Court Opinion

ID: 4258180
Source: CourtListenerOpinion
Date Created: 2018-03-26 16:00:24.893133+00
Date Added: 2024-06-11T14:02:49.285101
License: Public Domain

United States Bankruptcy Appellate Panel
                           For the Eighth Circuit
                       ___________________________

                               No. 17-6017
                       ___________________________

   In re: Veg Liquidation, Inc., formerly known as Allens, Inc.; All Veg, LLC

                             lllllllllllllllllllllDebtors

                            ------------------------------

                                 R. Ray Fulmer, II

                      lllllllllllllllllllll Plaintiff - Appellant

                                          v.

    Fifth Third Equipment Finance Company; Ryder Integrated Logistics, Inc.;
 International Paper Company; URS Real Estate, LP; Ball Metal Food Container,
  LLC; Syngenta Seeds, Inc.; Teneo Securities, LLC; Andrew Torgrove; Lazard
    Middle Market, LLC; Lazard Freres & Co., LLC; Alvarez & Marsal, North
America, LLC; Alvarez & Marsal Private Equity Performance Improvement, LLC;
 Jonathan Hickman; Sager Creek Vegetable Company, formerly known as Sager
 Creek Acquisition Corp.; 1903 Onshore Funding, LLC; Cortland Capital Market
      Services, LLC; Sankaty Credit Opportunities, IV, L.P.; Sankaty Credit
Opportunities, IV, L.P. (Caymanian); Sankaty Middle Market Opportunities Fund,
L.P.; Sankaty Middle Market Opportunities Fund, L.P. (Caymanian); Does 1-100;
   Alvarez & Marsal Holdings, LLC; 412, Inc., formerly known as Sager Creek
Vegetable Company, formerly known as Sager Creek Acquisition Corp.; Sankaty
Credit Opportunities, (Offshore Master) IV; Sankaty Middle Market Opportunities
                          Fund, (Offshore Master), L.P.

                     lllllllllllllllllllll Defendants - Appellees
                                      ____________
                   Appeal from United States Bankruptcy Court
                 for the Western District of Arkansas - Fayetteville
                                  ____________

                           Submitted: February 23, 2018
                              Filed: March 26, 2018
                                  ____________

Before SALADINO, Chief Judge, SHODEEN and SANBERG, Bankruptcy
Judges.
                             ____________

SALADINO, Chief Judge.

      The Appellant, R. Ray Fulmer, II, Chapter 7 Trustee, appeals the May 2, 2017,
and September 26, 2016, orders of the bankruptcy court1 dismissing his complaint and
denying leave to file a further amended complaint. We have jurisdiction over this
appeal from the final orders of the bankruptcy court. See 28 U.S.C. § 158(b).

      For the reasons stated below, we affirm.

                             STANDARD OF REVIEW

       This court reviews the bankruptcy court’s grant of a motion to dismiss de novo.
See GAF Holding, LLC v. Rinaldi (In re Farmland Indus., Inc.), 408 B.R. 497, 503
(B.A.P. 8th Cir. 2009), aff’d, 639 F.3d 402 (8th Cir. 2011). Although a court must
accept the factual allegations in a complaint as true, a complaint must contain
sufficient factual matter to state a claim that is plausible on its face to survive a
motion to dismiss. Id. The applicability of collateral estoppel is a question of law

      1
       The Honorable Ben T. Barry, Chief Judge, United States Bankruptcy Court for
the Eastern and Western Districts of Arkansas.

                                         -2-
which we also review de novo. United States v. Brekke, 97 F.3d 1043, 1046-47 (8th
Cir.1996); Osborne v. Stage (In re Stage), 321 B.R. 486, 491 (B.A.P. 8th Cir. 2005).
The denial of a motion for leave to amend a complaint is reviewed for abuse of
discretion, although when a motion for leave to amend is denied on the basis of
futility, the underlying legal conclusions are reviewed de novo. See Zutz v. Nelson,
601 F.3d 842, 850 (8th Cir. 2010).

                                    BACKGROUND

       The Debtors, Veg Liquidation, Inc., f/k/a Allen’s, Inc., and All Veg, LLC, filed
a voluntary petition under Chapter 11 of the United States Bankruptcy Code on
October 28, 2013. On November 22, 2013, the Debtors filed a motion for an order
authorizing, inter alia, bidding procedures for the sale of substantially all of the assets
of Allens, Inc., free and clear of liens pursuant to § 363(f) of the Bankruptcy Code.
On December 23, 2013, the Debtors followed up their bidding procedures motion
with a motion to sell in accordance with the bidding procedures and identifying a
“Stalking Horse” bidder. After a contested hearing, the bankruptcy court issued an
order on January 7, 2014, which granted the bidding procedures motion, authorized
the designation of Seneca Foods Corporation as the Stalking Horse purchaser,
established an auction procedure, and set a hearing date to approve the results of the
auction.

      On January 9, 2014, the Debtors filed a Notice of Bid Procedures, Sale Hearing
and Objection Deadlines in Connection With the Sale of Substantially All of the
Debtors’ Assets. On January 10, 2014, that notice and the bidding procedures order
were served by Epiq Systems (the noticing agent for the Debtors) by United States
mail on more than 5,000 creditors and parties in interest.

      The auction commenced on February 3, 2014, and concluded on February 6,
2014, with Seneca’s Stalking Horse agreement as the opening bid. Qualifying bids

                                           -3-
were also submitted by Sager Creek Acquisition Corporation (an entity formed by a
group of second lienholders) and a third party, McCall Farms. Seneca did not submit
any further bids, but Sager Creek and McCall Farms both increased and modified
their bids during the auction. Ultimately, Sager Creek was declared the successful
bidder with McCall Farms as the backup bidder. The day after the sale, the Debtors
filed a notice identifying the successful bidder along with a draft purchase agreement.
On February 10, 2014, written transcripts of the auction were filed with the
bankruptcy court.

       The sale hearing took place as scheduled on February 11, 2014. Various
objections were filed, but prior to or during the hearing all objections were either
settled, withdrawn, or continued. On February 12, 2014, the bankruptcy court issued
its detailed order (“Sale Order”) approving the sale to Sager Creek. No appeals were
filed. The closing took place on February 28, 2014.

        On June 6, 2014, the motion of the Debtors to convert the cases to Chapter 7
was granted. The Appellant was subsequently appointed the Chapter 7 trustee. On
February 26, 2016, the Trustee filed his initial complaint against the Appellees (the
Defendants in the adversary proceeding from which this appeal arose), and filed his
first amended complaint on April 28, 2016. The amended complaint names at least
25 separate defendants that the Trustee places into three categories – the “Committee
Defendants,” who were members of the unsecured creditor’s committee appointed in
the Chapter 11 bankruptcy proceeding of the Debtors; the “Fiduciary Defendants,”
who are various financial advisors and restructuring officers retained by the Debtors
during the bankruptcy case; and the “Sager Creek” and/or “Second Lien Holders,”
Defendants who held junior lienholder interests secured by assets of the bankruptcy
estate.

      The amended complaint includes 14 claims for relief entitled: Breach of
Fiduciary Duty, Fraudulent Transfer, Conspiracy to Commit Fraud on the Court,

                                         -4-
Aiding and Abetting Conversion and Fraud on the Court, Conversion, Inducing
Breach of Contract, Intentional Interference With Contractual Relations, Intentional
Interference With Prospective Economic Relations, Negligent Interference With
Prospective Economic Relations, Deceptive Trade Practices, Rescission/Reformation,
Unjust Enrichment, Equitable Subordination and Claim Bar, and Declaratory Relief.
All of the causes of action arise from the sale of substantially all of the assets of the
Debtors to Sager Creek that took place during the Chapter 11 case.

       The Defendants filed an initial motion to dismiss on July 1, 2016. On
September 29, 2016, the bankruptcy court dismissed two causes of action: the cause
of action for fraud on the court under Federal Rule of Civil Procedure 60(d) and
collusion under 11 U.S.C. § 363(n). The court denied the motion to dismiss all other
causes of action but held in abeyance the Defendants’ argument that the action was
a collateral attack on the Sale Order. On November 2, 2016, the Defendants filed a
second stage motion to dismiss. On May 2, 2017, asserting the doctrine of res judicata
and the finality of the Sale Order, the bankruptcy court granted the second stage
motion to dismiss, thereby dismissing all remaining causes of action. This appeal
followed.

                                    DISCUSSION

       The Trustee describes his complaint as seeking damages against the Defendants
for their conduct before and during the Debtors’ Chapter 11 proceeding. He believes
the Defendants concealed agreements and manipulated auction bids in order to take
more than $107 million of assets from the estate for no value. The Defendants’ view
it quite different. They consider the Trustee’s action as an improper collateral attack
on a final sale order.

    The Trustee’s briefing asserts a wide range of factual and legal issues.
However, we believe the ultimate issue presented is whether the finality of the Sale

                                          -5-
Order, together with statutory provisions and procedural rules, effectively defeats the
Trustee’s claims. We believe it does and the bankruptcy court properly dismissed the
adversary proceeding.

      1.     Dismissal.

        Federal Rule of Civil Procedure 8(a)(2), made applicable to bankruptcy
proceedings by Federal Rule of Bankruptcy Procedure 7008, requires pleadings to
contain “a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2); Fed. R. Bankr. P. 7008. A complaint which fails to
state a claim to relief that is plausible on its face may be dismissed pursuant to
Federal Rule of Civil Procedure 12(b)(6):

                     To survive a motion to dismiss, a complaint must
             contain sufficient factual matter, accepted as true, to “state
             a claim to relief that is plausible on its face.” A claim has
             facial plausibility when the plaintiff pleads factual content
             that allows the court to draw the reasonable inference that
             the defendant is liable for the misconduct alleged. The
             plausibility standard is not akin to a “probability
             requirement,” but it asks for more than a sheer possibility
             that a defendant has acted unlawfully. Where a complaint
             pleads facts that are “merely consistent with” a defendant’s
             liability, it “stops short of the line between possibility and
             plausibility of ‘entitlement to relief.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted; quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)).

                                          -6-
      2.    The Sale Order.

       The bankruptcy court’s Sale Order made multiple findings about the sale and
the sale process. According to the Sale Order, the bankruptcy court did so based
“upon the record at the Sale Hearing and the full record of this case, including the
record established at the Auction.” The bankruptcy court’s findings included:

            •      actual written notice of, and a reasonable
                   opportunity to object to or be heard, with respect to
                   the sale was provided to all known parties in interest
                   (id. ¶ H);

            •      the disclosures made by the Debtors in the Sale
                   Motion, the Bidding Procedures Motion, the Notice
                   of Auction and Sale Hearing and in related
                   documents filed with the court and/or served on
                   parties in interest were good, complete, and
                   adequate (id. ¶ L);

            •      the Bidding Procedures were non-collusive,
                   proposed and executed in good faith as a result of
                   arm’s length negotiations, and were substantively
                   and procedurally fair to all parties, and the Debtors
                   conducted the sale process in accordance with, and
                   had otherwise complied in all respects with, the
                   Bidding Procedures Order (id. ¶ M);

            •      all of the acquired assets were subject to a
                   competitive and good faith bidding process (id. ¶ O);

            •      the consideration to be provided by the buyer was
                   fair and reasonable, and was the highest and
                   otherwise best offer for the acquired assets, and was
                   in the best interests of the Debtors, their creditors
                   and estates, and constituted reasonably equivalent

                                         -7-
                    value and fair consideration under the Bankruptcy
                    Code and the Uniform Fraudulent Transfer Act and
                    similar laws; and that it will provide a greater
                    recovery for the Debtors’ creditors and other
                    interested parties than would be provided by any
                    other available alternative (id. ¶ Y);

             •      the Debtors demonstrated compelling circumstances
                    and a sound business purpose and justification for
                    the sale (id. ¶ Z);

             •      the buyer was a good faith purchaser under § 363(m)
                    of the Bankruptcy Code and was entitled to all of the
                    protections afforded thereby and otherwise had
                    proceeded in good faith in connection with the sale
                    (id. ¶ BB); and

             •      the Debtors and the buyer had not engaged in any
                    conduct that would permit the sale to be avoided
                    under § 363(n) of the Bankruptcy Code (id. ¶ CC).

       The Trustee’s allegations in the amended complaint against the Defendants are
inconsistent with the specific findings of the Sale Order. Stated another way, in order
for us to find that the Trustee’s claims are plausible, we would have to disregard
many of the specific findings set forth in the Sale Order. Therefore, we begin by
examining the Trustee’s arguments with respect to the effect of the Sale Order.

      The Trustee argues that res judicata with regard to the Sale Order cannot apply
to him due to a lack of privity. He also believes the Sale Order findings were made
without the introduction of evidence and are, therefore, void or unenforceable, and
in any event are “boilerplate” and not entitled to any weight on appeal. The Trustee

                                         -8-
also appears to argue that the Sale Order is a “void” order due to insufficient notice
related to the sale and the bidding procedures.2

      3.     11 U.S.C. § 363(m).

       Sales under 11 U.S.C. § 363 are entitled to heightened protections “by virtue
of the nature of rights transferred under 11 U.S.C. § 363.” Regions Bank v. J.R. Oil
Co., LLC, 387 F.3d 721, 732 (8th Cir. 2004). A sale under § 363 confers “rights good
as against the world, not merely rights good as against parties to the sale,” and is thus
shielded from collateral attack. Id. at 731.

      In this regard, 11 U.S.C. § 363(m) provides:

                   The reversal or modification on appeal of an
             authorization . . . 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, . . ., unless such authorization and
             such sale or lease were stayed pending appeal.

       As indicated, no party appealed the Sale Order. Further, the Trustee was not
appointed until four months after the Sale Order was issued and did not commence
the underlying adversary proceeding until more than two years after the Sale Order.
The Trustee argues that § 363(m) is inapposite because he is not attempting to appeal
the Sale Order. Instead, he is seeking damages against various Defendants – whom
he refers to as “strangers” to the Sale Order – for actions relating to the sale.

      2
       Interestingly, despite these assertions, the Trustee repeatedly insists that he is
not seeking to collaterally attack the sale order.

                                          -9-
      The Trustee’s semantics are not persuasive.

                   Section 363(m) protects the reasonable expectations
             of good faith third-party purchasers by preventing the
             overturning of a completed sale, absent a stay, and it
             safeguards the finality of the bankruptcy sale. [In
             addition,] section 363(m) . . . shields third parties who rely
             on the bankruptcy court’s order from endless litigation.

Official Comm. of Unsec. Creditors v. Trism, Inc. (In re Trism, Inc.), 328 F.3d 1003,
1006 (8th Cir. 2003) (internal citation omitted) (emphasis added). In Trism, the
Eighth Circuit held that challenging related provisions of a sale order “affects the
validity of the sale when the related provision is integral to the sale of the estate’s
assets.” Id. at 1007 (citing Cinicola v. Scharffenberger, 248 F.3d 110, 125-26 (3d Cir.
2001)). An integral provision is one that “is so closely linked to the agreement
governing the sale that modifying or reversing the provision would adversely alter the
parties’ bargained-for exchange.” Id. Further, as we noted in In re Farmland Indus.,
Inc., 408 B.R. 497, 508 (B.A.P. 8th Cir. 2009), aff’d, 639 F.3d 402 (8th Cir. 2001),
the shield of § 363(m) protects more than just title to the property that is sold. It “is
a judgment that is good as against the world, not merely as against parties to the
proceedings.” Id. (quoting Regions Bank, 387 F.3d at 732)).

       The Trustee believes that the detailed findings in the Sale Order were not
“integral provisions” to the sale as defined by the Eighth Circuit in Trism.
Specifically, the Trustee asserts that the bankruptcy court failed to review the asset
purchase agreement that was approved by the Sale Order to determine whether the
findings were integral to the sale. He further asserts that the conditions to closing set
forth in the asset purchase agreement do not specifically require the findings the
bankruptcy court made in the Sale Order. Again, the Trustee’s argument is not
persuasive.

                                          -10-
       First, the Trustee fails to recognize that one of the specific conditions of the
asset purchase agreement is the approval of the Sale Order by the bankruptcy court.
Second, the Trustee’s assertion that the bankruptcy court had not reviewed the asset
purchase agreement is an unsupported speculation. In fact, the Sale Order specifically
references the asset purchase agreement which is attached to the Sale Order. The
Trustee hangs his hat on the bankruptcy court not referencing a review of the asset
purchase agreement in the dismissal order – some three years later. However, in the
dismissal order, the bankruptcy court clearly discussed Trism and its “integral
provision” requirement. In any event, the Trustee’s implication that the bankruptcy
court’s specific findings in the Sale Order were somehow not integral to the sale is
nonsensical. The findings regarding proper notice, lack of collusion, good faith, fair
and reasonable consideration, etc., were all necessary and integral to the bankruptcy
court’s approval of the sale.3

      4.     Privity.

       A judgment’s preclusive effect is defined by claim and issue preclusion, which
are collectively referred to as “res judicata.” Taylor v. Sturgell, 553 U.S. 880, 892
(2008). Since the Trustee was not even appointed until months after the entry of the
Sale Order, he believes he could not be in privity with the parties to the Sale Order
and the Sale Order findings should not be binding upon him. The bankruptcy court
found that the Trustee is in privity with the Debtors and the creditors, and bound by
the terms of the Sale Order.

       We believe it is unnecessary to chase the Trustee down this particular rabbit
hole. The foregoing discussion regarding the “heightened protections” and expansive

      3
        In an ironic twist, the trustee argues in his brief that the bankruptcy court was
required to make such specific findings in connection with a sale under § 363(b). As
a result, it seems somewhat disingenuous for the Trustee to argue that the findings
were not “integral” to the sale.

                                          -11-
binding effect of an order under § 363(m) approving a sale under § 363(b) makes this
issue moot. Privity is irrelevant.

      5.     Jevic.

       Notwithstanding the bar of § 363(m), the Trustee asserts a number of additional
theories as to why we should find the Sale Order as a whole, or many of its
provisions, void or unenforceable. First, the Trustee argues that the bankruptcy court
should not have relied upon the Sale Order because it resulted in non-consensual
distributions in violation of the absolute priority rule, as prohibited by Czyzewski v.
Jevic Holding Corp., ___ U.S. ___, 137 S. Ct. 973 (2017).

       In Jevic, the Supreme Court held that structured dismissals must follow the
same priority rules as required for a Chapter 11 plan confirmation. However, the
Supreme Court carved out from its ruling interim distributions that further
“significant Code-related objectives.” Id. at 985. Examples of such distributions
include first-day wage orders and critical vendor orders that may violate priority
rules. But, where a structured dismissal does not “preserve the debtor as a going
concern,” the Supreme Court concluded that the violation of ordinary priority rules
did not serve “any significant offsetting bankruptcy-related justification.” Id. at 986.

       The Trustee’s reliance on Jevic – which was decided three years after the Sale
Order was issued – is misplaced. First, Jevic was the result of a timely appeal of the
structured dismissal order. Here, no appeal was ever taken from the Sale Order.
Second, regardless of whether the Sale Order did involve improper priority-skipping
distributions (an issue we need not address), the bar of § 363(m) still applies since no
appeal was taken and no stay of sale was ever issued. See Mission Product Holdings,
Inc. v. Old Cold, LLC (In re Old Cold, LLC), 879 F.3d 376, 388 (1st Cir. 2018)
(refusing to consider a Jevic challenge to a § 363 sale because “section 363(m)
applies even if the bankruptcy court’s approval of the sale was not proper . . . . ”). See

                                          -12-
also United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010)
(recognizing that a judgment is not void simply because it is or may have been
erroneous). Since this case does not arise from an appeal of the Sale Order, Jevic has
no application.

      6.     Lack of Evidence for Sale Order Findings.

       The Trustee next argues that his claims cannot be subject to the § 363(m) bar,
or issue and claim preclusion, based upon “uninformed and unsupported findings
contained in the Sale Order.” In support of this point, he argues that the bankruptcy
court did not take any formal evidence at the hearing resulting in the Sale Order and,
therefore, could not have made the detailed findings therein.

       In making that argument, the Trustee overlooks two important points. First, the
bankruptcy court did take evidence in an earlier contested hearing authorizing the
Debtors to proceed with a § 363 sale – which is a point the trustee acknowledges in
his brief. Also, evidence of the results of the sale were filed with the court, and the
transcripts of the sale auction were also filed with the court prior to the sale hearing.
The Sale Order very clearly indicates that it is based on the “entire record” of the
case, not just what was formally presented as evidence at the final sale hearing.

       Second, even if the specific findings set forth in the Sale Order are mere
“boilerplate” as the Trustee suggests, no party appealed the Sale Order. The Trustee
cites to the United States Supreme Court decision in Protective Committee v.
Anderson, 390 U.S. 414, 434-441 (1968), for the proposition argued in his brief that
the Supreme Court “rejected conclusory, boiler-plate bankruptcy court findings as the
basis for an enforceable bankruptcy court order.” However, the Supreme Court did
no such thing. Instead, it found that the record failed to support the findings of the
trial court in the very order being appealed. That is not the case here. Whether the

                                          -13-
Trustee likes the specific findings of the Sale Order or not, they are the detailed
findings of the bankruptcy court, were not appealed, and are final.

      7.     Rule 60.

      Recognizing the possibility that his claims may be barred by the finality of the
Sale Order and § 363(m), the Trustee then turns to Federal Rule of Civil Procedure
60 (made applicable in cases under the Bankruptcy Code by Federal Rule of
Bankruptcy Procedure 9024). Relief from a judgment or order under Rule 60(b)(1) -
(3) must be commenced no more than one year after entry of the judgment or order.
Fed. R Civ. P. 60(c)(1). Because the adversary proceeding was not filed for more than
two years after the entry of the Sale Order, it is too late for the Trustee to seek relief
under Rule 60(b)(1) - (3).

      However, a request for relief under Rule 60(b)(4), (5) and (6) may be made
“within a reasonable time.” Fed. R. Civ. P. 60(c)(1). Under those sections, a court
may relieve a party from a final judgment or order if the judgment is “void”
(subsection 4), if applying it prospectively is no longer equitable (subsection 5), or
for any other reason that justifies relief (subsection 6). The Trustee argues that one
or more of those grounds for relief should apply – mostly, it seems, for alleged due
process violations.

        The primary due process concern of the Trustee appears to be whether proper
notice and opportunity to participate in the sale process were provided to all creditors
and parties in interest. Here, the Trustee invents a noticing defect that does not exist.
It is undisputed that on January 15, 2014, notice of the bidding procedures order and
the auction and sale hearing were provided to all creditors and parties in interest. As
a result, all of those creditors and parties in interest had an opportunity to participate
in the sale process and object to approval of the sale. We liken this to the situation in
Espinosa where the United States Supreme Court said:

                                          -14-
                    Rule 60(b)(4) strikes a balance between the need for
             finality of judgments and the importance of ensuring that
             litigants have a full and fair opportunity to litigate a
             dispute. Where, as here, a party is notified of a plan’s
             contents and fails to object to confirmation of the plan
             before the time for appeal expires, that party has been
             afforded a full and fair opportunity to litigate, and the
             party’s failure to avail itself of that opportunity will not
             justify Rule 60(b)(4) relief.
559 U.S. at 276.

       The Trustee also finds due process concerns related to the bankruptcy court’s
conduct of the sale hearing, but a review of that transcript makes clear that the
bankruptcy court did not deny anyone the opportunity to present evidence, examine
witnesses, or otherwise participate in the hearing. In fact, as the Trustee readily
acknowledged, on more than one occasion during the sale hearing, the bankruptcy
court specifically asked the participants if they wanted to present any testimony or
additional evidence. Accordingly, the Trustee’s due process concerns related to notice
and opportunity to participate are without merit.

       As part of his due process arguments, the Trustee asserts that the application
of § 363(m) in this case “violates the Fifth Amendment Due Process Clause, Article
III and the Separation of Power Doctrine.” For this argument, he suggests that the
bankruptcy court interpreted § 363(m) to bar de novo review by an Article III court
unless the Article I court issuing the order grants a discretionary stay. In making that
argument, the Trustee seems to forget that a stay of any judgment can be obtained
from an Article III court – the United States District Court (if the appeal is pending
in that court) – even if it is denied by a bankruptcy court. If any party had appealed
the Sale Oder, that party could have elected to have the appeal heard by the United

                                         -15-
States District Court. The Trustee’s due process allegations based on the Constitution
are also without merit.

      8.     Miscellaneous Allegations.

        In his brief, the Trustee’s many allegations are often mixed together and
repeated under various theories for what he considers to be nefarious conduct and
lack of disclosure by virtually everyone involved in the asset sale. He seems to
believe that there was something legally improper about a change in control of the
Debtors that apparently took place months before the bankruptcy filing. He also
expresses concerns about a change during the auction to the sale terms and assets to
be sold, despite the fact that the bidding procedures expressly contemplated such
changes. He thinks it was improper for the second lienholder group to form an entity
to bid on the assets at the sale, or for existing creditors to agree to certain funding
arrangements with a potential purchaser at the sale in the hope of securing future
business from the successor. He believes all these things and more somehow amount
to collusion or fraud on the court or some other theory that would allow him to, years
later, seek damages from the parties involved in the sale.

        The Trustee uses the terms “fraud” and “fraud on the Court” and “collusion”
loosely and often. However, once the smear of the Trustee’s conclusory allegations
is removed, we agree with the bankruptcy court that the amended complaint does not
cite to any facts that would elevate such claims from a mere possibility to plausibility.
See Ashcroft v. Iqbal, 556 U.S. at 678 and Bell Atlantic Corp. v. Twombly, 550 U.S.
at 557.

       Absent specific facts showing fraud or collusion, we agree with the bankruptcy
court that it is now too late to bring these claims. The miscellaneous allegations all
are contradicted by the specific findings of the final Sale Order. Between the
operation of § 363(m) and Rule 60, the Trustee’s claims are barred. He professes that

                                          -16-
he is simply seeking damages from “strangers to the Sale Order,” but that is not true.
As the bankruptcy court recognized, all of the Defendants were involved in the sale
of the Debtors’ assets in one way or another. Some were junior lienholders, some
were estate professionals, and others were creditors and committee members. The
Defendants are far from being strangers to the Sale Order. As such, they are entitled
to the protections of § 363(m), which “shields third parties who rely on the
bankruptcy court’s order from endless litigation.” Trism, Inc., 328 F.3d at 1006.

      9.     Amended Complaint.

       Finally, the Trustee takes issue with the bankruptcy court’s denial of his
request to file yet another amended complaint. A review of that proposed amended
complaint reveals that it simply repackages the same assertions of nefarious conduct
on the part of the Defendants into additional causes of action. Approval of a request
for leave to amend a complaint requires a showing that “such an amendment would
be able to save an otherwise meritless claim. Wisdom v. First Midwest Bank, 167 F.3d
402, 409 (8th Cir.1999) (citing Ferguson v. Cape Girardeau Cnty., 88 F.3d 647, 650
(8th Cir.1996)). We agree with the bankruptcy court that the proposed amended
complaint would not survive a further motion to dismiss. Therefore, the bankruptcy
court did not abuse its discretion in denying leave to file an amended complaint.

                                   CONCLUSION

      For the foregoing reasons, we affirm the orders of the bankruptcy court.
                      ______________________________

                                        -17-