US Supreme Court grants review to federal bankruptcy case
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US Supreme Court grants review to federal bankruptcy case

The US Supreme Court Monday agreed to hear MOAC Mall Holdings v. Transform Holdco, a case examining appellate court jurisdiction over sales orders in federal bankruptcy proceedings.

The case revolves around the sale and transfer of a lease for a storefront in a mall. In 1991, Sears obtained a lease for a storefront in the mall of America in Minneapolis, Minnesota. The lease only cost Sears $10 a year and was supposed to last 100 years. Sears, however, went bankrupt in 2018. As part of the federal bankruptcy proceedings, Sears sold its assets and the Mall of America lease was transferred to Transform Holdco LLC, a corporation formed by Sears’ new owners.

Mall of America sought to prevent the transfer because they claim that Transform Holdco LLC does not intent to occupy the leased premises but rather sublease to other companies. Transform Holdco LLC argues that the long-term lease forms a substantial portion of the value that Sears was sold for in the bankruptcy proceeding.

The US Court of Appeals for the Second Circuit found that federal bankruptcy law did not permit Mall of America to challenge the lease transfer, since it was deemed “integral” to a court-approved bankruptcy sale. Mall of America filed a petition with the US Supreme Court, arguing that there is a remedy available which would not affect the validity of the sale. Therefore, according to Mall of America, the appellate court should be allowed to intervene. Transform Holdco LLC counters that such a remedy does not exist, and the Second Circuit ruling should stand.

The US Supreme Court must now determine whether federal bankruptcy law limits appeals over sales orders deemed “integral,” even when there is a remedy available that would not affect the validity of the sale. The court is set to hear oral arguments for the case next term.