PRECEDENTIAL

    UNITED STATES COURT OF APPEALS
         FOR THE THIRD CIRCUIT
            ________________

                  No. 12-2736
               ________________

         In re: SEMCRUDE, L.P., et al.,
                        Reorganized Debtors


SAMSON ENERGY RESOURCES COMPANY, et al.

                        v.

            SEMCRUDE, L.P., et al.

                     Luke Oil Company,
                     C & S Oil/Cross Properties, Inc.,
                     Wayne Thomas Oil and Gas and
                     William R. Earnhardt, Co.,
                           Appellants

               ________________

   Appeal from the United States District Court
            for the District of Delaware
     (D.C. Civil Action No. 1-09-cv-00994)
   District Judge: Honorable Leonard P. Stark
                ________________
                Argued February 19, 2013

 Before: AMBRO, FISHER, and JORDAN, Circuit Judges

             (Opinion filed: August 27, 2013)

Hartley B. Martyn, Esquire
Martyn & Associates
820 Superior Avenue, N.W., 10th Floor
Cleveland, OH 44113

Duane D. Werb, Esquire (Argued)
Werb & Sullivan
300 Delaware Avenue, 13th Floor
P.O. Box 25046
Wilmington, DE 19899
      Counsel for Appellants

Yolanda C. Garcia, Esquire
Martin A. Sosland, Esquire (Argued)
Vance L. Beagles, Esquire
Weil, Gotshal & Manges
200 Crescent Court, Suite 300
Dallas, TX 75201

L. Katherine Good, Esquire
John H. Knight, Esquire
Richards, Layton & Finger
One Rodney Square
920 North King Street
Wilmington, DE 19801
      Counsel for Appellees




                               2
                     ________________

                OPINION OF THE COURT
                    ________________

AMBRO, Circuit Judge


       We revisit equitable mootness, a judge-made
abstention doctrine that allows a court to avoid hearing the
merits of a bankruptcy appeal because implementing the
requested relief would cause havoc.1 As many courts have
noted, though its name suggests mootness in the
constitutional sense, that is where the similarity between the
doctrines ends. See, e.g., In re UNR Industries, Inc., 

, 769 (7th Cir. 1994). Mootness is a threshold issue that
prevents a federal court from hearing a case where there is no
live case or controversy as required by Article III of our
Constitution. Honig v. Doe, 

, 317 (1988).
Equitable mootness, in contrast, does not ask whether a court
can hear a case, but whether it should refrain from doing so
because of the perceived disruption and harm that granting
relief would cause.2 Official Comm. of Unsecured Creditors

       1
         Bankruptcy courts have also invoked the doctrine
outside the appellate context, for example, in dismissing a
complaint seeking revocation of plan confirmation under 11
U.S.C. § 1144. See In re Innovative Clinical Solutions, Ltd.,

, 140–41 (Bankr. D. Del. 2003). We take no
position on whether use of the doctrine there is appropriate.
       2
          The danger of courts conflating the doctrines has led
Judge Easterbrook to “banish ‘equitable mootness’ from the
(local) lexicon” in the Seventh Circuit. UNR, 20 F.3d at 769.




                              3
of LTV Aerospace and Defense Co. v. Official Comm. of
Unsecured Creditors of LTV Steel Co. (In re Chateaugay
Corp.), 

, 325 (2d Cir. 1993).

        Equitable mootness comes into play in bankruptcy (so
far as we know, its only playground) after a plan of
reorganization is approved. Once effective, reorganizations
typically implement complex transactions requiring
significant financial investment. Following confirmation of a
plan by a bankruptcy court, an aggrieved party has the
statutory right to appeal the court’s rulings. Nonetheless, if
debtors or others believe granting the requested relief would
disrupt the effected plan or harm third parties, they may seek
to dismiss the appeal as equitably moot. Their contention is
that even if the implemented plan is imperfect, granting the
relief requested would cause more harm than good.

       Courts have rarely analyzed the source of their
authority to refuse to hear an appeal on equitable mootness
grounds.3 The most plausible basis is found in federal
common law. See UNR, 20 F.3d at 769. The Bankruptcy
Code forbids appellate review of certain un-stayed orders, see

Though we do not ban the term (it is encrusted enough that
we suffer its continued usage), “prudential forbearance” more
accurately reflects the decision to decline hearing the merits
of an appeal because of its feared consequences.
      3
        When we adopted equitable mootness, we did not, as
then-Judge Alito noted in dissent, “undertake an independent
analysis of the origin or scope of the doctrine but [were]
instead content to rely on the decisions of other courts of
appeals.” In re Continental Airlines, 

, 568 (3d
Cir. 1996) (en banc) (Alito, J., dissenting).




                              4
11 U.S.C. §§ 363(m), 364(e), and restricts post-confirmation
plan modifications, see id. § 1127. Though these provisions
arguably express a policy favoring the finality of bankruptcy
decisions, the Code does not expressly limit appellate review
of plan confirmation orders. In re Pac. Lumber Co., 

, 240 (5th Cir. 2009); UNR, 20 F.3d at 769. Courts have
filled this gap by declining to hear appeals where they
perceive that the interests of finality outweigh those of the
appealing party.

       Because we have already approved the doctrine
(though narrowly in a 7-6 en banc ruling), In re Continental
Airlines, 

, 568 (3d Cir. 1996) (en banc)
(“Continental I”), we need not detour ourselves to consider
whether federal common law can support its use. Its judge-
made origin, coupled with the responsibility of federal courts
to exercise their jurisdictional mandate, obliges us, however,
to proceed most carefully before dismissing an appeal as
equitably moot.

        Turning to the specifics of this appeal, Appellants are
four Oklahoma producers (collectively, the “Appellants”)4
that supplied oil and gas to SemCrude, L.P. and related
entities (collectively, the “Debtors” or, following
reorganization, the “Reorganized Debtors”) on credit. Shortly
after Debtors petitioned for bankruptcy, Appellants filed a
complaint contending that they retained property and
statutory lien rights in those commodities. On multiple
occasions, Appellants asserted—either in objecting to the
Bankruptcy Court’s rulings or in seeking interlocutory

4
  They are Luke Oil Company, C&S Oil/Cross Properties
Inc., Wayne Thomas Oil and Gas, and William Earnhardt Co.
Debtors are affiliated companies whose bankruptcies are
jointly administered.




                              5
appellate review—that their claims against Debtors could not
be discharged without affording them the opportunity to
litigate their claims in an adversary proceeding. Yet they
have never been given that opportunity.

       Following confirmation of Debtors’ reorganization
plan, which constitutes a final judgment in bankruptcy cases,
In re PWS Holding Corp., 

, 235 (3d Cir. 2000),
Appellants appealed to the District Court. Again they were
turned away, this time because their appeal was deemed
equitably moot.

       They now appeal to us. Because we agree that the
evidentiary record does not support dismissal of that appeal
for equitable mootness, we reverse the District Court’s order
and remand for it to hear the merits of Appellants’ appeal.

                     I.     Background

       Debtors were (and continue to be following
reorganization) a midstream oil and gas business engaged in
the gathering, transportation, storage, and marketing of crude
oil and other petroleum products. In July 2008, they filed
voluntary petitions under Chapter 11 of the Bankruptcy Code.
Numerous producers (the “Producers”), like Appellants, had
supplied oil and gas to Debtors on credit prior to their filing
for bankruptcy. In the Bankruptcy Court, these Producers
asserted a variety of claims against Debtors entitling them to
receive distributions from the proceeds of the oil and gas
ahead of other creditors. Debtors and Appellants disagreed
about the appropriate mechanism for resolving these claims.

      Debtors filed a motion to establish global procedures.
They entitled the Producers to file one representative
proceeding for each state in which they supplied oil and gas
to Debtors. All interested parties had the right to brief, and




                              6
present oral argument on, their claims. Regardless whether a
Producer participated, however, the legal rulings from the
representative action would be binding on it.

       Appellants objected to these procedures. They argued
that the Federal Rules of Bankruptcy Procedure entitled them
to an adversary proceeding on their claims. About the same
time, they filed a complaint asserting their individual claims
against Debtors and seeking class certification to assert those
of similarly situated Producers in Oklahoma.

        The Bankruptcy Court granted Debtors’ motion to
implement their proposed resolution procedures and stayed
Appellants’ adversary proceeding.           After filing an
unsuccessful motion for reconsideration with the Bankruptcy
Court, Appellants sought leave from the District Court to file
an interlocutory appeal challenging the procedures. That
Court—noting that “the question of whether [Appellants]
will, in fact, be bound by the[] outcome [of the representative
proceedings] can be litigated at a later date”—declined to
hear the appeal. In re SemCrude, L.P., 

, 557 (D.
Del. 2009).
       Several representative proceedings—asserting rights
under Oklahoma, Texas, Kansas, New Mexico, and Wyoming
law—were subsequently filed. Other Producers based in
Oklahoma (but not Appellants) filed a representative
proceeding asserting that they retained property interests and
statutory liens in the oil and gas they supplied to Debtors.
The Bankruptcy Court granted summary judgment against the
Oklahoma-based Producers. In re SemCrude, L.P., 

 (Bankr. D. Del. 2009). It similarly rejected the claims of
Producers from Kansas and Texas. In re SemCrude, L.P., 

 (Bankr. D. Del. 2009) (Kansas); In re SemCrude,
L.P., 

 (Bankr. D. Del. 2009) (Texas).
Recognizing the novelty of these issues, however, the Court




                              7
sua sponte certified direct appeals to our Court under 28
U.S.C. § 158(d)(2).

       Before we heard these appeals (or the Bankruptcy
Court issued rulings in the other representative proceedings),
Debtors, their senior secured lenders, and an Official
Producers Committee reached a settlement that purported to
resolve the claims of all the Producers (the “Producer
Settlement”).5 Debtors subsequently filed a reorganization
plan incorporating the terms of the Producer Settlement.
Among other things, the settlement provided over $160
million in distributions to the Producers in exchange for the
discharge of their claims. It also required the voluntary
dismissal of all adversary proceedings and other litigation
related to the Producers’ claims.

       Appellants were not involved in negotiating the
Producer Settlement and did not expressly agree to its terms.
Through its incorporation into the reorganization plan, the
settlement nonetheless set the cash distributions they would
receive, though they were able to obtain a waiver of the
requirement that they dismiss their adversary proceeding.
       The plan placed Appellants, along with other
claimants, into classes of similarly situated creditors, and
gave them the opportunity to vote on and object to the
reorganization plan. The requisite majority of claimants in
each of these classes voted to accept the plan. Two of the
Appellants voted for it, and two abstained from voting. All
four of the Appellants, however, filed objections to the plan
asserting that they should be permitted to proceed with their
adversary proceeding. Following a hearing, the Bankruptcy
      5
         The Official Producers Committee was formed
pursuant to 11 U.S.C. § 1102(a)(2). Its members were
appointed by the United States trustee. Id.




                              8
Court overruled their objections, approved the plan, and
entered a confirmation order in October 2009.

       Appellants appealed to the District Court. They again
asserted that the reorganization plan could not validly
discharge their claims without affording them the procedural
protections of an adversary proceeding, and requested that
they be permitted to proceed in the Bankruptcy Court. They
did not seek a stay pending appeal.

       Partly as a consequence of their failure to obtain a stay,
the plan went into effect. On November 30, 2009 (the plan’s
effective date), several corporate restructuring transactions,
the repayment of certain payment obligations, and the
issuance of securities to those parties receiving equity
distributions, were implemented.

       Debtors sought to dismiss the appeal as equitably
moot. Among other things, they argued that granting
Appellants’ requested relief would require unraveling the
reorganization plan and harm numerous third parties. To
avoid these feared outcomes, the District Court dismissed the
appeal. In re SemCrude, L.P., No. 09 Civ. 994, 

 (D. Del. May 21, 2012). Appellants appeal, and ask
us to vacate that order and remand with instructions to hear
the merits of their appeal.

        II.    Jurisdiction and Standard of Review

      The District Court had jurisdiction of this appeal under
28 U.S.C. §§ 158(a) and 1334. We have jurisdiction under 28
U.S.C. §§ 158(d) and 1291. We review the Court’s equitable




                               9
mootness determination for abuse of discretion.6 Continental
I, 91 F.3d at 560.

           III.     The Equitable Mootness Doctrine

       Following confirmation of a reorganization plan by a
bankruptcy court, an aggrieved party has the statutory right to
appeal the court’s rulings. Once there is an appeal, there is a
“virtually unflagging obligation” of federal courts to exercise
the jurisdiction conferred on them. Colo. River Water
Conservation Dist. v. United States, 

, 817
(1976). Before there is a basis to forgo jurisdiction, granting
relief on appeal must be almost certain to produce a
“perverse” outcome—“chaos in the bankruptcy court” from a
plan in tatters and/or significant “injury to third parties.” In
re Phila. Newspapers, LLC, 

, 168 (3d Cir. 2012)
(citing Nordhoff Invs., Inc. v. Zenith Elecs. Corp., 

, 184 (3d Cir. 2001); Continental I, 91 F.3d at 560–61).
Only then is equitable mootness a valid consideration.

       In determining whether an appellate court should
dismiss an appeal on this ground, we assess five prudential
factors:
                  (1) whether the reorganization
                  plan has been substantially

       6
          As we recently noted, “[t]hen Circuit Judge Alito
criticized this standard of review as contradicting our
precedent that where the district court sits as an appellate
court, we exercise plenary review.” In re Phila. Newspapers,
LLC, 

, 167–68 n.10 (3d Cir. 2012) (citing
Continental I, 91 F.3d at 568 n.4). We are inclined to agree
with this criticism, but nonetheless are bound to review for
abuse of discretion.




                               10
              consummated, (2) whether a stay
              has been obtained, (3) whether the
              relief requested would affect the
              rights of parties not before the
              court, (4) whether the relief
              requested would affect the success
              of the plan, and (5) the public
              policy of affording finality to
              bankruptcy judgments.

Continental I, 91 F.3d at 560.

        These factors, as we explained recently, are
interconnected and overlapping. Phila. Newspapers, 690
F.3d at 168–69. “The second factor principally duplicates the
first in the sense that a plan cannot be substantially
consummated if the appellant has successfully sought a stay.”
Id. at 169 (quotation marks and citation omitted). In
analyzing the first factor, courts have asked “whether
allowing an appeal to go forward will undermine the plan,
and not merely whether the plan has been substantially
consummated under the Bankruptcy Code’s definition.” Id.
at 168-69 (citations omitted). This collapses the first and
fourth factors.      The third factor adds an additional
consideration—whether granting relief will undermine “the
reliance of third parties, in particular investors, on the finality
of [plan confirmation].” Id. at 169 (quotation marks and
citation omitted). “Finally, the fifth factor supports the other
four by encouraging investors and others to rely on
confirmation orders, thereby facilitating successful
reorganizations by fostering confidence in the finality of
confirmed plans.” Id. at 169.

       In practice, it is useful to think of equitable mootness
as proceeding in two analytical steps: (1) whether a confirmed
plan has been substantially consummated; and (2) if so,




                                 11
whether granting the relief requested in the appeal will (a)
fatally scramble the plan and/or (b) significantly harm third
parties who have justifiably relied on plan confirmation.

      Substantial consummation          is   defined    in   the
Bankruptcy Code to mean the

              (A) transfer of all or substantially
              all of the property proposed by the
              plan to be transferred;

              (B) assumption by the debtor or
              by the successor to the debtor
              under the plan of the business or
              of the management of all or
              substantially all of the property
              dealt with by the plan; and

              (C) commencement of distribu-
              tion under the plan.

11 U.S.C. § 1101. Satisfaction of this statutory standard
indicates that implementation of the plan has progressed to
the point that turning back may be imprudent.

       If this threshold is satisfied, a court should continue to
the next step in the analysis. It should look to whether
granting relief will require undoing the plan as opposed to
modifying it in a manner that does not cause its collapse. See
In re Zenith Elecs. Corp., 

, 343–44 (3d Cir.
2003) (appeal not equitably moot where disgorgement of
professional fees would not unravel plan); United Artists
Theatre Co. v. Walton, 

, 228 (3d Cir. 2003)
(appeal not equitably moot where striking indemnification
provision would allow the plan to stay otherwise intact);
PWS, 228 F.3d at 236 (appeal not equitably moot where plan




                               12
could go forward even if certain releases were struck from it).
It should also consider the extent that a successful appeal, by
altering the plan or otherwise, will harm third parties who
have acted reasonably in reliance on the finality of plan
confirmation. See In re Continental Airlines, 

,
210 (3d Cir. 2000) (“Continental II”); Continental I, 91 F.3d
at 562.

        We have never explicitly addressed which party bears
the burden to prove that, weighing these factors, dismissal is
warranted. Dismissing an appeal over which we have
jurisdiction, as noted, should be the rare exception and not the
rule. It should also be based on an evidentiary record, and not
speculation. To encourage this, we join other Courts of
Appeals in placing the burden on the party seeking dismissal.
See, e.g., In re Lett, 

, 1226 (11th Cir. 2011); In
re Paige, 

, 1339–40 (10th Cir. 2009); In re
Focus Media, Inc., 

, 923 (9th Cir. 2004).7

       Though some courts have shifted the burden to the
appellant when a plan has been substantially consummated,

       7
          Despite our never directly addressing this issue, in
other cases we have focused on whether the debtors/appellees
provided evidence supporting an equitable mootness ruling.
Compare Continental I, 91 F.3d at 563 (affirming a dismissal
based, in part, on the testimony of the debtors’ expert that the
investors would have the option to withdraw if the appeal
were successful), with Continental II, 203 F.3d at 210–11
(declining to dismiss because, in part, the debtors did not
provide any evidence that third parties relied on the
foreclosure of appellants’ requested relief in deciding to
support the plan). It is not inconsistent with these decisions
to place the burden on the party seeking dismissal.




                              13
see, e.g., Aetna Cas. & Sur. Co. v. LTV Steel Co. (In re
Chateaugay Corp.), 

, 776 (2d Cir.1996), we do
not adopt that approach.        Whether a plan has been
substantially consummated often depends, as in LTV Steel, on
whether a stay has been issued. However, neither the
Bankruptcy Code nor any other statute predicates the ability
to appeal a bankruptcy court’s ruling on obtaining a stay.8 As
such, we are unwilling to shift the burden to the appealing
party based on its failure to do something Congress has not
required it to do.

           IV.   Applicability of Equitable Mootness

       Before applying the prudential factors to this appeal,
we note a preliminary issue raised by the parties. Federal
Rule of Bankruptcy Procedure 7001 provides that certain
bankruptcy matters—including, according to Appellants, their
claims—must be resolved through adversary proceedings.
Those proceedings, which approximate civil actions, provide
similar procedural protections as the Federal Rules of Civil
Procedure. 10 Collier on Bankruptcy ¶ 7001.01 (Alan N.
Resnick & Henry J. Sommer, eds., 16th ed. rev. 2013). The
parties disagree on whether an appeal asserting a denial of
these protections can be dismissed as equitably moot.

        Appellants assert that the equitable mootness doctrine
cannot preclude their appeal because they have a due process
right to an adversary proceeding that overrides any interest in
preserving the finality of confirmation orders. They rely on
our decision in In re Mansaray–Ruffin, 

 (3d Cir.
       8
         The Bankruptcy Code does forbid appellate review of
certain un-stayed orders. See 11 U.S.C. § 363(m) (order to
sell or lease property); id. § 364(e) (order to obtain post-
petition financing). Because of these statutory bars, however,
equitable mootness is irrelevant in those instances.




                              14
2008), to support that argument. There, a debtor purported to
invalidate a lien on her property by providing for it as an
unsecured claim in her confirmed plan instead of filing an
adversary proceeding. Id. at 243. Though confirmed plans
are normally binding, 11 U.S.C. § 1327, we held that this did
not preclude the creditor from seeking to enforce the lien in a
subsequent action. Id. Where Rule 7001 “require[s] an
adversary proceeding—which entails a fundamentally
different, and heightened, level of procedural protections—to
resolve a particular issue, a creditor has the due process right
not to have that issue resolved without one.” Id. at 242. “The
mandatory nature” of this due process right “trump[s] [the]
finality” of confirmed plans. Id. at 238. Appellants assert
that their right to an adversary proceeding similarly overrides
any finality interests promoted by the equitable mootness
concept.

       Debtors respond that the Supreme Court’s decision in
United Student Aid Funds, Inc. v. Espinosa, 

(2010), effectively overrules Mansaray. A creditor filed a
motion in Espinosa seeking relief from a confirmation order
on the ground that the debtor had attempted to discharge her
student loan debt without filing an adversary proceeding as
required by the Bankruptcy Rules. The Supreme Court held
that this error was insufficient to vacate the Bankruptcy
Court’s order confirming the plan. Id. at 269–72. Though
Federal Rule of Civil Procedure 60(b)(4), which allows a
court to void a final judgment, “applies . . . where [the]
judgment is premised . . . on a violation of due process,” the
failure to file an adversary proceeding did not deny the
creditor due process. Id. at 271–72. To the contrary,
sufficient process was afforded by providing notice of and an
opportunity to object to the debtor’s plan. That holding,
Debtors argue, overturns our determination in Mansaray that
the Bankruptcy Rules establish due process rights that can
trump finality.




                              15
       Though this issue is intriguing, we need not, and do
not, address it in this opinion. This is so because, no matter
how we would resolve the issue, equitable mootness was not
a proper shield here.

     V.     Application of the Equitable Mootness Factors

       With that backdrop, we turn to this appeal. Based
largely on a non-precedential decision of this Court, see In re
SemCrude, L.P., 456 F. App’x 167 (3d Cir. 2012), the District
Court found that the plan was substantially consummated. It
also observed that Appellants had failed to seek or obtain a
stay. We have no qualms with those determinations.
However, it also found that granting relief to Appellants
would undermine the reorganization plan confirmed by the
Bankruptcy Court and harm third parties. Because the record
does not support these latter, and crucial, findings, we hold
that the Court abused its discretion in dismissing Appellants’
appeal.

A.        Substantial Consummation and Obtaining a Stay

       The parties do not dispute, and we know no reason to
disagree, that the reorganization plan has been substantially
consummated, due in part to Appellants’ failure to obtain a
stay. Distributions have been made to creditors, financial
transactions were put in place, and the Reorganized Debtors
have emerged from bankruptcy as a financially sound, indeed
thriving, oil and gas business. Though Appellants would
have been wise to seek a stay to stop the prospect of equitable
mootness in its tracks, their statutory right to appeal, as noted,
is not premised on their doing so. We thus turn to whether
granting them relief will have the feared outcomes—
collapsing the plan and significantly injuring third parties
who reasonably relied on its implementation—with which
equitable mootness is ultimately concerned.




                               16
B.     Success of the Plan

       Debtors make the all-or-nothing assertion that

              [p]roviding even a modicum of
              relief to [Appellants] would upset
              the delicate balance of the
              [Producer] Settlement embodied
              in the Plan. . . . The rulings of the
              Bankruptcy        Court     in    the
              [representative         proceedings]
              created the basis of the intense
              negotiations that led to the
              Settlement and eventually resulted
              in the overwhelming majority of
              the Producers supporting the Plan.
              Affording the Appellants the relief
              they seek would necessitate
              unraveling the entire Plan.

Debtors’ Br. at 42–43 (emphases added).

       These conclusions are unsupported by the evidence. It
is important to understand Appellants’ requested relief. They
do not assert that the central compromise of the Producer
Settlement is impermissible. They simply seek a ruling that
the plan did not discharge their claims, and ask for the
opportunity to assert them in an adversary proceeding.9 We
       9
         Debtors rely on In re U.S. Brass Corp., 

(5th Cir. 1999). There, the confirmed reorganization plan
incorporated a settlement between a group of creditors and
the debtor that entitled the settling creditors to 80% of the
debtor’s insurance recoveries. Id. at 958–59. The remaining
20% of recoveries were designated for the other creditors in
the class. Id. The latter creditors asserted on appeal that this




                               17
have no indication—other than Debtors’ “Chicken Little”
statements—that this would upset the Producer Settlement or
that doing so would cause the remainder of the plan to
collapse.

        Even if Appellants are successful on their claims—far
from a certain result—the amounts involved will not require a
sufficient redistribution of assets to destabilize the financial
basis of the settlement. Appellants have already received
$210,445.83 under the current plan. They claim that they are
entitled to an additional $207,300.62. This is a relatively
minor amount, less than 0.15% of the over $160 million
designated for distribution to the Producers. It pales even
more in the context of the entire reorganization plan, which
involved over $2 billion. The amount sought by Appellants is
roughly one-tenth of one percent of that sum.

       We also fail to see any indication that allowing
Appellants to proceed with their claims would result in a
deluge of other Producers filing their own adversary
proceedings. Unlike with Appellants, we are unaware of any
evidence in the record showing that other Producers objected
to the discharge of their claims or asserted the right to an
adversary proceeding.      In return for distributions they
received under the plan, other Producers were required to
dismiss with prejudice any adversary proceedings they had
filed. Absent their objecting at the time of plan confirmation


provision violated 11 U.S.C. § 1123(a)(4), which requires a
confirmed plan to treat the same all creditors within a class.
Id. at 958. The Court dismissed the appeal as equitably moot
rather than reaching its merits primarily because a successful
appeal would have required it to excise the entire settlement,
and thus destabilize the remainder of the plan. Id. at 962.
Those spectors are not before us.




                              18
to this dismissal requirement (as well as to the discharge of
their claims), they cannot now attempt to restart those actions.

       Debtors’ best argument is that Appellants’ adversary
proceeding is a putative class action that theoretically could
be financially significant enough to disrupt the litigation
peace achieved by the settlement. The parties disagree as to
the potential damages that could result from a successful class
action. Debtors assert that it could require them to make
payments of up to $81.7 million. Debtors’ Letter at 2–3
(Mar. 8, 2013). Appellants counter that the payments would
only approach around $40 million. Appellants’ Letter at 2–3
(Mar. 20, 2013).

        Regardless of the amount involved, the most we can
say of Debtors’ argument is that it asserts the finish without
the steps to get there. No class has been certified. And
assuming one is certified, we have little information about
what it would look like. The claims of many putative class
members, for example, may be precluded if they acquiesced
to a representative proceeding in lieu of individual adversary
proceedings, explicitly agreed to the Producer Settlement, or
failed to object to the plan as impermissibly discharging their
claims without an adversary proceeding. We cannot assume
that allowing Appellants to seek class certification will risk
unraveling the plan in the absence of more detailed
information about the potential class claims. As then-Judge
Alito explained, the feared consequences of a successful
appeal are often more appropriately dealt with by fashioning
limited relief at the remedial stage than by refusing to hear the
merits of an appeal at its outset. See Continental I, 91 F.3d at
571–72 (Alito, J., dissenting). This is particularly true where,
as here, the perceived harms are at best speculative.




                               19
C.    Injury to Third Parties

       Debtors also assert that a successful appeal will harm
third parties. In particular they have identified four groups
they claim would be adversely affected: (1) lenders; (2)
equity investors; (3) customers and suppliers; and (4) creditor
constituencies. Debtors’ Br. at 53–55. These groups entered
into a variety of transactions and agreements in connection
with the reorganization plan. Granting Appellants the relief
they request, in Debtors’ view, would harm these third parties
by upsetting their expectation that plan confirmation was
final. We address each group in turn.

       We begin with the lenders, who provided exit
financing for the Reorganized Debtors. According to
Debtors,

              [t]he Exit Financing Participants
              and those other third party entities
              relying on the Exit Facility would
              be severely harmed should the
              Confirmation Order be reversed;
              if there is no longer a
              Confirmation Order, the new
              lenders under the Exit Facility
              would likely attempt to terminate
              the Exit Facility and the
              Reorganized Debtors would be
              unable to continue their business,
              which would likely lead to the
              inability of the Reorganized
              Debtors to repay the borrowed
              funds.

Debtors’ Br. at 54. This argument is counterintuitive. Why
would these lenders terminate the credit facility if doing so




                                20
would cause harm to themselves? Moreover, we have no
evidence supporting the inference that they would take this
action. Debtors’ rely on an affidavit by Robert Fitzgerald—
the Chief Financial Officer of the Reorganized Debtors’
parent company, SemGroup Corporation (“SemGroup”)—to
support this argument. Appellants’ App. at 627–28. That
affidavit merely describes the credit facilities into which the
Reorganized Debtors and the lenders entered. It says nothing
about whether the lenders would seek to invalidate the loan
agreements if Appellants are granted relief, let alone that they
would have the legal right to do so.

        We are also not persuaded that the equity investors
will be materially harmed. As discussed, the amounts of
Appellants’ individual claims are relatively insignificant, and
it is premature to assume that the putative class action will
result in significantly greater financial exposure. Regardless
of the potential amount, moreover, there is little reason to
think that the Reorganized Debtors’ financial well-being—
and thus the prospects of their equity investors—would be
threatened by granting Appellants relief. SemGroup has
emerged from bankruptcy in robust financial health.
According to its public securities filings, in March 2012
(shortly before the District Court dismissed Appellants’
appeal as equitably moot), SemGroup had over $73 million in
cash or cash equivalents, substantially more than the $50
million it was provided under the plan when it emerged from
bankruptcy.10 It also had in excess of $140 million in

       10
          In their briefing, Debtors referred to this $50 million
figure as “working capital,” which is commonly calculated as
total current assets less total current liabilities. Following our
request for clarification, they informed us that the $50 million
figure actually refers to the cash or cash equivalents that,
under the reorganization plan, SemGroup was permitted to




                               21
working capital.11 Moreover, as the Fitzgerald affidavit
attests, the Reorganized Debtors have a variety of credit
sources available to fund their operations. Appellants’ App.
at 628–29. With this positive backdrop, it is not self-evident
that Appellants’ claims pose any significant risk, and we have
not been provided any testimony or other evidence to the
contrary.

      Harm to the final two groups—the Reorganized
Debtors’ customers and suppliers and the Debtors’

have on hand immediately following              confirmation.
Appellants’ Letter at 1 (Mar. 8, 2013).
      11
          These cash (or cash equivalent) and working capital
figures are drawn from SemGroup’s Securities and Exchange
Commission Quarterly Report for the period ended on March
31, 2012. SemGroup Corp., Quarterly Report (Form 10-Q)
(May 9, 2012). We take judicial notice of this publicly filed
report. See Fed. R. Evid. 201(c)(1); Fed. R. Evid. 201
advisory committee’s note (“In accord with the usual view,
judicial notice may be taken at any stage of the proceedings,
whether in the trial court or on appeal.”).

       Looking further out, SemGroup’s financial future
appears likely to remain stable. According to its Securities
and Exchange Commission Quarterly Report for the period
ended on March 31, 2013, by that time SemGroup’s cash and
cash equivalents exceeded $77 million and its working capital
topped $142 million. SemGroup Corp., Quarterly Report
(Form 10-Q) (May 9, 2013). And all this, of course, says
nothing of liability insurance that the Reorganized Debtors
may have to offset any future losses they do incur if
Appellants ultimately win their adversary proceeding.




                             22
creditors—appears lacking as well. According to Debtors,
the customers and suppliers will be hurt because the
Reorganized Debtors have assumed a variety of executory
contracts and unexpired leases in an attempt to solidify these
business relationships. However, they have not explained
why granting Appellants relief would require them now to
reject those agreements. Debtors contend the creditor
constituencies will be harmed because granting relief would
destabilize a series of settlements they have made with those
constituencies. But the only settlement identified by Debtors
is the Producer Settlement, and (as discussed) it does not
appear that settlement will be imperiled.

D.     Policy Considerations

        Preserving the finality of plan confirmation to
encourage parties to move forward with plan execution
justifies forbearing the exercise of jurisdiction only where
precluding the appeal will prevent a perverse outcome. As
the Supreme Court has instructed on numerous occasions,
“federal courts have a strict duty to exercise the jurisdiction
that is conferred upon them by Congress.” Quackenbush v.
Allstate Ins. Co., 

, 716 (1996) (collecting cases).
The presumptive position remains that federal courts should
hear and decide on the merits cases properly before them.

        When equitable mootness is used as a sword rather
than a shield, this presumption is upended. Appellants have
repeatedly advanced the contention that they are entitled to an
adversary proceeding. They filed a complaint to begin such a
proceeding, objected to the rulings of the Bankruptcy Court
disallowing it, and sought interlocutory appellate review in
the District Court. Denying them review now—based on
speculation of future harms—would be distinctly inequitable,
the antithesis of the equity required for “mootness.”




                               23
                     V.     Conclusion

       Dismissing an appeal as equitably moot should be rare,
occurring only where there is sufficient justification to
override the statutory appellate rights of the party seeking
review. Here, the evidentiary record does not support
Debtors’ contentions that a successful appeal would collapse
their plan of reorganization or undermine the justifiable
reliance of third parties to their significant harm. Holding
otherwise was an abuse of discretion. We thus reverse the
District Court’s dismissal, and remand for it to hear
Appellants’ appeal on its merits.12




       12
          Appellants have a long road ahead despite their
procedural victory here. On remand to the District Court,
they will need to demonstrate that they are entitled to an
adversary proceeding. If they win on that issue and continue
to pursue their putative class claims, they will need to obtain
class certification. And regardless whether they assert
individual or class claims, they will have to litigate them
successfully. We take no position on the likelihood of
Appellants achieving any of these results.




                              24