Court Opinion

ID: 1033969
Source: CourtListenerOpinion
Date Created: 2013-07-16 22:24:11.065914+00
Date Added: 2024-06-11T09:19:19.892920
License: Public Domain

FILED
                                                           JUL 16 2013
 1
                                                       SUSAN M SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
 2                                                       OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No.   AZ-12-1626-JuTaAh
                                   )
 6   RCS CAPITAL DEVELOPMENT, LLC; )        Bk. No. 11-28746-RJH
     AMERICAN CHILDCARE PROPERTIES,)        (jointly administered with
 7   LLC; ACCP I, LLC,             )        11-29741-RJH, 11-29742-RJH)
                                   )
 8                  Debtors.       )
     ______________________________)
 9   A.B.C. LEARNING CENTRES LTD.; )
     ABC DEVELOPMENTAL LEARNING    )
10   CENTERS (USA), INC.,          )
                                   )
11                  Appellants,    )
                                   )        M E M O R A N D U M*
12   v.                            )
                                   )
13   RCS CAPITAL DEVELOPMENT, LLC; )
     AMERICAN CHILDCARE PROPERTIES,)
14   LLC; ACCP I, LLC,             )
                                   )
15                  Appellees.     )
     ______________________________)
16
                     Argued and Submitted on June 21, 2013
17                            at Phoenix, Arizona
18                           Filed - July 16, 2013
19            Appeal from the United States Bankruptcy Court
                        for the District of Arizona
20
      Honorable Randolph J. Haines, Chief Bankruptcy Judge, Presiding
21                        _______________________
22   Appearances:     Carson T.H. Emmons Esq., of Baird, Williams &
                      Greer, LLP, argued for Appellees RCS Capital
23                    Development, LLC, American Childcare Properties,
24
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8013-1.

                                      -1-
 1                      LLC and ACCP I, LLC.**
                             _________________________
 2
     Before:     JURY, TAYLOR, and AHART***, Bankruptcy Judges.
 3
 4            Appellants, A.B.C. Learning Centres Limited (ABC Learning)
 5   and its affiliate, ABC Developmental Learning Centers (U.S.A.),
 6   Inc. (ABC USA) (collectively, ABC) appeal from the bankruptcy
 7   court’s order confirming the Fifth Amended Chapter 111 Plan
 8   dated October 22, 2012, filed by RCS Capital Development, LLC
 9   (RCS), American Childcare Properties, LLC (ACCP), and ACCP I,
10   LLC (collectively, RCS, ACCP and ACCP I, LLC are referred to as
11   Debtors).     We AFFIRM.
12                                  I.   FACTS
13            This appeal follows from our decision in the related appeal
14   involving the same parties (BAP No. AZ-12-1381-JuTaAh).      There,
15   we affirmed the bankruptcy court’s orders: (1) granting RCS’s
16   motion for summary judgment (MSJ) and, thus, allowing RCS to set
17   off its $57 million judgment adverse to ABC against ABC’s $41
18   million proof of claim based on litigation pending against
19   Debtors and others; and (2) denying ABC’s cross MSJ which
20
          **
            John J. Fries and Joshua L. Kahn of Ryley Carlock &
21
     Applewhite and Andrew Rosenblatt and Eric Daucher of Chadbourne &
22   Parke LLP appeared on brief for Appellants A.B.C. Learning
     Centres Ltd. and ABC Developmental Learning Centers (USA), Inc.
23   Appellants chose not to appear at argument in accordance with the
     Panel’s June 11, 2013 order.
24
          ***
             Hon. Alan M. Ahart, United States Bankruptcy Judge for
25   the Central District of California, sitting by designation.
26        1
            Unless otherwise indicated, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 and
     “Rule” references are to the Federal Rules of Bankruptcy
28   Procedure.

                                         -2-
 1   asserted legal and equitable defenses to the setoff.      Since we
 2   stated the facts leading up to the bankruptcy court’s decisions
 3   on the setoff issue in our memorandum in the related appeal, we
 4   will not repeat them here other than to amplify them as may be
 5   appropriate to this appeal.
 6   A.       RCS’s Request for Relief From Stay in ABC’s Chapter 15
 7            After the bankruptcy court entered the order granting RCS’s
 8   MSJ on the setoff issue and quashing all lis pendens which ABC
 9   recorded against RCS properties, RCS filed a motion in the
10   Delaware bankruptcy court seeking to vacate the orders:
11   (1) imposing the automatic stay in ABC’s chapter 15 case; and
12   (2) finding that RCS had willfully violated the automatic stay.
13   On September 20, 2012, the Delaware bankruptcy court denied
14   RCS’s motion as premature because the order granting RCS’s MSJ
15   remained subject to reconsideration and appeal.
16   B.       Confirmation of Debtors’ Chapter 11 Plan
17            Debtors then proceeded toward confirmation of their plan,2
18   which proposed, as allowed by the MSJ order, to pay ABC’s claim
19   in full through setoff and to pay other unsecured creditors in
20   full through cash on hand and post-confirmation collections.      In
21   particular, the funding for the plan would come from: (1) cash
22   on hand ($56,000); (2) proceeds from the Ann Road Property (as
23   described below); (3) proceeds from the distributions to RCS
24   from its participation in the development of the Russell Road
25
26
          2
27          The plan was a “joint” plan proposed by RCS, ACCP, and
     ACCP I, LLC. The bankruptcy court approved the Disclosure
28   Statement by order dated June 21, 2012.

                                       -3-
 1   Property;3 and (4) pursuing collection of the USD$28,486,206.64,
 2   plus interest, owed by ABC to RCS as a result of the setoff.
 3            The plan designated five classes of claims:
 4            Class 1 - City of North Las Vegas Secured Claim: The
              City of North Las Vegas had a lien for unpaid property
 5            taxes and development fees against the property known
              as the Ann Road Property. RCS proposed to sell this
 6            property under § 363 and use the proceeds to pay the
              City with the remainder used to pay other allowed
 7            unsecured claims (other than ABC) under the plan.4
 8            Class 2 - Hill Crest Bank Secured Claim: RCS owned
              two parcels known as the Valley View and Simmons
 9            properties which were encumbered by liens in favor of
              Hill Crest Bank. Because the loans were nonrecourse
10            and the value of the properties was less than the
              liens, RCS would surrender those properties to Hill
11            Crest Bank.
12            Class 3(A) - General Unsecured Claims (other than ABC
              and Ken Krynski): These claims would be paid in full
13            with (1) excess proceeds from the Ann Road Property;
              (2) through RCS’ 50% profit participation in the
14            Russell Road Property; and (3) any monies RCS
              collected from ABC. RCS anticipated that the claims
15
16
          3
            RCS owned a 50% profit interest in property located at
17   2488 East Russell Road. Once the Russell Road Property was sold,
     Debtors would use RCS’s share of the proceeds (approximately
18
     $800,000-$1,000,000) to pay off general unsecured claims, except
19   the debt owed to ABC. The Russell Road Property was in escrow
     prior to confirmation of Debtors’ plan with a scheduled closing
20   in December 2012.
21        4
            On July 9, 2012, RCS moved for authorization to sell the
     Ann Road Property for $500,000. On July 27, 2012, RCS filed an
22
     amended motion to sell the property. ABC objected to the motion
23   due to the automatic stay imposed in its chapter 15 proceeding.
     However, ABC consented to the sale if the proceeds were held in a
24   segregated account and not distributed until ABC’s interest in
     the Ann Road Property was determined by a final and non-
25   appealable order. On August 20, 2012, the bankruptcy overruled
26   ABC’s objection and allowed the property to be sold by order
     entered on August 24, 2012 without the conditions consented to by
27   ABC. The proceeds were used to pay off the City of North Las
     Vegas, and the remaining proceeds were designated for unsecured
28   creditors other than ABC.

                                       -4-
 1           in this class would be no greater than $925,000.
 2           Class 3(B) - ABC Claims: RCS proposed to pay ABC the
             full amount of its claim with its setoff, which
 3           allowed for 100% payment.
 4           Class 3(C) - Ken Krynski Claim: RCS disputed
             Krynski’s claim filed in the amount of $2 million.
 5           RCS believed that the claim was no more than $500,000.
             RCS would make payments to Krynski on the Effective
 6           Date in an amount determined by the court necessary to
             cure any default(s) on the payment plan due Krynski
 7           pursuant to the settlement agreement dated August 15,
             2011. Any payments made after the Effective Date
 8           would be made in accordance with the settlement
             agreement.
 9
             Administrative Claims: All amounts would be paid in
10           full within thirty (30) days of confirmation subject
             to allowance by the bankruptcy court.
11
             Class 5 - Interests of Members: No distributions
12           would be made to members until after payments to all
             other creditors.
13
14           Finally, the plan provided for mutual releases in
15   connection with ABC’s claim and for substantive consolidation of
16   Debtors’ estates.
17           On August 14, 2012, ABC objected to the confirmation of
18   Debtors’ plan on several grounds.5     First, citing Sherman v.
19   Harbin (In re Harbin), 486 F.3d 510, 517 (9th Cir. 2007), ABC
20   argued that the plan did not meet the feasibility requirement
21   under § 1129(a)(11) because it made no provision for the
22   possibility that ABC would prevail on appeal of the RCS MSJ
23   order and, thereafter, obtain a judgment against Debtors that
24   was not subject to setoff.    Second, ABC asserted that the plan
25   provided for property sales that were “forbidden by law” in
26
         5
27          The Official Committee of Unsecured Creditors and Krynski
     also objected to the plan. However, those objections were either
28   resolved or withdrawn.

                                      -5-
 1   violation of § 1129(a)(3).     ABC maintained that the automatic
 2   stay in its chapter 15 case, coupled with the Delaware
 3   bankruptcy court’s enforcement of the stay against RCS through
 4   various orders, prohibited the property sales called for by the
 5   plan.6
 6            The bankruptcy court heard the matter on October 10, 2012
 7   and overruled ABC’s objections, except for those related to the
 8   purported violations of § 1129(a)(3) (forbidden by law) and
 9   § 1129(a)(11) (feasibility).     These objections were continued
10   for an evidentiary hearing on November 13, 2012.
11            On October 22, 2012, Debtors submitted the Fifth Amendment
12   to Plan of Reorganization.     The plan was amended as result of
13   the hearing on October 10, 2012.
14            At the November 13, 2012, evidentiary hearing, Debtors’
15   sole witness was Rick Sodja, a member of RCS.     ABC produced no
16   witnesses.     After hearing Sodja’s testimony and the parties’
17   arguments, the bankruptcy court overruled ABC’s remaining
18   objections and confirmed the plan.      The bankruptcy court found
19   that the sale of the properties did not run afoul of the
20   automatic stay imposed in ABC’s chapter 15 case nor violate the
21   Delaware bankruptcy court’s orders which enforced the stay
22   against RCS with respect to the properties.     The court reasoned
23
          6
24          ABC made numerous other objections that are not relevant
     for purposes of this appeal. For example, ABC objected to the
25   plan provision which made its claims against Debtors subject to a
26   mutual release; asserted that the plan falsely classified its
     claim as unimpaired; accused Debtors of gerrymandering because
27   the plan classified ABC separately from other unsecured claims;
     and argued that the plan improperly called for the substantive
28   consolidation of Debtors’ estates.

                                       -6-
 1   that neither of the orders made any determination with respect
 2   to ABC’s rights or interests in the properties.      Since the RCS
 3   bankruptcy court had determined ABC had no rights or interests
 4   in the properties, the court found that the plan complied with
 5   § 1129(a)(3).
 6            Next, the bankruptcy court addressed ABC’s feasibility
 7   objection based on the holding in Harbin.       The court explained
 8   that the holding in Harbin simply required the court, rather
 9   than the plan, to consider what might happen on appeal and that
10   requirement was among all the facts and circumstances the court
11   needs to consider in determining feasibility.      The court
12   concluded that based on the evidence presented, the plan was not
13   likely to need any further liquidation or financial
14   reorganization for two reasons:     First, the court did not think
15   that ABC was going to prevail on appeal.      Second, even if ABC
16   did prevail, the court found no evidence that suggested after a
17   trial on the merits that ABC’s claim would not be subject to
18   setoff or that it was likely ABC would wind up with a net claim
19   so large that Debtors would have to liquidate or engage in
20   further financial reorganization.       The bankruptcy court
21   concluded that Debtors presented a “good case” that further
22   liquidation or financial reorganization was not likely.        For
23   these reasons, the court found that Debtors met their burden of
24   proof on feasibility under § 1129(a)(11).7      The bankruptcy court
25
26        7
            At this hearing, the bankruptcy court also ruled that the
27   mutual release provision should be deleted, substantive
     consolidation was inappropriate, and that the plan was proposed
28   in good faith.

                                       -7-
 1   entered the order confirming the plan on November 29, 2012.
 2        On December 4, 2012, ABC filed a timely notice of appeal
 3   from the confirmation order.    On the same day, ABC filed an
 4   emergency motion for a stay pending appeal and an emergency
 5   motion for an expedited hearing on the motion.    At the
 6   December 11, 2012 expedited hearing on the matter, the
 7   bankruptcy court denied ABC’s motion for stay pending appeal.
 8        On December 17, 2012, Debtors filed a Notice of Effective
 9   Date which stated that the Effective Date of the confirmed plan
10   was December 14, 2012.   In the notice, Debtors represented that
11   payments were made to Krynski in the amount of $535,000 and that
12   other payments were being made pursuant to the confirmed plan of
13   reorganization.
14        After the bankruptcy court denied ABC’s motion for a stay
15   pending appeal, ABC filed a motion for a stay of the
16   confirmation order with the Panel.     On December 21, 2012, the
17   Panel entered an order staying distributions under the plan
18   pending resolution of this appeal.     RCS moved for
19   reconsideration.   After reviewing the bankruptcy court’s reasons
20   for denying a stay, the Panel concluded that the lack of
21   likelihood of success on the merits justified revisiting its
22   original order granting the requested stay.    The Panel granted
23   RCS’s motion for reconsideration and vacated the stay by order
24   entered on February 2, 2013.
25                            II.   JURISDICTION
26        Because the plan has been confirmed, distributions
27   commenced, properties sold, and there is no stay pending appeal
28   of the confirmation order, the question arises whether this

                                      -8-
 1   appeal is moot and subject to dismissal.       If an appeal is moot,
 2   we must dismiss if constitutionally moot, Drummond v. Urban
 3   (In re Urban), 375 B.R. 882, 887 (9th Cir. BAP 2007), and we may
 4   dismiss if equitably moot.     Clear Channel Outdoor, Inc. v.
 5   Knupfer (In re PW, LLC), 391 B.R. 25, 33–35 (9th Cir. BAP 2008).
 6   We consider the mootness question below and conclude that the
 7   appeal is not constitutionally or equitably moot.
 8           The bankruptcy court had jurisdiction over this proceeding
 9   under 28 U.S.C. §§ 1334 and 157(b)(2)(L).      We have jurisdiction
10   under 28 U.S.C. § 158.
11                                 III.    ISSUES
12           A.   Whether ABC’s appeal from the bankruptcy court’s order
13   confirming Debtors’ chapter 11 plan is moot;
14           B.   Whether the bankruptcy court erred in finding that
15   Debtors’ plan was not forbidden by law and complied with
16   § 1129(a)(3); and
17           C.   Whether the bankruptcy court erred in finding that
18   Debtors’ plan satisfied the feasibility requirements under
19   § 1129(a)(11).
20                          IV.   STANDARDS OF REVIEW
21           “Mootness is a question of law reviewed de novo.”    Nelson
22   v. George Wong Pension Trust (In re Nelson), 391 B.R. 437, 442
23   (9th Cir. BAP 2008).
24           The issue of whether the plan was proposed “by any means
25   forbidden by law” is a question of law which we also review de
26   novo.    Settling States v. Carolina Tobacco Co. (In re Carolina
27   Tobacco Co.), 360 B.R. 702, 711 (D. Or. 2007).       In connection
28   with our inquiry into whether Debtors’ plan was proposed “by any

                                          -9-
 1   means forbidden by law,” we are called upon to interpret the
 2   stay enforcement orders issued by the Delaware bankruptcy court.
 3   The interpretation of a court order is a legal conclusion to be
 4   reviewed de novo.    See U.S. v. Spallone, 399 F.3d 415, 423 (2d
 5   Cir. 2005) (“The interpretation of the text of [another court’s]
 6   order or judgment is considered a conclusion of law subject to
 7   de novo review.”).
 8        “The issue whether a plan is feasible-is not likely to be
 9   followed by liquidation or further reorganization-is one of
10   fact, which we review under the clearly erroneous standard.”
11   In re Harbin, 486 F.3d at 517.    We affirm the bankruptcy court’s
12   factual findings unless those findings are “(1) ‘illogical,’
13   (2) ‘implausible,’ or (3) without ‘support in inferences that
14   may be drawn from the facts in the record.’”    United States v.
15   Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc).
16   Where there are two plausible views of the evidence, “the
17   factfinder’s choice between them cannot be clearly erroneous.”
18   Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574
19   (1985).
20                              V.   DISCUSSION
21   A.   Mootness
22        Both RCS and ABC address the mootness issue in their
23   briefs, albeit in an abbreviated manner.     On the one hand, ABC
24   contends that this appeal is not moot because the Panel granted
25   ABC’s request for a stay pending appeal.     However that order has
26   since been vacated.   On the other hand, without legal analysis
27   or support, RCS suggests that this appeal would become moot once
28   we affirmed the bankruptcy court’s summary judgment order in the

                                      -10-
 1   related appeal, BAP No. AZ-12-1381-JuTaAh.     Although we have
 2   affirmed the bankruptcy court’s orders on the cross motions for
 3   summary judgment on the setoff issue, we disagree that our
 4   decision rendered this appeal moot.8
 5            We have an independent obligation to consider mootness sua
 6   sponte, Felton Pilate v. Burrell (In re Burrell), 415 F.3d 994,
 7   997 (9th Cir. 2005), because we lack jurisdiction, Urban, 375
 8   B.R. at 887, or it may be the case that any remedy may be unjust
 9   given the change in position of third parties, Clear Channel,
10   391 B.R. at 33–35.     “The test for mootness of an appeal is
11   whether the appellate court can give the appellant any effective
12   relief in the event that it decide the matter on the merits in
13   his favor.     If it can grant such relief, the matter is not
14   moot.”     In re Burrell, 415 F.3d at 998.   We conclude that this
15   appeal is not constitutionally moot because we could reverse
16   plan confirmation or require modification of the plan, thereby
17   giving relief to ABC.
18            The equitable mootness question requires more analysis due
19   to the Ninth Circuit’s “comprehensive test” for determining
20   whether an appeal is equitably moot:
21            We will look first at whether a stay was sought, for
              absent that a party has not fully pursued its rights.
22            If a stay was sought and not gained, we then will look
              to whether substantial consummation of the plan has
23            occurred. Next, we will look to the effect a remedy
              may have on third parties not before the court.
24            Finally, we will look at whether the bankruptcy court
              can fashion effective and equitable relief without
25            completely knocking the props out from under the plan
              and thereby creating an uncontrollable situation for
26
27
          8
            We also must acknowledge that our ruling may not be the
28   final order on that issue, as ABC has further appeal rights.

                                       -11-
 1        the bankruptcy court.
 2   Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe
 3   Insulation Co.), 677 F.3d 869, 881 (9th Cir. 2012).    In applying
 4   these factors to this case, we ultimately decline to dismiss
 5   this appeal on equitable mootness grounds.
 6        First, ABC was diligent in seeking a stay from the
 7   bankruptcy court and this Panel, which both refused.   “[F]ailure
 8   to obtain a stay is one factor to be considered in assessing
 9   equitable mootness, but is not necessarily controlling.”   Id. at
10   881-82.   Second, because a stay was sought and not gained, we
11   next determine whether substantial consummation of the plan has
12   occurred.   “The Bankruptcy Code defines substantial consummation
13   as: (a) transfer of all or substantially all of the property
14   proposed by the plan to be transferred; (b) assumption by the
15   debtor or by the successor to the debtor under the plan of the
16   business or of the management of all or substantially all of the
17   property dealt with by the plan; and (c) commencement of
18   distribution under the plan.”   Id. (citing § 1101(2)).
19        RCS states that it no longer has any property that was
20   subject to the lis pendens as the properties have all been sold
21   and most of the proceeds have been used to pay RCS’s creditors.
22   Sodja’s testimony at the evidentiary hearing on plan
23   confirmation corroborates RCS’s statement.   As noted above, the
24   Ann Road Property was sold over ABC’s objection pursuant to a
25   court order prior to the confirmation of Debtors’ plan.    Sodja
26   testified that two of the properties RCS owned would be returned
27   to Hill Crest Bank because the debt exceeded the potential value
28   of the properties.   Finally, Sodja testified that the closing

                                     -12-
 1   for the Russell Road Property was to occur prior to the end of
 2   the year [2012].   Hence, the first requirement for substantial
 3   consummation has been met because there has been a transfer of
 4   all the real property dealt with by the plan.
 5        Paragraph 7.1 of the plan provides that, as of the
 6   Effective Date, the management, control, and operation of the
 7   Reorganized Debtor[s] became the general responsibility of the
 8   Managing Member of the Reorganized Debtor[s], “which shall,
 9   thereafter have the responsibility for the management, control
10   and operation of the Reorganized Debtor[s].”    Therefore, the
11   second requirement for substantial consummation of the plan has
12   been met.
13        Finally, distributions under the plan have commenced.         The
14   Notice of Effective Date filed by Debtors plainly states that
15   Krynski was paid $525,000 and other distributions had commenced.
16   Accordingly, the plan has been substantially consummated.
17        Even though the plan has been substantially consummated,
18   that is not the “end of the story.”    In re Thorpe Insulation
19   Co., 677 F.3d at 882 n.7.   We can “still assess whether
20   effective relief might be given without fully impairing the
21   prior plan and other pertinent circumstances.”    Id.    We, thus,
22   consider “whether modification of the plan of reorganization
23   would bear unduly on the innocent.”    Id. at 882.
24        There is no doubt that the plan has proceeded and third
25   party rights have intervened.   Properties were sold to third
26   parties who are not presently before the court.      Under these
27   circumstances, it would be inequitable to alter the plan so far
28   as the sale of the properties is concerned because parties who

                                     -13-
 1   relied on the plan are not before us.
 2          We last consider whether the bankruptcy court on remand may
 3   be able to devise an equitable remedy.   “Where equitable relief,
 4   though incomplete, is available, the appeal is not moot.”     Id.
 5   at 883.   Here, RCS’s remaining asset is its judgment against
 6   ABC.   Therefore, complete reversal of the plan will not likely
 7   provide a remedy for ABC.   However, RCS admits that some
 8   residual amount remains in its estate.   Moreover, if ABC’s
 9   claims are determined to be valid, then it may be entitled to
10   recover monies RCS paid to Krynski, who was the sole member of
11   ACCP, which had obtained the loans from ABC.   While
12   theoretically Krynski may not have the money, we conclude this
13   possibility does not make this appeal equitably moot.   We
14   therefore consider the merits.
15   B.     The Merits
16          Debtors had the burden of proving all the elements
17   governing plan confirmation.   Leavitt v. Soto (In re Leavitt),
18   209 B.R. 935, 940 (9th Cir. BAP 1997), aff’d, 171 F.3d 1219 (9th
19   Cir. 1999).   The requirements for plan confirmation are listed
20   in § 1129(a) (stating that the court shall confirm a plan only
21   if all the following requirements have been met).   Sections
22   1129(a)(3) and (11) are at issue in this appeal.
23          Section 1129(a)(3): Forbidden by Law
24          Section 1129(a)(3) requires the bankruptcy court to decide
25   whether the “plan has been proposed in good faith and not by any
26   means forbidden by law.”    ABC contends that Debtors’ plan runs
27   afoul of this section because properties will be sold that are
28   subject to stay enforcement orders issued by the Delaware

                                      -14-
 1   bankruptcy court.     ABC argues that these orders, which enforced
 2   the automatic stay in ABC’s chapter 15 case against RCS,
 3   demonstrate that ABC has a protectable interest in the
 4   properties.     Thus, according to ABC, the confirmation order
 5   authorizing the sale of the properties constitutes an
 6   impermissible collateral attack on the Delaware bankruptcy
 7   court’s orders.
 8            In the first order ABC relies upon, the Delaware bankruptcy
 9   court found that RCS’s sale of properties subject to ABC’s lis
10   pendens was a willful violation of the automatic stay.9     ABC’s
11   argument that this order somehow prohibited the sale of the
12   properties through the confirmed plan stems from a faulty
13   premise; i.e., that the Delaware bankruptcy court’s enforcement
14   of the stay against RCS means that the court found ABC had a
15   constructive trust over the properties, creating a right to the
16   protection of the stay.     The order does not say that.
17            “Court orders are construed like other written instruments,
18   except that the determining factor is not the intent of parties,
19
20
          9
            Recall that ABC recorded the lis pendens against the ACCP
21   properties concurrent with the commencement of the Nevada lawsuit
     against Debtors and others. RCS filed a motion to expunge the
22
     lis pendens which the Nevada court denied in an order dated
23   September 10, 2009, finding: (1) the constructive trust claim
     affected the title or possession of the properties; (2) ABC
24   Learning would be injured by a transfer of an interest in the
     properties before the Nevada Action was concluded; and (3) ABC
25   Learning established that it was likely to prevail on the merits
26   of the constructive trust claim. See In re ABC Learning Centres
     Ltd., 2011 WL 4899789, at *2 (setting forth what happened in the
27   Nevada court). After the Nevada district court denied RCS’s
     motion to expunge, RCS sold three properties that were subject to
28   the lis pendens. Id.

                                       -15-
 1   but that of the issuing court.”   Spallone, 399 F.3d at 424.
 2   “[A]n order will not be construed as going beyond the motion in
 3   pursuance of which the order was made, for a court is presumed
 4   not to intend to grant relief which was not demanded.”    Id.
 5   The plain language of the order shows that the Delaware
 6   bankruptcy court found RCS violated the stay based on its
 7   inquiry into whether ABC had “arguable claims of right to the
 8   properties, or a colorable basis for asserting an interest in
 9   the properties.”   In re ABC Learning Centres Ltd., 2011 WL
10   4899789, at *2.    The court’s order further shows that ABC’s
11   filing of the lis pendens established the colorable claim:
12   “Filing the Lis Pendens and the Nevada Court’s Lis Pendens Order
13   established a colorable claim of title.”    Id.   Finally, the
14   Delaware bankruptcy court did not find that ABC had rights to
15   the properties by virtue of its constructive trust claim.     “It
16   is not necessary at this stage that [ABC] establish an ownership
17   interest in or title to the property and the bankruptcy court
18   need not make that determination at the outset for the automatic
19   stay to apply.    The Nevada Court will make that determination
20   . . . If the Nevada court finds that [ABC] had a constructive
21   trust, that will vest title of rights in [ABC].”    Id. at *3.
22        We do not construe the Arizona bankruptcy court’s
23   confirmation order as a collateral attack on this order.    “The
24   collateral attack doctrine precludes litigants from collaterally
25   attacking the judgments of other courts.”   Rein v. Providian
26   Fin. Corp., 270 F.3d 895, 902 (9th Cir. 2001).     In order to be
27   an impermissible collateral attack of an earlier judgment, the
28   relevant claims must have been directly ruled on in the prior

                                     -16-
 1   proceeding.    See Skokomish Indian Tribe v. United States,
 2   332 F.3d 551, 560 (9th Cir. 2003).     Here, although the Delaware
 3   bankruptcy court enforced the automatic stay against RCS, the
 4   basis for its doing so was the filing of the lis pendens.     The
 5   order does not establish that ABC had any other colorable basis
 6   for asserting an interest in the properties.    As noted by the
 7   bankruptcy court, no court has ever ruled on ABC’s constructive
 8   trust claim.    Accordingly, the collateral attack doctrine does
 9   not apply.
10        It follows that once the Arizona bankruptcy court quashed
11   the lis pendens due to its findings that there was a de facto
12   merger between RCS and ACCP, the sale of the properties through
13   a confirmed plan could not run afoul of the Delaware bankruptcy
14   court’s order, or for that matter, the imposition of the stay in
15   ABC’s chapter 15.
16        The second order ABC relies upon is the Delaware bankruptcy
17   court’s denial of RCS’s motion to vacate the order imposing the
18   stay in ABC’s chapter 15 and the order finding RCS had committed
19   a willful violation of the stay even though the Delaware court
20   knew that the Arizona bankruptcy court had granted RCS’s MSJ and
21   quashed the lis pendens on the properties.    The plan also does
22   not violate the law because of this denial order.    Again, the
23   plain language of the order only refers to the now-dissolved lis
24   pendens as the colorable basis for ABC’s alleged interest in the
25   properties.    In sum, we conclude that the bankruptcy court did
26   not err by finding that Debtors’ plan complied with
27   § 1129(a)(3).
28

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 1        Section 1129(a)(11): Feasibility
 2        Section 1129(a)(11) requires the court to confirm a plan
 3   when “[c]onfirmation of the plan is not likely to be followed by
 4   liquidation, or the need for further financial reorganization,
 5   of the debtor or any successor to the debtor under the plan,
 6   unless such liquidation or reorganization is proposed in the
 7   plan.”
 8        ABC argues that the bankruptcy court erred in its finding
 9   of feasibility because it did not follow a bright-line rule set
10   forth in Harbin, which ABC recites as follows:      a plan is not
11   feasible if it does not provide a mechanism for addressing the
12   claims of creditors who may subsequently recover large judgments
13   against the debtor.   However, this is neither a rule nor the
14   holding set forth in Harbin.     The opinion begins:   “[W]e hold
15   that a bankruptcy court considering the feasibility of a plan of
16   reorganization under 11 U.S.C. § 1129(a)(11) must evaluate the
17   possible effect of a debtor’s ongoing civil case with a
18   potential creditor, whether that litigation is pending at the
19   trial level or on appeal.”    In re Harbin, 486 F.3d at 514.
20   Nowhere do we find in the opinion a “bright-line” rule that
21   requires a plan to provide a mechanism for addressing the claims
22   of creditors who may subsequently recover large judgments
23   against the debtor.
24        Moreover, in Harbin the bankruptcy court erroneously
25   concluded that it could not consider the effect of the
26   creditor’s pending appeal for several reasons, including the
27   Rooker-Feldman doctrine.     All these reasons were rejected by the
28   Ninth Circuit.   This case differs.     The bankruptcy court

                                      -18-
 1   properly noted, “what might happen on appeal is among the facts
 2   and circumstances the court needs to consider in determining
 3   feasibility.”   The court then considered the effect of ABC’s
 4   appeal on the feasibility of Debtors’ plan by taking evidence on
 5   whether ABC would prevail in the appeal of the RCS MSJ order,
 6   but “it heard no evidence to that effect.”
 7        Because feasibility is a finding of fact, ABC has the
 8   burden to demonstrate that the bankruptcy court’s findings of
 9   fact are clearly erroneous.   Wells Fargo Bank, N.A. v. Loop 76,
10   LLC (In re Loop 76, LLC), 465 B.R. 525, 545 (9th Cir. BAP 2012).
11   To show clear error, ABC must demonstrate how the findings were
12   not supported by the record (i.e., the testimony and evidence
13   upon which the court relied in issuing its ruling).   ABC
14   contends that it does not need to show clear error because the
15   bankruptcy court misapplied the law when it found ABC was
16   unlikely to prevail in the summary judgment appeal.   In
17   addition, ABC argues that the RCS MSJ will be reviewed de novo
18   on appeal.   Therefore, ABC maintains that the bankruptcy court’s
19   decision that it was “unlikely to prevail on appeal” should be
20   governed under a de novo review standard.    We now have affirmed
21   the bankruptcy court’s orders on the parties’ cross motions for
22   summary judgment.   Therefore, even under a de novo review, ABC
23   has not shown that it was likely to prevail on appeal.
24        In short, ABC failed to show a reasonable possibility that
25   its claim could affect the plan’s feasibility in the future;
26   i.e., that the plan was likely to be followed by liquidation, or
27   the need for further financial reorganization.   Accordingly, we
28   discern no error with the bankruptcy court’s conclusion that the

                                    -19-
 1   plan met the requirements for feasibility under § 1129(a)(11).10
 2                            VI.   CONCLUSION
 3         For the reasons stated, we AFFIRM.
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26        10
            ABC devotes a significant portion of its brief to
27   arguments raised and briefed in the related appeal on the cross
     summary judgment motions. We do not revisit these arguments in
28   the context of this appeal.

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