Opinion ID: 493285
Heading Depth: 1
Heading Rank: 1

Heading: Appeal of Order 809 and Review of the ICC Decision in this Court

Text: 24 RLEA appealed from Order No. 809 and from the ruling of the ICC. The appeals were consolidated. On August 20, 1986, this court issued its decision that effectively rejected both challenges. Matter of Chicago, Milwaukee, St. Paul & Pac. R.R., 799 F.2d 317 (7th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 2460, 95 L.Ed.2d 869 (1987) [hereinafter cited as Order No. 809 Appeal ]. 25 With respect to the sale of the core assets to the Soo, the court held that the challenge was mooted by former Bankruptcy Rule 8-703(a)(6): 9 26 Unless an order approving a sale of property ... is stayed pending appeal, the sale to a good faith purchaser ... shall not be affected by the reversal or modification of such order on appeal, whether or not the purchaser ... knows of the pendency of the appeal. 27 Id. at 329 (quoting former Bankruptcy Rule 8-703(a)(6)). The court also determined that the ICC correctly declined to exercise continuing jurisdiction over the Milwaukee Road's final plan of reorganization. This court held that, while the MRRA required the reorganization court to obtain the ICC's advice before sale of the assets, it permitted the court to make its own decision on the final sale: 28 The Restructuring Act changed the rules, however, by allowing the district court to make its own decision in the end. Here the district court took the ICC's advice and sold the lines to the Soo. The district court had the authority to turn the Milwaukee into a real estate company on its own. Id. at 331. Continued the court: 29 There is no doubt that by April 1985 the Milwaukee was not operating a railroad. Section 77(d) refers to the debtor, and this might be the basis of a contention that the Milwaukee remained subject to Sec. 77(d) even though it was no longer a railroad, needing the ICC's permission to get out of bankruptcy. The ICC reads the statute otherwise, however, and its interpretation is entitled to respect. Chemical Manufacturers Ass'n v. Natural Resources Defense Council, Inc., 470 U.S. 116, 105 S.Ct. 1102, 1108, 84 L.Ed.2d 90 (1985); Watkins v. Blinzinger, 789 F.2d 474, 478 (7th Cir.1986). 30 Id. at 331-32. 31 Finally, the court added the following caveat to its decision: 32 The district court confirmed the Milwaukee's plan of reorganization on July 12, 1985. The RLEA and several other parties have filed appeals from the order confirming the plan. Although many of the RLEA's arguments about the order of sale and the ICC's refusal to review the plan go to the merits of that plan, the RLEA's appeal from the confirmation is not before us. It and all other appeals have been consolidated for separate disposition. We have disposed of RLEA's arguments on jurisdictional grounds. Nothing we say here bears on the merits of any appeal from the order confirming the plan, and we mean to leave no clues about what our views might be. 33 Id. at 332. J. Soo's Payment of Wage Deferral Claims 34 In compliance with Order No. 809, the Soo reimbursed the trustee for settlements he had previously made to the employees. See supra subsection E. It also contacted the remaining 125 employees and tendered payment. All but 12 employees accepted. Therefore, at this point only 12 employees, with claims totaling $27,460.37, remain. 35 K. Confirmation and Consummation of the Final Plan of Reorganization 36 On May 1, 1985, the trustee filed a final plan with the reorganization court. This plan did not provide for the payment of claims under the Wage Deferral Agreement. RLEA objected to the plan on the ground that it did not address the wage deferral claims question. In approving and confirming the plan, the reorganization court rejected the RLEA's position and, in Order No. 832, wrote: 37 With respect to the objection of RLEA seeking provision in the Plan for employees' claims under the Wage Deferral Agreement approved in this Court's Order No. 551 [sic], the Court finds that Order No. 809 relieved the Trustee from all obligations and liabilities with respect to those claims, which accordingly are not entitled to provision in the Plan. 38 Order No. 832 at 7, p 13. 39 Finally, in October 1985, the trustee petitioned the court to set a Consummation Date for the ... reorganization [of the Milwaukee Road] and to enter a final decree which both discharged the Trustee and closed the reorganization proceedings. Appellant's Br. at 20. RLEA objected to the entry of such an order, mainly on the ground that, until this court had resolved the challenges to Order No. 809, see supra subsection G, and the plan of reorganization, it would be premature to enter such an order. On November 12, 1985, the reorganization court entered Order No. 866 setting November 25, 1985 as the consummation date on which all right, title and interest of the Trustee in the property of the Estate shall vest in and become the absolute property of the Reorganized Company. Order No. 866 at 7, p 6. Order No. 866 also discharged the trustee and debtor and terminated jurisdiction over the debtor and the reorganization proceedings, except as specifically retained. 40 On appeal, RLEA alleges that the reorganization plan approved by the reorganization court does not meet the requirements of Sec. 77(b) and 77(e) of the Bankruptcy Act because it fails to address the claims of RLEA's members under the wage deferral agreement. RLEA also argues that, because Order No. 832 should be set aside, the entry of Order No. 866 was premature, and therefore should also be set aside.