furthermore, the bankruptcy court here

seemed to separately consider and rule upon the sale aspects and

the compromise aspects of the transaction entered into between

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Gorski and Bush. As best we can tell from the limited record

provided, the bankruptcy court’s approval of the compromise

aspects presumably focused on the legal standards governing

compromise of controversies under Rule 9019(a) and not on the

legal standards governing § 363 sales. 

Therefore, under the unique procedural history of this case,

we conclude that § 363(m) should not be applied to the bankruptcy

court’s compromise order, and the appeal therefrom is not moot. 

Even so, the appellants still cannot prevail. The appellants did

not order the transcript from the final compromise hearing held

on July 20, 2015, at which the bankruptcy court orally stated its

findings of fact and conclusions of law on the record. This

makes it impossible for us to conduct any meaningful, informed

review of the bankruptcy court’s compromise order. See Kyle v.

Dye (In re Kyle), 317 B.R. 390, 393–94 (9th Cir. BAP 2004),

aff'd, 170 Fed. Appx. 457 (9th Cir. 2006) (stating that the Panel

may exercise its discretion to dismiss or summarily affirm when

the appellant’s failure to provide an adequate record prevents

informed appellate review).

In addition, appellants’ appeal brief did not contain any

arguments specifically and distinctly challenging the bankruptcy

court’s compromise order. As a result, appellants have forfeited

any such arguments they could have made. See Christian Legal

Soc'y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010); Brownfield v.

City of Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir. 2010).

In short, appellants have not presented us with any grounds

that would justify reversal of the bankruptcy court’s compromise

order, nor are any such grounds evident from the record available

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to us. Accordingly, the compromise order must be affirmed

CONCLUSION

For the reasons set forth above, we DISMISS AS MOOT the 

appeals from the bankruptcy court’s bidding procedures order and

its sale order. The compromise order is AFFIRMED.

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