IN RE AKARD STREET FUELS, L.P., (N.D.Tex. 2001)

SIDNEY FITZWATER, District Judge

The bankruptcy court declined to approve a proposed compromise reached in the case of chapter 11 debtor Vista DFW LOCS LLC ("Vista DFW') among Vista DFW, appellant Morgan Stanley Dean Witter Mortgage Capital, Inc. ("Morgan Stanley"), and the Official Committee of Unsecured Creditors of Vista DFW ("Unsecured Creditors Committee"). Instead, in a series of orders that culminated in the sale confirmation order at issue, it directed the sale of substantially all of Vista DFW's assets free and clear of liens that Morgan Stanley asserted in the property, at an auction at which the bankruptcy court precluded Morgan Stanley from credit bidding. In these Consolidated appeals, Morgan Stanley challenges five bankruptcy court decisions. The court dismisses the appeals from four orders. As to the remaining one, after carefully studying the record and hearing oral argument, the court discerns no reversible error of law, clearly erroneous fact finding, or abuse of discretion, and affirms.

I

After Vista DFW filed for bankruptcy, Vista DFW, Morgan Stanley, and the Unsecured Creditors Committee reached a compromise under which substantially all Vista DFW estate assets would be auctioned pursuant to 11 U.S.C. § 363. Among other things, the settlement allowed Morgan Stanley to credit bid and recognized the validity of its alleged liens. When Vista DFW by motion sought bankruptcy court approval of the settlement and related relief, appellee Alon USA LP ("Alon") objected. Following a hearing, the bankruptcy court granted Vista DFW's motion in part and denied it in part. In an order entered September 6, 2001 ("the 363 sale order"), the court rejected the proposed compromise. Instead, it ordered the sale at public auction of substantially all of Vista DFW's assets free and clear of all liens under 11 U.S.C. § 363(f)(4) and denied Morgan Stanley the right to credit bid.

In response to the 363 sale order, Morgan Stanley filed a motion to allow it to credit bid. The bankruptcy court conducted a hearing on the motion and, by oral order during the hearing and by subsequent written order entered September 13, 2001 ("the credit bid order"), denied the motion.

Substantially all of Vista DFW's assets (some were abandoned) were thereafter sold at auction in accordance with the procedures specified in the 363 sale order. During the hearing to determine whether the sale should be confirmed, Morgan Stanley objected on various grounds. The bankruptcy court, by oral on-the-record findings and conclusions, and by minute order entered September 26, 2001 ("the sale confirmation order"), confirmed the sale over Morgan Stanley's objections.

During the September 26 hearing, Morgan Stanley moved orally that the automatic stay be lifted pursuant to 11 U.S.C. § 362(d) or, alternatively, that the bankruptcy case be dismissed under 11 U.S.C. § 1112(b). The bankruptcy court denied both motions.

This court on September 26, 2001 stayed the sale confirmation order. It has expedited the appeals and heard oral argument.

II

The court dismisses the appeals docketed as Civil Action Nos. 3:01-CV-2066-D and 3:01-CV-2068-D — Morgan Stanley's appeals from the 363 sale order and the credit bid order — because the notices of appeal are from interlocutory orders that were merged into the appeal from the sale confirmation order. See Dickinson v. Auto Ctr. Mfg. Co., 733 F.2d 1092, 1101 (5th Cir. 1983). The court will consider the arguments presented in these appeals in its review of the sale confirmation order.

The court rejects, however, Alon's contention during oral argument that Morgan Stanley's notices of appeal are so defective as to deprive the court of jurisdiction.

The court concludes that it lacks jurisdiction over Morgan Stanley's appeals from the bankruptcy court's rulings denying Morgan Stanley's oral motions to lift the automatic stay and dismiss the bankruptcy case because Morgan Stanley did not file notices of appeal from those orders. These rulings were made during the bankruptcy court's sale confirmation hearing but are neither explicitly designated as appealed orders in a notice of appeal nor are they fairly encompassed within Morgan Stanley's appeal of the sale confirmation order.

The court rejects Alon's assertion that Morgan Stanley's failure to file an amended notice of appeal from the bankruptcy court's October 15, 2001 order granting Alon's motion to amend or make findings of fact and conclusions of law deprives this court of appellate jurisdiction. At most, Morgan Stanley's failure to file an amended notice of appeal precludes it from challenging the bankruptcy court's decision to enter such findings and conclusions. It does not affect this court's jurisdiction over the appeal or the reviewability on the merits of the amended findings and conclusions. Moreover, to decide this appeal, it is not necessary for the court to consider the bankruptcy court's additional findings of fact and conclusions of law.

III

In this expedited appeal, where the need for a prompt ruling outweighs the need for a detailed one, the bankruptcy court's decision is being affirmed, and the opinion decides issues that are controlled by their specific facts and thus lacks precedential value outside the context of this case, the court need not write at length.

This court reviews the bankruptcy court's conclusions of law de novo, see In re Ambassador Park Hotel, Ltd., 61 B.R. 792, 798-99 (N.D. Tex. 1986) (Fitzwater, J.), but reviews its fact findings only for clear error, see In re Johnson Southwest, Inc., 205 B.R. 823, 827 (N.D. Tex. 1997) (Fitzwater, J.). A bankruptcy court's order approving or denying a compromise involving a bankruptcy estate is reviewed for abuse of discretion. See In re Jackson Brewing Co., 624 F.2d 599, 602-603 (5th Cir. 1980). The question whether purchasers paid reasonably equivalent value for property sold under 11 U.S.C. § 363 is a question of fact for the bankruptcy court that is reviewed only for clear error. See In re Dunham, 110 F.3d 286, 288-89 (5th Cir. 1997).

The bankruptcy court did not abuse its discretion in rejecting the proposed settlement on the facts developed before it. Its findings of fact concerning the relevant factors, see In re Foster Mortgage Corp., 68 F.3d 914, 917 (5th Cir. 1996), are not clearly erroneous, and it did not commit a reversible error of law.

The bankruptcy court did not commit reversible error in ordering Vista DFW's estate property sold free and clear of Morgan Stanley's asserted lien interest under 11 U.S.C. § 363(f)(4). The court neither clearly erred in its factual findings nor erred in its legal conclusions in deciding that there was a bona fide dispute regarding Morgan Stanley's alleged interest.

Likewise, the bankruptcy court did not commit reversible error in ruling that no party (in particular, Morgan Stanley) would be allowed to credit bid at the auction sale. The court's findings of fact in support of the determination under 11 U.S.C. § 363(k) that there was "cause" to do so are not clearly erroneous, and its legal conclusions do not constitute error as a matter of law.

The bankruptcy court did not clearly err in its findings concerning the adequacy of the price at which the estate assets were sold.

In sum, the bankruptcy court conducted an appropriate assessment under the pertinent factors adopted by the Fifth Circuit and rejected a proposed settlement after determining that the possible gain to the estate was outweighed by the detriment that would be incurred by surrendering the right to pursue a challenge to Morgan Stanley's asserted liens. The court also concluded that the challenge to Morgan Stanley's alleged liens constituted a bona fide dispute, that a rapid sale of estate assets was necessary to prevent a sharp decline in the value of the estate, and that a comparatively lengthy period of time would be necessary to resolve the complex dispute surrounding the challenged liens. These findings of fact, adequately supported by record evidence, formed the basis for the bankruptcy court's legally permissible conclusion that cause existed to deny Morgan Stanley the right to credit bid. The bankruptcy court, acting within its discretion, found without clear factual error or legal error that because Morgan Stanley (who did not yet have an allowed claim) was capable of bidding cash at the auction and later recovering the cash if it proved its liens, it would not be unduly prejudiced by the sale procedure. The bankruptcy court also held, without clear factual error or legal error, that the auction was properly conducted and that the prices established by the auction were legally adequate. This court cannot say that bankruptcy court acted in any material respect based on clearly erroneous fact findings or legal error, or abused its discretion. Under such circumstances, its order must be affirmed.

* * *

The bankruptcy court's sale confirmation order is AFFIRMED, this court's September 26, 2001 stay of the sale confirmation order is LIFTED, the November 6, 2001 motion of USRP (PAC), L.P., USRP (TC), L.P., and USRP (FAIN 10), L.P. to modify the stay order is DENIED AS MOOT, and the appeals docketed as Civil Action Nos. 3:01-CV-2066-D and 3:01-CV-2068-D are DISMISSED.

AFFIRMED in part; DISMISSED in part.