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Con gressionaI
~.Research Service
Unanimous Supreme Court Rules Bankruptcy
Sale Statute Is Not Jurisdictional
June 20, 2023
On April 19, 2023, the Supreme Court unanimously held in MOAC Mall Holdings LLC v. Transform
Holdco LLC (MOAC) that 11 U.S.C. @ 363(m)-a Bankruptcy Code provision that limits the scope of
relief an appellate court may order regarding certain sales or leases of estate property-is not
jurisdictional. This means that a party may be barred from invoking the statute's limitations if it fails to do
so at the earliest appropriate time in the appellate process. This decision marks the second instance in the
Supreme Court's 2022-23 term-the first being Wilkins v. United States-in which the Court held that a
statute is not jurisdictional.
This Sidebar recounts the MOAC decision and analyzes how this holding impacts bankruptcy
proceedings. The Sidebar also offers considerations for Congress as to how this decision, along with
Wilkins, may affect the drafting of jurisdictional and nonjurisdictional statutes.
Background of MOAC
A previous Legal Sidebar explains in detail the parameters of @ 363(m) and summarizes the factual and
procedural history ofMOAC. Briefly, Sears Holding Corporation (Sears) filed for Chapter 11 bankruptcy
in the U.S. Bankruptcy Court for the Southern District of New York. The bankruptcy court approved an
agreement to sell most of the bankruptcy estate's assets to Transform Holdco LLC (Transform), the
respondent in this case (the Sale Order). Among the assets conveyed to Transform was the right to
designate entities to which Sears' leases on certain property should be assigned. Transform exercised this
right by designating Sears' lease with petitioner MOAC Mall Holdings LLC (MOAC) in the Mall of
America (the MOAC Lease) for assignment to Transform's wholly owned subsidiary under Bankruptcy
Code § 365, which governs assignments. MOAC objected to this assignment on the ground that Sears
failed to provide assurance of Transform's ability to perform under the lease, as required by @ 365. The
bankruptcy court rejected that argument and approved the assignment (the Assignment Order).
MOAC wished to appeal the Assignment Order to the district court, but feared that Transform would
argue that @ 363(m) limited or barred the appeal. Section 363(m) provides that
[t]he reversal or modification on appeal of an authorization under [11 U.S.C. @ 363(b) or
(c)] of a sale or lease of property does not affect the validity of a sale or lease under such
Congressional Research Service
https://crsreports.congress.gov
LSB10979
CRS Legal Sidebar
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/govelzf0001&div=1&collection=&method=preview&ext=.png&size=3)
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