Opinion
M-47 (HB).
June 30, 2003.
OPINION ORDER
Pursuant to Rule 8003 and 8011 of the Federal Rules of Bankruptcy Procedure ("FRBP"), Motorola Inc. ("Motorola") seeks to appeal the Bankruptcy Court's order approving a disclosure statement and the procedures for voting on the joint plan of reorganization submitted by WorldCom Inc. ("WorldCom") on behalf of itself, WorldCom Wireless Inc. ("Wireless"), and more than two hundred other subsidiaries associated with WorldCom (collectively "debtors"). WorldCom and the Official Committee of Unsecured Creditors of WorldCom (collectively "appellees") oppose the appeal on the grounds that the order that Motorola seeks to appeal is interlocutory and Motorola failed to meet its burden to show that this Court should exercise jurisdiction. Oral argument was held on June 18, 2003, during which this Court provisionally held from the bench that the Bankruptcy Court's order is interlocutory and that Motorola failed to show that the circumstances merited the Court exercising its discretionary jurisdiction. This Court ordered the parties to submit supplemental letter briefs to further examine whether the Bankruptcy Court's order approving the disclosure statement is final in light of amendments made to FRBP 8002(c) in 1997. After further consideration and for the following reasons, I am of the same mind and Motorola's motion is denied.
I. BACKGROUND
Before WorldCom entered Chapter 11 bankruptcy, WorldCom issued more than $27 billion of debt. In the prospectus distributed by WorldCom, it informed buyers that their debt would be "structurally subordinate" to the debt owed to creditors of subsidiaries, such as Wireless. On July 21, 2002, WorldCom and certain of its direct and indirect subsidiaries filed for Chapter 11 reorganization in the United States Bankruptcy Court for the Southern District of New York. WorldCom, the parent of Wireless, incurred enormous public debt to acquire MCI and other corporate assets, which culminated in WorldCom and certain of its subsidiaries filing for the largest Chapter 11 reorganization in history. Before entering Chapter 11, Wireless purportedly maintained a separate corporate entity with its own managers, employees, and accounting books. Wireless bought cellular phones from Motorola, which led Wireless to incur about $20.5 million in debt to Motorola. Motorola holds more than 90% of the claims against Wireless. Near the time that WorldCom and Wireless filed their petitions for reorganization, WorldCom liquidated Wireless' assets and left the wireless telephone service business. Wireless received about $30 million for these assets, but owed creditors (excluding insiders) at the time of its petition about $22.5 million. In Motorola's view, it and other Wireless creditors should receive 100 cents on dollar, plus interest, in any liquidation.
On April 14, 2003, WorldCom filed a plan of reorganization ("the proposed plan") for itself, Wireless and its other debtor affiliates. Motorola contends that the proposed plan gives "no effect to the structural subordination that had been a condition to the issuance of the WorldCom parent company debt." Motorola Mem. at 10. In addition, Motorola asserts that the disclosure statement contains no information in regard to Wireless' stand-alone status, and thus it is purportedly impossible to ascertain whether the treatment of Wireless creditors under the plan complies with 11 U.S.C. § 1129(a)(7)(A)(ii) and 1129(b). At the hearing that approved the disclosure statement, Motorola sought to introduce a supplemental disclosure statement "to provide adequate disclosure as to Wireless." Id. at 14. The debtors objected, and the Bankruptcy Court rejected the proposed supplemental disclosure, choosing instead to include a brief summary of Motorola's and debtors' contentions, which Motorola and the debtors agreed was an accurate summation of their respective positions. Motorola Exh. 4 (May 22, 2003 Transcript) at 116-18.
In addition, Motorola further requested that the solicitation and balloting for the proposed plan be carried out in such a manner that creditors, such as Motorola, would vote in a class separate from the structurally subordinate parent creditors. Motorola contends that the failure to separately classify its votes from those of the structurally subordinate parent creditors renders its votes meaningless. The Bankruptcy Court denied this request, and issued an order on May 28, 2003 approving the adequacy of the disclosure statement, voting procedures, and other related matters.
II. DISCUSSION
A. IS THE BANKRUPTCY COURT'S ORDER INTERLOCUTORY OR FINAL?
Motorola contends that an order approving a disclosure statement is final and therefore appealable, as of right, pursuant to 28 U.S.C. § 158(a)(1). Motorola argues that amendments to FRBP 8002(c) in 1997 abrogated past case law, which has consistently held since the seminal decision by the Fifth Circuit in In re Texas Extrusion Corp., 844 F.2d 1142, 1154-55 (5th Cir. 1988), that orders approving disclosure statements are interlocutory. Motorola cites no case law since the 1997 amendment, much less since Texas Extrusion, that has found approval or disapproval of a disclosure statement by a bankruptcy court to be a final order. Although the Second Circuit has yet to render a decision on this issue, courts in the Southern District of New York and elsewhere, including the Ninth, Fifth and Fourth Circuits, have all agreed that such an order is not final. See, e.g., In re Wallace Gale Co., 72 F.3d 21, 25 (4th Cir. 1995); In re Perez, 30 F.3d 1209, 1216-17 (9th Cir. 1994); Texas Extrusion, 844 F.2d at 1154-55; In re Ionosphere Clubs, Inc., 179 B.R. 24, 26-29 (S.D.N.Y. 1995); In re Elsinore Shore Assoc., 82 B.R. 339, 341 (N.J. 1988); In re Pacific Gas Elec. Co., 273 B.R. 795, 820 (Bankr. N.D. Cal. 2002); In re Waterville Timeshare Group, 67 B.R. 412,413 (Bankr. D.N.H. 1986); see also 7 Collier on Bankruptcy ¶ 1125.03 (15th ed. 2002) ("Every circuit court which has ruled on the matter has held that a bankruptcy court ruling on a disclosure statement is an interlocutory order which cannot be appealed [as of right]."). This motion raises directly, for the first time, the question of what effect the 1997 amendment have, if any, on the time when appeal from an order approving disclosure statement must be made.
In 1997, Rule 8002(c)(1) was amended to read, in relevant part:
The bankruptcy judge may extend the time for filing the notice of appeal by any party, unless the judgment, order, or decree appealed from: . . .
(E) approves a disclosure statement under § 1125. . . . FRBP 8002 (1997). Motorola observes that in the Committee Notes to the amendment, it states:
The subdivision is amended further to prohibit any extension of time to file a notice of appeal — even if the motion for an extension is filed before the expiration of the original time to appeal — if the order appealed from . . . approves a disclosure statement. . . .
These types of orders are often relied upon immediately after they are entered and should not be reviewable on appeal after the expiration of the original appeal period under Rule 8002(a) and (b).
FRBP 8002(c) Committee's Notes (1997). Motorola construes the amendment and accompanying comment to mean that orders approving disclosure statements must now be considered final for purposes of appeal. In my view, had the Supreme Court, which approved the amendment, or the Advisory Committee, which proposed the amendment, intended to overrule established precedent that orders approving disclosure statements were interlocutory, they would have done so much more clearly either through the text of the Bankruptcy Rules or the Advisory Committee Notes. The absence of any language that illustrates an effort to overrule past cases militates against finding that the amendment supercedes past case law. See United States v. philips, 19 F.3d 1565, 1581-82 (11th Cir. 1994) (holding that the absence of evidence of congressional intent in either the text of the statute or legislative history to overrule precedent suggests no intent to overrule prior cases). Indeed, while the Advisory Committee acknowledges that portions of the amendment to FRBP 8002(c) were incorporated to prevent the harshness of the unamended rule as applied specifically in In re Mouradick, 13 F.3d 326 (9th Cir. 1994), neither it nor the amended text of FRBP 8002(c) provides any indication that the amendment restricting the time to file a notice of appeal from certain orders supercedes Texas Extrusion and its progeny.
Motorola strenuously attacks the vitality of Texas Extrusion in light of the 1997 amendment to FRBP 8002(c). I find its arguments unpersuasive. Motorola argues that because FRBP 8002(c) no longer allows extensions of time to file a notice of appeal from an order approving a disclosure statement, the Court must infer that such an order must be considered final. In 1988, when the Fifth Circuit decided Texas Extrusion, Rule 8002(c) allowed bankruptcy courts to extend the time to file a notice of appeal from a disclosure statement order, provided it was filed "within 10 days of the date of the entry of the judgment, order, or decree appealed from." FRBP 8002(a); 8002(c) (1987). Before 1997, the time to file a notice of appeal from such order could not be extended beyond 30 days from "the date of the entry of the judgment, order, or decree appealed from." After 1997, FRBP 8002(c) was amended to remove that court's ability to grant extensions if it pertained to any one of the six enumerated categories of orders, including approval of disclosure statements. Cf. FRBP 8002(c) (1997) with FRBP 8002(c) (1996). Now, a notice of appeal must be filed within 10 days rather than 30 days from "the date of the entry of the judgment, order, or decree appealed from." Motorola contends that this alteration completely vitiates the reasoning in Texas Extrusion. I disagree.
FRBP 8002(a) (c), amended as of 1987, stated in relevant part:
(a) Ten-day period
The notice of appeal shall be filed with the clerk within 10 days of the date of the entry of the judgment, order, or decree appealed from.
(c) Extension of time for appeal
The bankruptcy judge may extend the time for filing the notice of appeal by any party for a period not to exceed 20 days from the expiration of the time otherwise prescribed by this rule. A request to extend the time for filing a notice of appeal must be made before the time for filing a notice of appeal has expired, except that a request made no more than 20 days after the expiration of the time for filing a notice of appeal may be granted upon a showing of excusable neglect if the judgment or order appealed from does not authorize the sale of any property or the obtaining of credit or the incurring of debt under § 364 of the Code, or is not a judgment or order approving a disclosure statement, confirming a plan, dismissing a case, or converting the case to a case under another chapter of the Code.
The Fifth Circuit concluded that the district court in Texas Extrusion erroneously held that the bankruptcy court order approving the disclosure statement was final for purposes of appeal. Specifically, the Fifth Circuit observed that:
The district court's first reason stemmed from an implication found in the language in Bankruptcy Rule 8002(c) that notices of appeal may be filed immediately from orders approving disclosure statements, and such notices of appeal or requests to extend the time for filing notices of appeal must be made within ten days. The district court saw this language as implying that such orders are final and therefore must be appealed within ten days or the appeal is forever waived. There is also language in the Advisory Committee Note following Rule 8002 that can be read to imply that a bankruptcy court order approving a disclosure statement is a final order and therefore some indication of appeal must be filed within ten days of its entry or the appeal is forever waived. . . . We hold, however, that such inferences from the language of the Bankruptcy Rules are not sufficient to establish that bankruptcy court orders approving disclosure statements are final orders. We also have some doubts that such inferences are even necessarily correct.Texas Extrusion, 844 F.2d at 1154-55 (emphasis in original). As shown from this passage, the Fifth Circuit flatly rejected the district court's inference, from the language of the rule and Advisory Committee Notes, that requiring some indication that an appeal be filed within ten days of its entry suffices to show that orders approving a disclosure statement are final. The Fifth Circuit in Texas Extrusion concluded that the district court's inference is in clear conflict with case law, which sets out the criteria for determining which orders are final for purposes of appeal in the bankruptcy context, and with the realities of the bankruptcy process that Congress enacted. The grounds for the inference that Motorola seeks to advance here is nearly the same as that of the district court's, and thus, the Fifth Circuit's rejection of that inference in regard to finality of a disclosure statement order applies with similar, if not, equal force here.
The Advisory Committee Notes in regard to FRBP 8002(c) stated in relevant part:
Orders of the bankruptcy court relating to the sale of property, extension of credit, confirmation of a plan, dismissal or conversion of the case, and approval of the disclosure statement are of such significance to the administration of the case, the parties in interest, and third parties that this subdivision requires that either an appeal or a motion for extension be filed within the original 10 day period.
FRBP 8002(c) (1987) (emphasis added).
Motorola further argues that amended FRBP 8002(c) supercedes the Fifth Circuit's reasoning that the mechanics of the confirmation process militates against treating orders approving disclosure statements to be final. The Fifth Circuit had noted that:
a blanket rule holding that an order approving a disclosure statement is a final order requiring immediate appeal, or the appeal is forever waived, fails to recognize the mechanics of the confirmation process. A disclosure statement is sent to each of the debtor's creditors, usually along with a copy of the plan of reorganization and a ballot, for purposes of informing the creditor and obtaining the creditor's approval of the plan. A creditor may not even receive a copy of the disclosure statement until after ten days from the entry of the order approving the disclosure statement. It is lacking any realism, then, to require that creditor to file a notice of an appeal contesting the order approving the disclosure statement before the creditor even receives the disclosure statement or at least has an opportunity to look closely at either the disclosure statement or the Plan.
Nothing in the amendment, however, by its plain language, alters prior case law, which has held, under FRBP 8002, that the time to file a notice appeal from an order approving a disclosure statement runs from entry of the confirmation order, rather than from entry of the order approving the disclosure statement. See Perez, 30 F.3d at 1217 ("the confirmation order — not the disclosure order — triggers the deadline for notices of appeal on `adequate information' issues under section 1125(a)"); see also Texas Extrusion, 844 F.2d at 1154 ("Bankruptcy Rules 8001 and 8002 allow ten days to file the notice of appeal from final orders of the bankruptcy court." (emphasis in original)). Since Perez, courts in the Southern District of New York have consistently acknowledged that under FRBP 8002(c), entry of the confirmation order, not the disclosure order, starts the clock running for filing the notice of appeal from a disclosure order. See, e.g., In re Ionosphere Clubs, Inc., 179 B.R. at 27; In re E-II Holdings Inc., 1995 WL 387650, at *3 (S.D.N.Y. Jun 30, 1995). Motorola cites no case law that would demonstrate that the amendment, enacted nearly half a dozen years ago, has altered any court's understanding of when the notice of appeal of an order approving a disclosure statement becomes due. Indeed, I find no treatise that has come to accept or recognize Motorola's perspective. See 7 Collier on Bankruptcy ¶ 1125.03 (15th ed. 2002); William L. Norton, Jr., 4 Norton Bankr. L. Prac. § 91:11 (2d ed. updated May 2003); 2 Fed. Appellate Prac. Guide 9th Cir.2d § 12:9 (2d ed. updated Apr. 2003); 5 Bankr. Service L.Ed. § 44:424 (Interlocutory Nature of Order on Disclosure Statement) (2002).
Of the six categories of orders enumerated by FRBP 8002(c)(1), Motorola notes that five of them have been held to be final, and that by implication, the sixth category of orders, approval of disclosure statements, should likewise be deemed final orders. Motorola disregards the practical reality that orders approving a disclosure statement are unlike the orders in the other five categories. For instance, denial of relief from an automatic stay, see FRBP 8002(c)(1)(A), is considered to be a final, appealable order "because such denial is the functional equivalent of a permanent injunction," which is indisputably a final order. See In re Chateaugay Corp., 880 F.2d 1509, 1511 (2d Cir. 1989). Making appeals from orders authorizing the sale of property, see FRBP 8002(c)(1)(B), "makes good sense" because the sale could potentially forever bar the appellant from any relief. See In re Kids Creek Partners, L.P., 200 F.3d 1070, 1075 (7th Cir. 2000). Furthermore, orders that authorize obtaining credit or the assumption or assignment of an executory contract or unexpired lease, see FRBP 8002(c)(1)(C)-(D), are final because they can completely determine the rights of the parties with respect to that discrete matter. In re CSM Realty Corp., 2001 WL 987919, at *3 (S.D.N.Y. Aug. 29, 2001). Orders confirming a plan, see FRBP 8002(c)(1)(F), "marks the termination of any distinctive bankruptcy proceeding" and is "as close to the final order as any the bankruptcy judge enter." Kham Nate's Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1354-55 (7th Cir. 1990) (emphasis in original). In contrast, an order approving a disclosure statement does "[b]y no stretch of the imagination . . . resolve any discrete dispute among the various parties involved within the larger bankruptcy proceeding or determine the rights of the parties to secure their requested relief." Texas Extrusion, 844 F.2d at 1155. As further noted by the Ninth Circuit,
the inadequacy of disclosure can only injure a creditor if the plan is eventually confirmed. But, just because the bankruptcy court has approved the disclosure statement doesn't mean the plan will be approved. The creditors still have to vote, and the bankruptcy court still must determine that the plan complies with the Code. . . . Before the bankruptcy court passes on the plan, there is no way of knowing whether the allegedly inadequate disclosure prejudices anyone.Perez, 30 F.3d at 1216-17. As in Perez, "reviewing approval of a disclosure statement immediately is not merely unnecessary, it is premature," 30 F.3d at 1216, here because the alleged inadequacies of the disclosure may change or be rendered moot depending on how the Bankruptcy Court resolves the substantive consolidation issue, which Motorola admits is substantively "[t]he heart of [its] Plan and Disclosure Statement concerns." Motorola Mem. at 11. Here, the Bankruptcy Court reserved decision on the substantive consolidation until the confirmation hearing. See Motorola Exh. 4 (May 22, 2003 Transcript) at 11-16. Attempting to resolve now Motorola's inadequacy claim would yield, at best, an interim decision, that would not conclusively dispose of the contested matter, and indeed, would likely waste judicial resources if the court were required to revisit the adequacy claim based on the outcome of the confirmation hearing. Although the concept of "finality" is more flexible in the context of bankruptcies "[t]his `pragmatic approach to finality' does `not overcome the general aversion to piecemeal appeals,'" In re AroChem Corp., 176 F.3d 610, 619 (2d Cir. 1999) (quoting In re Chateaugay Corp., 922 F.2d 86, 90 (2d Cir. 1990) (emphasis added)), which is precisely the outcome that would likely occur here if this Court considered Motorola's appeal. See In re Frontier Props., Inc., 979 F.2d 1358, 1363 (9th Cir. 1992) ("Traditional finality concerns still dictate, however, that `[w]e avoid having a case make two complete trips through the appellate process.'" (quoting In re Vylene Enter., 968 F.2d 887, 895 (9th Cir. 1992)).
Motorola suggests that deferring appeal of the disclosure statement order until after the confirmation order issue would make relief unavailable. I disagree. It indisputably will have standing to appeal should the Bankruptcy Court confirm the proposed plan. Perez., 30 F.3d at 1217 ("[T]he issue of whether disclosure was adequate is in no way rendered moot by approval of the plan and is fully reviewable in an appeal from such order" following confirmation.). Although Motorola cites cases where the appellant's appeal were found to be equitably moot, see In re Ionosphere Clubs, Inc., 184 B.R. 648 (S.D.N.Y. 1995); In re E-II Holdings, Inc., 1995 WL 387650 (S.D.N.Y. 1995); Central States v. Central Transp., Inc., 68 B.R. 95 (M.D.N.C. 1986), in each case, the appellant failed to obtain a stay pending appeal to preserve the status quo. "The party who appeals without seeking to avail himself of that protection does so at his own risk." Chateaugay, 988 F.2d at 326. None of the cases cited by Motorola persuade me to believe that immediate appeal of the disclosure statement order is necessary here to preserve Motorola's right to relief.
Motorola further argues that under Bowers v. Connecticut Nat'l Bank, 847 F.2d 1019, 1022 (2d Cir. 1988), any "contested matter" pursuant to FRBP 9014, such as the adequacy of a disclosure statement, is a "discrete dispute," and that an order issuing therefrom is a final order for purposes of appeal. Although Collier on Bankruptcy, suggests that each "contested matter" is a "discrete unit," 1 Collier on Bankruptcy ¶ 5.07[2] at 5-24 (15th ed. 2002), the rubric that a dispute is a "contested matter" does not alone make the order resolving the matter final. Rather, as the Second Circuit commented, to be final and thus appealable as of right under 28 U.S.C. § 158(a), the contested matter, if resolved on appeal, must conclusively determine the dispute. Bowers, 847 F.2d at 1022; see also In re Fugazy Express, Inc., 982 F.2d 769, 775-76 (2d Cir. 1992) ("[F]or a bankruptcy court order to be final . . . the order need not resolve all of the issues raised by the bankruptcy; but it must completely resolve all of the issues pertaining to a discrete claim, including issues as to the proper relief." (emphasis added)). "The object of th[is] rule is to foster judicial economy and more expeditious disposition of bankruptcy cases by consolidating and adjudicating all appealable issues engendered by the same claim into one appellate proceeding, rather than considering their appeals of separable issues serially as and when they arise in the bankruptcy court's various orders." In re Premier Operations, 290 B.R. 33, 42 (S.D.N.Y. 2003). Neither the 1997 amendment nor the accompanying comment to amended FRBP 8002(c) alters the general rule that a party may appeal the decision of a bankruptcy judge as of right only if the bankruptcy decision is a final order. 28 U.S.C. § 158 (appeals); see, e.g., In re JJF Associates LLC, 2001 WL 1512616, at *2 (S.D.N.Y. Nov. 28, 2001); North Fork Bank v. Abelson, 207 B.R. 382, 386 (E.D.N.Y. 1997). Again, the order approving a disclosure statement is not final because further issues, including the substantive consolidation and confirmation, must be resolved before the adequacy of the disclosure statement may be decided conclusively. Bower and the cases that have followed in this Circuit and District confirm, contrary to Motorola's argument, that orders approving disclosure statements are not final within the meaning of 28 U.S.C. § 158.
Motorola additionally argues in conclusory fashion that if the confirmation order, not the disclosure order, still triggers the deadline for notices appeal, then amended FRBP 8002(c)(1)(E), which pertains to the appeal of disclosure orders, is meaningless. I fail to see how the relevant portion of the 1997 amendment, which simply narrowed the bankruptcy court's power to grant extensions of time to file a notice of appeal on confirmation orders, FRBP 8002(c)(1)(F) (1997), and orders approving or disapproving disclosure statements, FRBP 8002(c)(1)(E), necessarily renders FRBP 8002(c)(1)(E) meaningless. In light of Perez and the cases that have followed, amended FRBP 8002(c)(1)(E) and 8002(c)(1)(F) merely delineate that both types of orders must be appealed within ten days of the confirmation order, rather than the thirty days that was permitted before 1997.
In re Pacific Gas Electric appears to be the only published decision, since the 1997 amendment, to have expressed an opinion in regard to whether an order approving or disapproving a disclosure statement is final. The Bankruptcy Court in the Northern District of California, in no uncertain terms, concluded that "denial of approval of a disclosure statement is interlocutory." 275 B.R. 1, 3 (Bankr. N.D. Cal. 2002), rev `d on other grounds, 283 B.R. 41 (Bankr. N.D. Cal. 2002). Motorola contends that the district court "agreed that appellate jurisdiction exists as of right, pursuant to 28 U.S.C. § 158(a)(1)," 283 B.R. 41, 42 (N.D. Cal. 2002), and that, at least in the Ninth Circuit, "immediate appeals of disclosure statement orders may go forward as appeals of final orders." Motorola Supp. Mem. at 12. Motorola is incorrect. The district court determined that the debtor could pursue its appeal as right pursuant to 28 U.S.C, § 158(a)(1), not because it considered the denial of the disclosure statement to be, by itself, a final order, as Motorola suggests, but because the bankruptcy court certified the order under Rule 54(b) of the Federal Rules of Civil Procedure ("FRCP"), which the district court found to be proper. Pacific Gas, 283 B.R. at 45. Had the bankruptcy court not certified the order, or the district court found the certification improper, the debtor would have had to pursue its appeal with leave of the district court, pursuant to 28 U.S.C. § 158(a)(3). See id at 42. Not only is Pacific Gas clearly distinguishable from the case at bar, it utterly fails to support Motorola's argument. In Pacific Gas, the debtor had proposed a reorganization plan that would have conflicted with state laws regulating public utilities. 275 B.R. at 2. The debtor argued that 11 U.S.C. § 1123(a) preempted any conflicting state laws that would otherwise prohibit the proposed reorganization plan. Id. The bankruptcy court issued an order rejecting the disclosure statement "based upon the Proponents' express preemption theory." Id. The bankruptcy court took steps to note, however, that this order did "not address or finally adjudicate any other issues or disputes among Proponents and Objectors," Id., such as the adequacy of the disclosure statement, which is the dispute that Motorola seeks to resolve here. The Pacific Gas order decided a question of preemption, which as a collateral matter, required the court to reject the proposed plan as set forth in the disclosure statement. The bankruptcy court acknowledged that the preemption dispute was a matter of first impression with enormous impact on any plan that might or could be proposed. Id. at 2. Realizing that orders approving or disapproving disclosure statements are interlocutory, the bankruptcy court, out of caution, agreed to certify the order as a final judgment, to ensure that there would be at least one level of appellate review before any additional administrative expenses would be spent on alternative plans. Id. at 4. The central issue in the order, from which the appeal was taken in Pacific Gas, concerned "a discrete question of statutory interpretation," 283 B.R. 41, 43 (N.D. Cal. 2002), which, unlike the matter before me, would in no way be affected by any subsequent bankruptcy proceeding and which would conclusively resolve all the issues pertaining to the dispute. See Fugazy, 982 F.2d at 775-76. I find nothing in Pacific Gas that alters my conclusion that an appeal from an order finding a disclosure statement to be adequate is interlocutory.
In addition to seeking review of the Bankruptcy Court's order approving the disclosure statement, Motorola further seeks review, pursuant to 11 U.S.C. § 1122(a), of the voting procedure, which is based on classification of claims in the plan. Section 1122(a) states that "a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class." Motorola contends that the proposed claim classification is improper. Whether the proposed classification is improper is a matter to be decided at the confirmation hearing in conjunction with the decision on the substantive consolidation. See 11 U.S.C. § 1129(a)(7)(ii) and 1129(b). Because the proposed classification has not been finalized, the approval of the voting procedure based on the proposed classification is merely interlocutory at this stage, and therefore not appealable as of right.
Lastly, I find that the "collateral order" exception to the final judgment rule, see Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546-47 (1949), is inapplicable here. Under the collateral order doctrine, an order that ordinarily is interlocutory, may be deemed sufficiently final to be appealable as of right if the order (1) conclusively determines a disputed question; (2) resolves an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from a final judgment. Coopers Lybrand v. Live say, 437 U.S. 463, 468-69 (1978). As shown by the foregoing, however, Motorola's appeal would not conclusively determine the adequacy of the disclosure statement. Because Motorola may not bring this appeal as of right, I must next decide whether this Court should, in its discretion, exercise jurisdiction pursuant to 28 U.S.C. § 158(a)(3).
B. SHOULD THIS COURT CONSENT TO ENTERTAIN APPEAL?
According to 28 U.S.C. § 158(c), "[a]n appeal under subsections (a) and (b) of this section shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts and in the time provided by Rule 8002 of the Bankruptcy Rules." Neither the Bankruptcy Code nor the Bankruptcy Rules, however, reference the rule or statute to use in deciding whether to take the appeal. District courts have generally used 28 U.S.C. § 1292(b), which ordinarily governs appeals from interlocutory district court orders to the court of appeals. See, e.g., Urban Retail Properties v. Loews Cineplex Entm't, 2002 WL 535479, at * 4 (S.D.N.Y. Apr. 9, 2002); In re 105 East Second Str. Assocs., 1997 WL 311919, at *2 (S.D.N.Y. Jun. 10, 1997); In re AroChem Corp., 198 B.R. 425, 426-27 (Conn. 1996), aff'd 176 F.3d 610 (2d Cir. 1999); In re MacInnis, 235 B.R. 255, 263 (S.D.N.Y. 1998); In re Ionosphere Clubs, Inc., 179 B.R. at 28; In re Beker Indus. Corp., 89 B.R. 336, 341 (S.D.N.Y. 1988).
Motorola contends that § 1292(b) is not the appropriate standard because in § 1292(b), the lower court certifies whether to grant an interlocutory appeal to the reviewing court, whereas in the context of a bankruptcy appeal, the reviewing court must decide whether to grant leave to appeal the interlocutory order. Motorola argues that FRCP 23(f), which governs appeals of class certification, is the more appropriate standard to follow because it vests the discretion to consider a case in the reviewing court, and as in the case of a class action, the composition of "classes," i.e., categories creditors, approved by the bankruptcy court has been fixed. Motorola Reply Mem. at 17. It may be worth noting that FRCP 23(f), according to the Advisory Committee Notes, was added to reduce the cost imposed on litigants relative to the possible size of the claim by effectively lowering the burden that courts normally imposed under § 1292(b), to appeal a class certification order. FRCP 23(f) Advisory Committee's Note. No such change to the Bankruptcy Rules or Code were made to accommodate interlocutory appeals from a bankruptcy order. Not surprisingly, while creative, Motorola does not cite any case law that supports its argument that FRCP 23(f) is the more appropriate standard to apply here. In my view, FRCP 23(f), which relates to class actions, applies to a wholly different animal, and is not applicable to the appeal before this Court.
Under § 1292(b), leave to appeal an interlocutory order may be granted when the order (1) "involves a controlling question of law," (2) as to "which there is substantial ground for difference of opinion," and (3) "an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). In addition, the party seeking an interlocutory appeal has the burden of showing "exceptional circumstances," see, e.g., Perera v. Cogan, 265 B.R. 32, 34 (S.D.N.Y. 2001); In re Alexander, 248 B.R. 478, 483 (S.D.N.Y. 2000); In re Ionosphere, 179 B.R. at 29, to overcome the "general aversion to piecemeal litigation," In re AroChem Corp, 176 F.3d at 619, and to show that the circumstances warrant "a departure from the basic policy of postponing appellate review until after entry of a final judgment." Coopers, 437 U.S. at 475; see also Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir. 1990).
In regard to the first prong, the "question of law" must refer to a "pure" question of law that the reviewing court "could decide quickly and cleanly without having to study the record." Ahrenholz v. Bd. of Trs. of Univ. of Illinois, 219 F.3d 674, 676-77 (7th Cir. 2000) ("`question of law' means an abstract legal issue"); In re Masterwear Corp., 1998 WL 879694, at *4 (S.D.N.Y. Dec. 16, 1998); Nobell, Inc. v. Sharper Image Corp., 1992 WL 421456, at *8-9 (N.D.Cal. Apr. 17, 1992). The first factor is not met here because "the approval of a disclosure statement, rather than involving a controlling question of law . . . involves a fact-specific inquiry into the particular plan to determine whether it possess `adequate information' under § 1125." In re Ionosphere, 179 B.R. at 29. Indeed, Motorola admits that the bankruptcy judge erred by refusing to consider evidence it sought to introduce during the hearing for the approval of the disclosure statement. "The determination of what is adequate information is subjective and made on a case by case basis. This determination is largely within the discretion of the bankruptcy court." Id. (quoting Texas Extrusion, 844 F.2d at 1157). As part of Motorola's dispute with the bankruptcy judge's approval, Motorola additionally claims that the bankruptcy judge misclassified claims against Wireless with claims against other debtors. Under 11 U.S.C. § 1122(a), "a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to other claims or interests of such class." (emphasis added). As with determining adequacy of information, whether the claims brought by different creditors are "substantially similar" is a fact-specific inquiry, which must be made on a case by case basis, and can hardly be characterized as a pure question of law. Accordingly, Motorola's claim must fail under the first prong required to meet § 1292(b).
Furthermore, in regard to the second prong, the "substantial ground for a difference of opinion" within the meaning of § 1292(b) must arise out of a genuine doubt as to the correct applicable legal standard that was relied on in the order. P. Schoenfeld Asset Management LLC v. Cendant Corp., 161 F. Supp.2d 355, 360 (N.J. 2001). I see no evidence of such doubt here. Motorola clearly identifies, and no one disputes, that 11 U.S.C. § 1122(a) and 1125 govern classification of claims and adequacy of the written disclosure, respectively. Rather, Motorola contends that the bankruptcy judge failed to consider facts, which would show that the claims are dissimilar and the disclosure statement inadequate. Accordingly, Motorola's claim fails to meet the second prong of § 1292(b). See, e.g., In re Ionosphere, 179 B.R. at 29. In addition, given the unresolved status of the substantive consolidation, which will be decided at the confirmation hearing and which may require subsequent revisions to the disclosure statement, I am unconvinced that allowing Motorola's appeal to go forward would materially advance the ultimate termination of the litigation.
Lastly, I am unpersuaded that "exceptional circumstances" exist here. Although Motorola notes instances, such in In re Ionosphere Clubs, Inc., 184 B.R. 648, where the Court rejected the appellant's appeal on the ground of equitable mootness, rendering the appellant's appeal unreviewable, the appellant there had failed to take steps to obtain an order to stay consummation of the reorganization plan to prevent the matter from becoming moot. 184 B.R. at 652. Even if the bankruptcy court declines the stay, Motorola may still seek a stay of the consummation from the district court. See FRBP 8005. Accordingly, there are rules in place that Motorola may use to prevent equitable mootness, and enable appeal and review of the approval of the disclosure statement as sought by Motorola. Motorola's appeal satisfies no prong of the standard to grant leave to appeal an interlocutory order.
III. CONCLUSION
For the foregoing reasons, Motorola's motion for leave to appeal the bankruptcy court's order approving the disclosure statement and voting procedures is DENIED. The Clerk of the Court is instructed to close any pending motions and remove this case from my docket.