PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: ADAMSON COMPANY INC.,

a/k/a Old Dominion Fabricators,

Debtor.

DEVELOPMENT COMPANY OF AMERICA,

No. 95-2965

Creditor-Appellant,

v.

ADAMSON COMPANY INC., a/k/a Old

Dominion Fabricators,

Debtor-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Richmond.

Richard L. Williams, Senior District Judge.

(CA-95-507, BK-94-30676-S)

Argued: June 5, 1996

Decided: October 29, 1998

Before WIDENER and MURNAGHAN, Circuit Judges, and

HALL, Senior Circuit Judge.

_________________________________________________________________

Dismissed by published opinion. Judge Widener wrote the opinion, in

which Judge Murnaghan and Senior Judge Hall concurred.

_________________________________________________________________

COUNSEL

ARGUED: William Ray Baldwin, III, HIRSCHLER, FLEISCHER,

WEINBERG, COX & ALLEN, Richmond, Virginia, for Appellant.
Bruce H. Matson, LECLAIR, RYAN, P.C., Richmond, Virginia, for

Appellee. ON BRIEF: Michael Paul Falzone, HIRSCHLER, FLEISCHER, WEINBERG, COX & ALLEN, Richmond, Virginia, for

Appellant.

_________________________________________________________________

OPINION

WIDENER, Circuit Judge:

Development Company of America (Development Company), a

creditor in the chapter 11 bankruptcy case of Adamson Company, Inc.

(Adamson), appeals the district court's order affirming the bankruptcy

court's decision to allow Adamson to assume and assign a lease

between Adamson and Development Company on a manufacturing

plant in Chester, Virginia. Adamson contends the appeal should be

dismissed because Development Company failed to seek a stay of the

bankruptcy court's order before the transaction, which included the

lease assignment, was completed. We agree and dismiss the appeal.

Adamson, a fabricator of steel tanks, maintained a manufacturing

plant in Chester, Virginia leased from Development Company (the

Chester lease). On February 23, 1994, Adamson filed a chapter 11

bankruptcy petition and from that time operated its business as

debtor-in-possession. Unable to reorganize, Adamson found a buyer

to take over the lease and purchase substantially all of its assets,

including its name, inventory, machinery, equipment, contract rights,

and a parcel of real estate, for $1,925,000 cash. The buyer, McConnell Acquisition (McConnell), is owned by a single shareholder, Ward

McConnell, who also owns several manufacturing companies that

produce a variety of products including steel tanks similar to those

made by Adamson. McConnell's purchase agreement was contingent

on Adamson obtaining the required approval of the bankruptcy court,

so on March 7, 1995, Adamson moved for permission to sell substantially all of its assets and to assign the Chester lease to McConnell.

Development Company opposed the motion, arguing that it had terminated the lease or that Adamson had not properly exercised a right to

renew.

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Following two hearings, the bankruptcy court entered its memorandum opinion and order which approved the sale and authorized

Adamson to assign the lease to McConnell.

On May 8, 1995, Adamson and McConnell closed the sale and

transferred Adamson's assets, including the Chester lease, to McConnell. McConnell took possession of the plant and assets and continued

to operate the business. Development Company did not obtain a stay,

under Bankruptcy Rule 8005, of the bankruptcy court's order approving the sale and the assumption and assignment of the lease. Instead,

Development Company appealed the bankruptcy court's order to the

district court. The district court affirmed.

Adamson contends that because Development Company did not

seek a stay of the bankruptcy court's order authorizing the asset sale

and assumption and assignment of the lease, 11 U.S.C. § 363(m)

applies to moot Development Company's appeal. We agree.

11 U.S.C. § 363(m) provides:

The reversal or modification on appeal of an authorization

under sub-section (b) or (c) of this section of 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.

Although there is no question with respect to good faith, Development Company now asks us to hold either that Adamson's tenancy

under the lease was terminated or expired, as it previously argued, or

that the bankruptcy court erred in allowing the assignment to McConnell. In the absence of a stay, however, Adamson Company has essentially been liquidated through the sale of its assets. Many of the assets

Adamson sold, such as inventory and accounts receivable, have obviously already been irrecoverably altered by McConnell's continued

operation of the business. Furthermore, invalidating the lease assignment to McConnell would adversely affect individuals who are not

parties to this case, such as Adamson's former employees, bankruptcy

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creditors, and McConnell's current debtors and creditors. This reasoning, while supportive of § 363(m), is not necessary for our decision.

Development Company argues that it was not required to seek a

stay because 11 U.S.C. § 365 contains certain provisions with respect

to unexpired leases and that section contains no provision relating to

stays pending appeal. This argument, however, ignores both the plain

language and the purpose of section 363(m). By its terms, section

363(m) applies to "a sale or lease of property." 11 U.S.C. § 363(m).

It is elementary that a leasehold is personal property and possibly of

value to the debtor's estate, thus the assignment of a lease for a valuable consideration is a sale of property to which§ 363(m) applies. In

re: Stadium Management, 895 F.2d 845, 848 (1st Cir. 1990), and In

re: Exennium, 715 F.2d 1401, 1403 (9th Cir. 1983), are cases directly

on point, and we held, persuasive here, in Willemain v. Kivitz, 764

F.2d 1019, 1023 (4th Cir. 1985), that 11 U.S.C.§ 363(m) applied to

a 20% limited partnership interest which was an unregistered and

restricted security.

Stadium Management, Exxenium, and Willemain also teach that

such appeals as this should be dismissed as moot.

Accordingly, the appeal in this case is

DISMISSED.

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