NOT PRECEDENTIAL

                    UNITED STATES COURT OF APPEALS
                         FOR THE THIRD CIRCUIT

                                 _____________

                                  No. 16-2167
                                 _____________

              In re: REVSTONE INDUSTRIES LLC, et al., Debtors

                                       Ascalon Enterprises LLC,
                                                           Appellant
                                 _____________


                 On Appeal from the United States District Court
                            for the District of Delaware
                        District Court No. 1-15-cv-00347
                 District Judge: The Honorable Sue L. Robinson

                              Argued March 22, 2017

       Before: SMITH, Chief Judge, JORDAN and ROTH, Circuit Judges

                               (Filed: June 6, 2017)



Sheldon S. Toll        [ARGUED]
Suite 100
29580 Northwestern Highway
Southfield, MI 48034


      Counsel for Appellant

Laura D. Jones
James E. O’Neill, III
Colin R. Robinson
Pachulski Stang Ziehl & Jones
919 North Market Street
P.O. Box 8705, 17th Floor
Wilmington, DE 19801

Alan J. Kornfeld         [ARGUED]
Pachulski Stang Ziehl & Jones
10100 Santa Monica Boulevard
13th Floor
Los Angeles, CA 90067
      Counsel for Appellee

                             _____________________

                                    OPINION*
                             _____________________

SMITH, Chief Judge.




*
 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
                                          2
      In this bankruptcy case, the debtors, Revstone Industries, LLC (“Revstone”)

and associated entities, proposed a Chapter 11 plan approved by almost all

creditors. The plan provides for the eventual “sale of all or substantially all of the

property of the estate.” 11 U.S.C. § 1123(b)(4); see In re PPI Enterprises (U.S.),

Inc., 

, 211 (3d Cir. 2003) (“[A] debtor may develop a Chapter 11 plan

to sell off all of its assets.”). Ascalon Enterprises, LLC (“Ascalon”), Revstone’s

sole member and a non-creditor, filed a limited objection to the plan. According to

Ascalon, Revstone is not entitled to discharge certain debts, as provided in Article

X of the plan, because Revstone would “not engage in business after

consummation of the plan.” 11 U.S.C. § 1141(d)(3)(B). The Bankruptcy Court

disagreed. It concluded that Revstone is entitled to discharge because, after

emerging from bankruptcy, Revstone will continue to operate its business in

substantially the same manner as it did before filing for bankruptcy. [A516] The

Bankruptcy Court approved the plan over Ascalon’s objection, and Ascalon timely

appealed. The District Court affirmed, and Ascalon timely appealed again.1

      We conclude that Ascalon lacks standing to appeal. We will affirm on that

alternative ground. See, e.g., Oss Nokalva, Inc. v. European Space Agency, 617


      1
       The Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. §§ 157 and
1334. The District Court had jurisdiction pursuant to 28 U.S.C. §§ 158(a) and
1334. We have jurisdiction pursuant to 28 U.S.C. §§ 158(d)(1) and 1291.
                                          

, 761 (3d Cir. 2010) (“[We] may affirm a judgment on any ground

apparent from the record, even if the district court did not reach it.” (citation

omitted)).

                  APPELLATE BANKRUPTCY STANDING

      Appellate standing in bankruptcy is limited to “persons aggrieved” by an

order of the bankruptcy court. In re Combustion Eng’g, Inc., 

, 214 (3d

Cir. 2004) (citation omitted). The persons-aggrieved test “now exists as a

prudential standing requirement that limits bankruptcy appeals to persons ‘whose

rights or interests are directly and adversely affected pecuniarily by an order or

decree of the bankruptcy court.’” 

marks omitted) (quoting In

re Dykes, 

, 187 (3d Cir. 1993)). To be a person aggrieved, a party must

challenge an order that “diminishes their property, increases their burdens, or

impairs their rights.” 

re PWS Holding Corp., 

, 249 (3d

Cir. 2000)).

      This standard is “more restrictive than Article III standing.” 

Appellate bankruptcy standing, unlike Article III standing, must be based strictly

on financial injury. 

Court has denied standing to parties

“who, even though they may be exposed to some potential harm incident to the

bankruptcy court’s order, are not directly affected by that order.” 

marks omitted) (quoting Travelers Ins. Co. v. H.K. Porter Co., 

737, 741 (3d Cir. 1995)). These requirements are rooted in the “‘particularly acute’

need to limit appeals in bankruptcy proceedings, which often involve a ‘myriad of

parties . . . indirectly affected by every bankruptcy court order[.]’” 

original) (quoting 

).

                      ASCALON’S STANDING ARGUMENT

      In its reply brief, Ascalon argues that it has standing based on the tax

consequences of discharging certain liabilities under the plan. According to

Ascalon, it designated Revstone as an S corporation, and thus any tax liability

would pass from Revstone to Ascalon. Ascalon claims that Revstone incurred

millions of dollars in unpaid federal and state taxes arising from asset sales during

bankruptcy. Subsequently, Ascalon elected to revoke Revstone’s pass-through

status, ending Ascalon’s liability for Revstone’s tax obligations. See I.R.C.

§ 1362(d); In re Majestic Star Casino, LLC, 

(3d Cir. 2013)

(discussing the revocation of a debtor’s pass-through status). According to

Ascalon, Revstone stated in open court that it intends to have Ascalon’s tax

election set aside.

      Against that backdrop, Ascalon argues that it “is justly apprehensive that, if

Revstone discharges its tax liability, the taxing authorities might seek to impose

liability on Ascalon, despite the election it made.” Reply Br. 1–2.


                                          5
                                    APPLICATION

       Ascalon’s argument does not establish standing because it is waived, and in

any event, fails to allege a sufficiently direct financial interest in the litigation.2

       Ascalon’s explanation for its own standing has shifted throughout this

litigation. In the District Court, Ascalon argued that it has standing as a creditor

because it submitted a claim that the Bankruptcy Court disallowed without

prejudice. Ascalon has now abandoned that argument3 and raises the taxation issue

for the first time on this second-level appeal. “[A]rguments not squarely put before

the district court are waived on appeal.” Issa v. Sch. Dist. of Lancaster, 

, 139 n.8 (3d Cir. 2017) (citing P.R.B.A. Corp. v. HMS Host Toll Roads, Inc.,
       2
        The District Court declined to address standing, “[g]iven the lack of timely
objection or cross-appeal.” In re Revstone Indus., LLC, No. 15-347, 

, at *2 (D. Del. Mar. 30, 2016). We disagree with that analysis.
       Our sister circuits are divided on whether a party may waive a defense based
on prudential standing. See Lewis v. Alexander, 

, 340 n.14 (3d Cir.
2012). We need not decide that issue because Revstone timely preserved its
standing objection at every stage of the proceeding. Nor was Revstone required to
take a cross-appeal. As the prevailing party in the Bankruptcy Court, it was not
“aggrieved,” and thus lacked standing to file a separate appeal. See Deposit Guar.
Nat’l Bank, v. Roper, 

, 333 (1980); Nanavati v. Burdette Tomlin
Mem’l Hosp., 

, 102 (3d Cir. 1988); see also Smith v. Johnson &
Johnson, 

, 283 n.2 (3d Cir. 2010) (“Yet a party, without taking a
cross-appeal, may urge in support of an order from which an appeal has been taken
any matter appearing in the record, at least if the party relied on it in the district
court.”).
       3
       Ascalon re-raised this issue at oral argument, despite excluding it from its
briefing. Because the argument was not presented in any of Ascalon’s briefs, it is
waived. See Halle v. W. Penn Allegheny Health Sys. Inc., 

, 230 n.17
(3d Cir. 2016).
                                             6


, 224 n.1 (3d Cir. 2015)); cf. Nichols v. City of Rehoboth Beach, 

, 282 n.1 (3d Cir. 2016) (holding that the plaintiff waived an argument in

favor of standing). Furthermore, Ascalon’s standing argument is articulated for the

first time in its reply brief, and does not explain Ascalon’s injury beyond the single

sentence quoted above. See Prometheus Radio Project v. FCC, 

, 53 (3d

Cir. 2016) (arguments raised for the first time in a reply brief are waived on

appeal); John Wyeth & Brother Ltd. v. CIGNA Int’l Corp., 

, 1076 n.6

(3d Cir. 1997) (“[A]rguments raised in passing . . . , but not squarely argued, are

considered waived.”).

       Regardless, Ascalon’s “apprehensi[on]” about what the taxing authorities

“might” do, Reply Br. 1–2, is not sufficiently direct to establish appellate

bankruptcy standing. Any consequences flowing from Revstone reverting to a

pass-through entity are “too contingent” to establish standing. 

; see 

(rejecting appellate standing where the claimed injury was

based on future litigation). But more fundamentally, Ascalon has failed to provide

any support for the proposition that the Bankruptcy Court’s discharge injunction

permits the relevant authorities to assess Ascalon for Revstone’s tax liability, let

alone demonstrate a “direct[] or immediate[]” danger that a taxing authority will do

so. 

                                          7
      At oral argument, Ascalon acknowledged that it may fail the persons-

aggrieved test but argued for the first time that that we should abandon that

standard. That argument is also waived. In any event, the persons-aggrieved test is

well established in our precedents, which we are bound to follow. IOP 9.1.

                                 CONCLUSION

      Because Ascalon failed to carry its burden to establish appellate standing,

we will affirm.




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