The Honorable Amy J. St. Eve, District Judge for the United 1

States District Court, Northern District of Illinois, sitting

by designation.

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 09-2984, 09-2985

IN RE:

MARK RAY and BERWICK BLACK CATTLE CO.,

Debtors.

APPEAL OF:

BECKER & POLIAKOFF, P.A.

Appeals from the United States District Court

for the Central District of Illinois.

Nos. 09 CV 1120, 09 CV 1121—Michael M. Mihm, Judge.

ARGUED JANUARY 22, 2010—DECIDED MARCH 8, 2010

Before RIPPLE and ROVNER, Circuit Judges, and ST. EVE,

District Judge.

1

ST. EVE, District Judge. Appellant Becker & Poliakoff,

P.A. (“Becker”) seeks to appeal from an order of the

district court affirming the bankruptcy court’s dismissal

of two Chapter 11 bankruptcy cases. Becker, however,
2 Nos. 09-2984, 09-2985

lacks standing to appeal the bankruptcy court’s order.

Accordingly, the judgment of the district court that

Becker had standing to appeal the bankruptcy court’s

order is vacated.

I. FACTUAL BACKGROUND

This appeal arises from the dismissal of the Chapter 11

bankruptcy proceedings of debtors Mark Ray and Berwick

Black Cattle Company (collectively, “Debtors”). Appellees

Ward Feed Yard, Inc., ILS Financing, Inc. (collectively,

“Ward”), and High Plains Credit PCA (“High Plains”)

(collectively with Ward, “Appellees”) are creditors of

Debtors. Debtors were in the business of buying, selling

and raising cattle. Involuntary Chapter 11 petitions

were filed against the Debtors on December 26, 2006. On

February 15, 2007, the United States Trustee (“Trustee”)

appointed an Unofficial and Official Committee of Creditors Holding Unsecured Claims (the “Committee”) to

represent Debtors’ creditors. The Committee retained

Becker, a Florida-based law firm, as litigation counsel.

At the outset of the bankruptcy cases, substantially all

of Debtors’ assets were liquidated in the ordinary course

of business. The sale of assets and operations failed to

produce sufficient cash proceeds as projected by Debtors,

and creditors were left with undersecured or unsecured

claims. As permitted by a series of financing orders

entered by the bankruptcy court, the Committee filed a

series of adversary complaints against High Plains and

Ward, which sought recovery of, inter alia, alleged preferential and fraudulent transfers. In June 2008, Debtors, the
Nos. 09-2984, 09-2985 3

Committee, Ward and High Plains negotiated an agreed

plan for reorganization. On September 23, 2008, the

bankruptcy court entered an order denying confirmation

of the plan after finding that the general releases

provided to High Plains and Ward were overbroad.

Also in September 2008, Becker filed fee applications

with the bankruptcy court for the fees, costs and administrative expenses it incurred as counsel to the Committee.

Shortly after filing its final fee application, the Becker

shareholder who had the primary responsibility for

the representation of the Committee, Ivan J. Reich, left

Becker and joined the law firm of Gray Robinson, P.A.

(“Gray Robinson”). By order dated October 22, 2008, Gray

Robinson substituted for Becker as litigation counsel to

the Committee.

After denial of the parties’ proposed reorganization plan

and further failed negotiations, on December 9, 2008,

Debtors filed a motion to dismiss the bankruptcy cases

for cause pursuant to Section 1112(b) of the Bankruptcy

Code due to the continuing diminution of the estate. High

Plains and Ward supported the motion to dismiss. On

December 11, 2008, the Trustee filed a motion to

convert the Debtors’ cases to Chapter 7 cases or, in the

alternative, to appoint a Chapter 11 trustee. On December 12, 2008, the Committee filed a motion to convert

or, alternatively, for appointment of a Chapter 11

trustee. Becker did not file any motions objecting to

these submissions to dismiss or to convert the bankruptcy cases.

On December 23, 2008, the bankruptcy court held an

omnibus hearing on all pending motions, including the
4 Nos. 09-2984, 09-2985

Debtors’ motion to dismiss and the Committee’s and

Trustee’s motions to convert or appoint a Chapter 11

trustee. No attorney from the Becker firm appeared at

the hearing. Mr. Reich, counsel to the Committee,

appeared for the Committee. During the hearing, the

bankruptcy court heard argument from counsel for Debtors, the Committee, the Trustee, Ward, High Plains, and

additional creditors. Mr. Reich represented during the

hearing that no evidence was necessary to resolve the

questions presented to the bankruptcy court regarding

dismissal or conversion of the bankruptcy proceedings.

No parties objected to this representation.

On January 15, 2009, the bankruptcy court entered an

opinion and order dismissing the Debtors’ Chapter 11

cases due to the utter insolvency of the estates. On

January 26, 2009, Becker filed two emergency motions

requesting reconsideration of the bankruptcy court’s

January 15, 2009 dismissal order. The bankruptcy court

denied Becker’s motions on January 28, 2009.

On February 5, 2009, Becker filed an appeal with the

district court. No other party filed an appeal. Ward and

High Plains objected to the appeal and argued that

Becker lacked standing to appeal the bankruptcy court’s

dismissal order. Although Ward and High Plains contended that Becker failed to appear at the hearing or

otherwise object to the motion to dismiss filed by

Debtors, without addressing the issues of Becker’s appearance or objection, the district court concluded that

Becker had a pecuniary interest in the bankruptcy court’s

dismissal order and therefore qualified as a person ag-
Nos. 09-2984, 09-2985 5

grieved with standing to appeal. After finding that Becker

had standing to appeal, the district court affirmed the

order of the bankruptcy court dismissing the Chapter 11

proceedings. Becker now appeals the dismissal of the

Chapter 11 proceedings.

II. ANALYSIS

Becker contends that the district court erred in

affirming the bankruptcy court’s dismissal of the

Chapter 11 proceedings. Ward and High Plains

contend that the district court improperly determined

that Becker had standing to appeal the bankruptcy

court’s dismissal order. Because it is dispositive, we

only address the issue of Becker’s standing to appeal.

A. Bankruptcy Standing

Bankruptcy standing is narrower than Article III standing. In re Stinnett, 465 F.3d 309, 315 (7th Cir. 2006) (citing

In re Cult Awareness Network, Inc., 151 F.3d 605, 607-08

(7th Cir. 1998)); In re Carbide Cutoff, Inc., 703 F.2d 259,

264 (7th Cir. 1983). “Only a ‘person aggrieved’ has

standing to appeal an order of the bankruptcy court.” In

re Schultz Mfg. & Fabricating Co., 956 F.2d 686, 690 (7th Cir.

1992) (citing In re UNR Indus., Inc., 725 F.2d 1111, 1120

(7th Cir. 1984)); see also In re Carbide Cutoff, Inc., 703 F.2d

at 264. “Prerequisites for being a ‘person aggrieved’

are attendance and objection at a bankruptcy court proceeding.” Id. (citing In re Commercial W. Fin. Corp., 761 F.2d

1329, 1334-35 (9th Cir. 1985)); see also In re Weston, 18 F.3d
6 Nos. 09-2984, 09-2985

860, 864 (10th Cir. 1994). These requirements reflect

the need for economy and efficiency in the bankruptcy

system. In re Commercial W. Fin. Corp., 761 F.2d at 1335. If

a party fails to appear at a hearing or object to a motion

or proceeding, it cannot expect or implore the bankruptcy court to address the issues raised by the motion

or proceeding for a second time. Because “the requirements of due process outweigh those of judicial efficiency,” however, these prerequisites are excused “if the

objecting party did not receive proper notice of the proceedings below and of his opportunity to object to

the action proposed to be taken.” Id. (internal citations

omitted).

In addition to the appearance and objection

prerequisites, “[o]nly those persons affected pecuniarily

by a bankruptcy order have standing to appeal that

order.” In re Stinnett, 465 F.3d 309, 315 (7th Cir. 2006)

(citing In re Cult Awareness Network, Inc., 151 F.3d at 607-

08). “[A] person has standing to object to an order if that

person can ‘demonstrate that the order diminishes the

person’s property, increases the person’s burdens, or

impairs the person’s rights.’ ” In re Cult Awareness

Network, 151 F.3d at 608 (citing In re DuPage Boiler

Workers, Inc., 965 F.2d 296, 297 (7th Cir. 1992) and In re

Andreuccetti, 975 F.2d 413, 416 (7th Cir. 1992)). The

purpose of this standard is to insure “ ‘that bankruptcy

proceedings are not unreasonably delayed by protracted

litigation by allowing only those persons whose

interests are directly affected by a bankruptcy order to

appeal.’ ” Id. (citing In re Andreuccetti, 975 F.2d at 416-17).

Indeed, “[c]ourts consistently have noted a public policy
Nos. 09-2984, 09-2985 7

interest in reducing the number of ancillary suits that

can be brought in the bankruptcy context so as to

advance the swift and efficient administration of the

bankrupt’s estate. This goal is achieved primarily by

narrowly defining who has standing in a bankruptcy

proceeding.” Id. (citing In re Richman, 104 F.3d 654,

656-57 (4th Cir. 1997)).

B. Application to Becker

High Plains and Ward contend that Becker does not

have standing to appeal from the final judgment entered

by the bankruptcy court because Becker failed to appear

or object to the requested dismissal and has not established that the dismissal order affected its pecuniary

rights. Whether an appellant is a “person aggrieved” is

a question of fact, and a district court’s ruling is

reviewed for clear error. Depoister v. Mary M. Holloway

Found., 36 F.3d 582, 585 (7th Cir. 1994).

As an initial matter, Becker contends that, as a result

of their failure to file a cross-appeal, High Plains and

Ward have not preserved the issue of Becker’s standing

to appeal. It is well settled that the issue of Article III

appellate standing “is not subject to waiver or forfeiture.” See, e.g., Freedom from Religion Found., Inc. v. Nicholson, 536 F.3d 730, 737 (7th Cir. 2008) (citing FW/PBS, Inc. v.

City of Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107

L.Ed.2d 603 (1990)). This appeal, however, presents the

question of whether Becker had bankruptcy standing, a

form of prudential standing which is more confined

than Article III standing, to appeal the bankruptcy
8 Nos. 09-2984, 09-2985

court’s order. In Mainstreet Org. of Realtors v. Calumet City,

505 F.3d 742, 747-49 (7th Cir. 2007), we held that

nonconstitutional or prudential lack of standing may

be waived by a party that fails to timely raise the issue,

but that a court may also raise and address a question

of prudential standing of its own accord. While we

have discretion to deem that Becker and High Plains

waived the issue of standing by failing to raise it in

the lower court, here we choose to address the issue, a

prerequisite to the Court reaching the merits of Becker’s

appeal.

Becker concedes that appearance and objection are

required for bankruptcy standing. Becker submits that

it met this requirement through the appearance of

attorney Reich, counsel to the Committee, at the

omnibus hearing in the bankruptcy court. Mr. Reich,

however, never submitted an appearance on behalf of the

Becker firm in the bankruptcy court. Moreover, at the

omnibus hearing, Mr. Reich introduced himself as “here

for the Committee” and never identified himself as representing the Becker firm or any administrative claimant.

In fact, the transcript of the omnibus hearing is devoid

of any mention of the Becker firm by Mr. Reich or any

other party. Furthermore, there is no evidence that

Mr. Reich ever informed the bankruptcy court that he

was appearing on behalf of Becker.

To support its claim that Mr. Reich represented Becker

at the hearing, Becker alleges that it and subsequent

counsel to the Committee, Mr. Reich, recognized their

unified interest in opposing dismissal. Becker relies on an
Nos. 09-2984, 09-2985 9

At oral argument, the Court offered Becker an additional 2

attempt to clarify and identify in the record “when counsel

appeared and objected in the bankruptcy court.” In addition to

responding to this inquiry, in its submission to the Court

Becker also presented a novel argument that it did not

receive notice of the December 23, 2008 hearing and that

therefore the appearance and objection requirements are

waived as to Becker. “[A]rguments raised for the first time

in oral argument or in supplemental filings are waived,”

however, and the Court will not consider this untimely argument. United States v. Bell, 585 F.3d 1045, 1055 (7th Cir. 2009).

affidavit submitted to the district court in which

Mr. Reich details his agreement to represent the interests

of Becker in the bankruptcy court. Becker also relies on

Mr. Reich’s affidavit to establish that Mr. Reich represented Becker with respect to a fee application that was

noticed for, but not addressed at, the December 23, 2008

hearing. Notwithstanding an undisclosed agreement

between Mr. Reich and Becker subsequent to Mr. Reich’s

departure from the Becker firm, however, the critical

issue remains whether there is any evidence in the bankruptcy court record that Mr. Reich filed an appearance

on behalf of Becker or informed the bankruptcy court or

the parties that Gray Robinson represented Becker with

respect to the dismissal order, fee application or otherwise. The record is devoid of any such indication.2

Becker’s reliance on In re Record Club of America, Inc., 28

B.R. 996, 999 (M.D. Pa. 1983) and Osborn v. Bank of

the United States, 22 U.S. 738, 6 L.Ed. 204 (1824) for the

proposition that there is a presumption that an attorney
10 Nos. 09-2984, 09-2985

represents the parties he purports to represent is

inapposite. The case law cited by Becker, while revealing

that evidence beyond an appearance is not necessarily

required to demonstrate that an attorney represents a

party, does nothing to save Becker’s claim. Nothing in

the record reveals an appearance on behalf of Becker in

the bankruptcy court.

Becker further maintains that an independent appearance was not required for Becker because the Committee’s constituency included Becker, a creditor and

administrative claimant under the Bankruptcy Code, and

the tenor of Mr. Reich’s argument at the omnibus hearing

reflected that he was advocating on Becker’s behalf. The

hearing transcript belies this contention. During the

omnibus hearing, Mr. Reich never refers to the Becker

firm, and while he makes reference to the administrative

claimants, Mr. Reich never asserts that he is there to

represent those entities. Becker’s reasoning is problematic for another reason as well. The Bankruptcy Code

prohibits counsel for the Committee from representing

“any other entity having an adverse interest in connection with the case.” 11 U.S.C. § 1103(b). As Becker itself

has recognized, as an administrative claimant its claims

are entitled to priority over the claims of the unsecured

creditors represented by the Committee. 11 U.S.C.

§ 507(a)(2). Indeed, Gray Robinson ultimately withdrew

as counsel to the Committee when it recognized that

its status as an administrative claimant, combined with

the fees it incurred while representing the Committee,

led to a conflict of interest with the Committee.
Nos. 09-2984, 09-2985 11

We also reject Becker’s argument that it directly appeared and objected to the dismissal order by filing two

emergency motions for reconsideration in the bankruptcy court. Becker identifies no legal authority to

support its contention that the filing of a motion for

reconsideration cures a failure to appear or object at an

earlier stage in the proceedings. Moreover, given that

“[a]rguments raised or developed for the first time in a

motion to reconsider are generally deemed forfeited,”

Becker’s motions do not remedy its initial failure to

appear and present its objections to the bankruptcy

court. See Pole v. Randolph, 570 F.3d 922, 938 (7th Cir. 2009)

(citing Mungo v. Taylor, 355 F.3d 969, 978 (7th Cir. 2004)).

The appearance and notice requirements serve an

important purpose to ensure that the parties present the

court with all evidence and legal authorities that may

aid the court in its decisions. In re Schwinn Co., 209 B.R.

887, 892 (N.D. Ill. 1997). Becker should not be permitted

to circumvent this requirement by raising its arguments

for the first time only after the bankruptcy court considered and ruled on the motion to dismiss. To permit

such a motion to cure the standing problem would undermine the economy and efficiency promoted by the

standing requirements in the first place.

Becker’s failure to enter an appearance or present its

objections to the bankruptcy court precluded it from

appealing the dismissal order to the district court. See

In re Schultz, 956 F.2d at 691 (parties lacked standing to

appeal where they failed to enter an appearance in

the bankruptcy case or present their objections to a
12 Nos. 09-2984, 09-2985

sale order to the bankruptcy court). The district court accordingly erred in concluding that Becker satisfied the

prerequisites for being a “person aggrieved” and had

standing to appeal the dismissal order.

III. CONCLUSION

Because we find that Becker lacks standing, the Court

vacates the district court’s judgment and remands with

instruction to dismiss the appeal for lack of standing.

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