IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                              June 9, 2009

                                             No. 08-60349                 Charles R. Fulbruge III
                                                                                  Clerk

In The Matter Of: PREMIER ENTERTAINMENT BILOXI LLC, doing
business as Hard Rock Hotel & Casino Biloxi; PREMIER FINANCE BILOXI
CORP

                                                          Debtors

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PREMIER ENTERTAINMENT BILOXI LLC, doing business as Hard Rock
Hotel & Casino Biloxi; PREMIER FINANCE BILOXI CORP

                                                          Appellees
v.

PACIFIC INVESTMENT MANAGEMENT COMPANY LLC; DEUTSCHE
ASSET MANAGEMENT; WESTERN ASSET MANAGEMENT;
CASTLERIGG MASTER INVESTMENTS LTD

                                                          Appellants


In The Matter Of: PREMIER ENTERTAINMENT BILOXI LLC, doing
business as Hard Rock Hotel & Casino Biloxi; PREMIER FINANCE BILOXI
CORP

                                                          Debtors

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                                       No. 08-60349

U.S. BANK NATIONAL ASSOCIATION

                                                   Appellant
v.

PREMIER ENTERTAINMENT BILOXI LLC, doing business as Hard Rock
Hotel & Casino Biloxi; PREMIER FINANCE BILOXI CORP

                                                   Appellees




                   Appeals from the United States District Court
                      for the Southern District of Mississippi
                              USDC No. 1:07-CV-1058


Before REAVLEY, BARKSDALE, and GARZA, Circuit Judges.
PER CURIAM:*
       Primarily at issue is whether this bankruptcy appeal is equitably moot.
The bankruptcy court, in July 2007, confirmed Debtors’ chapter 11 plan.
Appellants appealed to district court, raising various challenges to the confirmed
plan; the appeal was dismissed as equitably moot. Here, Appellants challenge
the equitable-mootness dismissal and, additionally, re-urge several challenges
to the confirmed plan. Because this appeal is equitably moot, it is DISMISSED.
                                              I.
       Debtors are Premier Entertainment Biloxi LLC and Premier Finance
Biloxi Corporation (collectively, Premier). Premier owns and operates Hard
Rock Hotel and Casino (Hard Rock) in Biloxi, Mississippi. Appellants are U.S.
Bank National Association, trustee for an indenture under which Premier issued



       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.

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$160 million in notes, and several creditors (Noteholders), which held notes
outstanding as of the commencement of Premier’s bankruptcy proceedings.
      The notes, secured by Premier’s assets, were issued in January 2004 to
finance Hard Rock’s construction and operation. The notes accrued interest at
a fixed rate of 10.75 percent per annum, with the principal due at maturity in
February 2012, and had prepayment penalties, including a prohibition against
prepaying any of the outstanding principal until February 2008. Moreover,
certain prepayments could be made only after depositing defined sums of money
with U.S. Bank to pay various prepayment penalties.
      Only days before its scheduled opening, Hard Rock was severely damaged
by Hurricane Katrina. The district court stated:
      After the hurricane, the Noteholders and Premier could not agree
      on the amount of insurance coverage that should be obtained on the
      damaged structure or who should control insurance proceeds that
      were paid as a result of the hurricane damage to the structure
      . . . . [In September 2006], Premier filed chapter 11 bankruptcy
      petitions. [In July 2007], over the objections of the Noteholders and
      [U.S. Bank], the Bankruptcy Court confirmed Premier’s Joint Plan
      of Reorganization. The Reorganization Plan provides a 100%
      recovery for creditors with allowed claims. It also provides that the
      Noteholders will receive the principal plus the accrued unpaid
      interest through the effective date of the plan. The Noteholders
      claimed that they were also entitled to a prepayment penalty. As a
      result, the Reorganization Plan provides that funds representing the
      amount of the prepayment penalty will be held in escrow until the
      Bankruptcy Court determines whether the Noteholders are entitled
      to the prepayment penalty.
Pac. Inv. Mgmt. Co. LLC v. Premier Entm’t Biloxi LLC (In re Premier Entm’t
Biloxi LLC), Nos. 1:07-CV-1058, 1:07-CV-1222 (S.D. Miss. 

)
(unpublished district court opinion and order granting Premier’s motion to
dismiss) (emphasis added).
      Concerning the prepayment-penalties dispute, the confirmed plan created
an escrow account; required Premier to deposit funds into it; allowed creditors

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                                   No. 08-60349

believing themselves entitled to the penalties to litigate, after plan confirmation,
entitlement to those penalties; and, therefore, through the escrow account,
established a means to pay creditors determined to be entitled to the penalties.
Consistent with this plan, and in accordance with the bankruptcy court’s orders,
Premier deposited $13.7 million into the escrow account; and it deposited an
additional $1 million into that account for the attorney’s fees that may be
incurred by U.S. Bank during the adversary proceeding prepayment-penalty
litigation contemplated by the plan.
      In August 2007, the Noteholders and U.S. Bank appealed to district court
the bankruptcy court’s July 2007 plan confirmation; their appeals were
consolidated. In March 2008, the district court granted Premier’s motion to
dismiss the appeal, holding it equitably moot.
                                         II.
      The Noteholders and U.S. Bank urge, inter alia, that the district court
erred in dismissing on equitable-mootness grounds.            Such dismissals are
reviewed de novo. E.g., United States ex rel. FCC v. GWI PCS 1 Inc. (In re GWI
PCS 1 Inc.), 

, 799-800 (5th Cir. 2000). Along that line, our court
“reviews the decision of a district court, sitting as an appellate court, by applying
the same standards of review to the bankruptcy court’s findings of fact and
conclusions of law as applied by the district court”. Wooley v. Faulkner (In re SI
Restructuring, Inc.), 

, 134-35 (5th Cir. 2008). The bankruptcy
court’s conclusions of law, and of mixed law and fact, are reviewed de novo; its
findings of fact, only for clear error. E.g., Bradley v. Ingalls (In re Bradley), 

, 428 (5th Cir. 2007).
                                         A.
      Equitable mootness is a doctrine that may be invoked in reviewing a
bankruptcy appeal. It is a prudential doctrine, fundamentally different from
constitutional mootness.

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                                   No. 08-60349

      Many courts, including our own, . . . have employed the concept of
      “mootness” to address equitable concerns unique to bankruptcy
      proceedings. In this context, “mootness” is not an Article III inquiry
      as to whether a live controversy is presented; rather, it is a
      recognition by the appellate courts that there is a point beyond
      which they cannot order fundamental changes in reorganization
      actions. Consequently, a reviewing court may decline to consider
      the merits of a confirmation order when there has been substantial
      consummation of the plan such that effective judicial relief is no
      longer available – even though there may still be a viable dispute
      between the parties on appeal.
Manges v. Seattle-First Nat’l Bank (In re Manges), 

, 1038-39 (5th
Cir. 1994) (footnote call and internal citation omitted). In determining whether
a bankruptcy appeal is equitably moot, our court examines three factors:
      (i) whether a stay has been obtained, (ii) whether the plan has been
      “substantially consummated,” and (iii) whether the relief requested
      would affect either the rights of parties not before the court or the
      success of the plan.

                                         1.
      With respect to the first equitable-mootness factor, Appellants have been
twice denied a stay—in bankruptcy and district court. See In re Premier Entm’t
Biloxi LLC, No. 06-50975 (Bankr. S.D. Miss. 10 Aug. 2007) (unpublished
bankruptcy court opinion denying motion for stay); In re Premier Entm’t Biloxi
LLC, No. 1:07-MC-1005 (S.D. Miss. 10 Aug. 2007) (unpublished district court
opinion and order denying motion for stay).
      Notably, the bankruptcy court, in denying a stay, held Appellants did not
satisfy any of the four criteria necessary to obtain one. See In re Premier Entm’t
Biloxi LLC, No. 06-50975 (Bankr. S.D. Miss. 10 Aug. 2007) (unpublished
bankruptcy court opinion denying motion for stay). (The four criteria necessary
for a stay, essentially, are: likelihood of success on the merits; irreparable injury
if the stay is not granted; no substantial harm caused to other parties; and grant


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                                    No. 08-60349

would serve the public interest. See, e.g., Ruiz v. Estelle, 

, 856 (5th
Cir. 1982).)
        Appellants urge their failure to obtain a stay is immaterial because, inter
alia, effective relief is purportedly available without disturbing the confirmed
plan and without unduly affecting third parties not before our court.
Notwithstanding Appellants’ assertions, our court has held that the first
equitable-mootness factor concerns whether a stay was granted; a stay
“diligently—albeit unsuccessfully—pursued” is insufficient. In re 

; see also Nationwide Mut. Ins. Co. v. Berryman Prods., Inc. (In re
Berryman Prods., Inc.), 

, 944-45 (5th Cir. 1998) (“[The appellant]
asserts that because it diligently pursued a stay, its failure to obtain the stay
does not require dismissal of the proceeding as moot. We rejected this argument
in In re Manges.” (emphasis in original)).
        Appellants are correct that their failure to obtain a stay, by itself, is not
dispositive. On the other hand, because they failed to obtain one, the first
equitable-mootness factor does militate toward holding this appeal equitably
moot.
                                           2.
        The second equitable-mootness factor requires examining whether the
plan has been “substantially consummated”. Substantial consummation
        means—
        (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 distribution under the plan.
In re GWI PCS 1 

(quoting 11 U.S.C. § 1101(2)). In that
regard, our court “requires only ‘substantial consummation,’ not absolute or
complete consummation”, 

and looks, inter alia, to operation as a

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                                    No. 08-60349

reorganized entity as one indicator of substantial consummation, see 

99 & n.20, 801-02.
        Appellees are operating Hard Rock as a reorganized entity and have done
at least most (they contend all) of that required of them under the confirmed
plan.      Indeed, Appellants      appear        to   concede   the   plan’s   substantial
consummation. In their reply brief, they, instead, urge: “[T]he fact that the Plan
has been substantially consummated is not determinative with respect to
equitable mootness, given the ability of this Court to grant effective relief”.
        Appellants are correct to the extent that, as with their failure to obtain a
stay, the plan’s substantial consummation is not automatically dispositive for
equitable mootness.      On the other hand, because the plan is substantially
consummated, the second equitable-mootness factor, like the first, militates
towards equitable mootness.
                                            3.
        The third equitable-mootness factor requires examining whether the relief
requested would affect either the rights of parties not before the court or the
success of the plan. In this regard, the district court voiced its concerns by
noting:
        Appellants assert that the relief that they request would not affect
        either the rights of the parties not before the court or the success of
        the plan because they only seek to be paid outright the funds that
        are currently held in escrow. However, the statements of issues on
        appeal framed by the Appellants are not so limited. The Appellants
        repeatedly assert that the Bankruptcy Court erred in confirming the
        Plan, and as a result, they ask this Court to overturn the
        confirmation of the entire Plan. The overturning of the Plan would
        create an unmanageable situation for the Bankruptcy Court.
In re Premier Entm’t Biloxi LLC, Nos. 1:07-CV-1058, 1:07-CV-1222 (S.D. Miss.

) (unpublished district court opinion and order granting Premier’s
motion to dismiss) (footnote call omitted).



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                                 No. 08-60349

      As discussed infra, Appellants continue to assert that overturning the
confirmed plan would be proper. Along that line, we have the same concerns as
did the district court: overturning the plan would, at this late stage, create an
unmanageable situation for the bankruptcy court. Moreover, creditors and other
third parties who relied on the confirmed plan would undoubtedly be affected.
“The ultimate question to be decided [when considering equitable mootness] is
whether the Court can grant relief without undermining the plan and, thereby,
affecting third parties.” In re SI Restructuring, 

.
      Appellants also assert that, while overturning the confirmed plan would
be appropriate, relief could be afforded simply by ordering the already-set-aside
escrow funds to be turned over to them. Our court’s providing this proposed
relief, however, would necessarily involve overturning the provisions of the
confirmed plan that establish the escrow funds and the adversary proceeding.
      The bankruptcy court, through its plan confirmation, determined that the
Noteholders would first have to establish their entitlement to the money in
escrow before those funds would be distributed.        This does not deny the
Noteholders money to which they may be entitled; instead, it provides a
mechanism for confirming that entitlement. Indeed, Appellants concede in their
reply brief that, “as provided under the Plan”, they have “the right to litigate
their entitlement to the Escrow under the adversary proceeding”. Accordingly,
we decline to order the turnover of funds when Appellants’ rights to those funds
have not yet been established through the ordered litigation; doing so would
amount to an unwinding of the confirmed plan as a whole.
      Finally, Appellants additionally urge equitable mootness should not apply
because Debtors are purportedly solvent, and the relief sought is purely
monetary. Appellants do not, however, point to any precedent from our court
supporting this equitable-mootness exception; nor do we find support for this
position in our equitable-mootness jurisprudence.

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                                   No. 08-60349

      Having reviewed de novo the district court’s equitable-mootness holding,
we agree that the three equitable-mootness factors demonstrate the prudence
of that holding. See In re 

. Accordingly, we likewise
hold this appeal equitably moot.
                                        B.
      As noted, in addition to challenging the equitable-mootness dismissal,
Appellants re-urge several challenges to the confirmed plan. Specifically, after
discussing equitable mootness in their brief—and after claiming, inter alia, they
“do not seek to modify the Plan”—Appellants next include a separate section
entitled: “THE BANKRUPTCY COURT ERRED WHEN IT CONFIRMED THE
PLAN”.
      The issues raised by Appellants under this heading are, essentially: the
confirmed plan is not “fair and equitable”; there were improprieties in the voting
process that led to the plan’s confirmation; and the plan improperly exculpated
Debtors’ parent company. All of these issues go to the substantive merits of the
plan, or to its confirmation.
      Because the district court held this appeal equitably moot, it did not reach
these challenges to the confirmed plan. Likewise, because we hold the appeal
equitably moot, we may not consider such challenges. See, e.g., In re GWI PCS
1 

.
                                       III.
      For the foregoing reasons, the appeal is DISMISSED.




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