MOAC Mall Holdings LLC v. Transform Holdco LLC
The Supreme Court unanimously ruled that a Bankruptcy Code provision limiting the effect of overturned property sales is not a hard limit on court power — it is an ordinary legal rule that can be waived.
The decision closes off a tactic that beneficiaries of bankruptcy sales had used to protect completed transactions: waiting to see whether they won on the merits before invoking the provision, knowing that a truly jurisdictional rule could never be waived away.
How it got here: After MOAC won its appeal on the merits, the district court dismissed on jurisdictional grounds under § 363(m); the Second Circuit affirmed; the Supreme Court agreed to hear the resulting circuit split.
The Case in Depth
What happened
When Sears filed for bankruptcy in 2018, it sold most of its assets to Transform Holdco, including the right to designate a new tenant for a lease at Minnesota's Mall of America. Transform chose its own subsidiary, but the mall's landlord, MOAC Mall Holdings, objected that Sears had not shown the new tenant could adequately perform under the lease. The bankruptcy court approved the assignment anyway. MOAC appealed and initially won on the merits — only to have the district court then dismiss the entire appeal on the ground that a Bankruptcy Code provision stripped courts of power to grant any relief once the sale was complete.
The question before the Court
Does a bankruptcy law that limits the effect of overturned court-approved sales strip courts of all power to act, or is it just a regular rule that can be waived when a party holds it in reserve and raises it only after losing?
The Court's answer
No — Section 363(m) is not a jurisdictional provision. Under the Court's clear-statement rule, a statute only strips courts of the power to hear a case when Congress plainly said so. Section 363(m)'s text never mentions court authority or jurisdiction. Instead, it takes for granted that courts can reverse or modify bankruptcy sale authorizations, and then adds a targeted protection: that reversal does not always undo the validity of a completed sale to a good-faith buyer. A provision that presupposes courts will act is the opposite of one that takes away their power. Statutory context confirms this: § 363(m) sits in a different part of the Bankruptcy Code from the sections that actually grant courts jurisdiction over bankruptcy matters, and unlike other provisions it contains no cross-reference to those jurisdictional grants.
Because § 363(m) is not jurisdictional, ordinary doctrines like waiver and judicial estoppel can apply to it. A party cannot strategically wait until after losing on the merits to invoke it for the first time and thereby nullify the court's ruling.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Parties who benefit from bankruptcy sales can no longer strategically hold this protection in reserve and deploy it only after losing on the merits. Courts can now apply doctrines like judicial estoppel and waiver when a litigant waits until a convenient moment to raise the argument, making bankruptcy sale disputes more predictable and fairer for challengers like landlords and creditors.
What changes now
The Second Circuit's judgment is vacated and the case goes back to the lower courts. The underlying dispute — whether Transform provided adequate assurance of future performance under the lease assignment provisions of the Bankruptcy Code — remains open for the courts below to address now that § 363(m) cannot be used to automatically block relief. The Court also expressly declined to resolve other open questions about § 363(m)'s meaning and scope, leaving those for the lower courts on remand.
What this does not decide
The Court did not decide whether § 363(m) actually applied to MOAC's appeal in the first place, or whether Transform could still invoke it on remand under proper circumstances. It also left open other disputed questions about the provision's exact scope that the parties briefed.
How the Court got there
The legal reasoning, step by step
- The Court applied its clear-statement rule — the principle that a law only limits a court's power to hear a case when Congress plainly said so. Jurisdictional rules carry severe consequences: courts must enforce them automatically and cannot excuse noncompliance for waiver, forfeiture, or bad-faith conduct by the party invoking them. Because that label is so consequential, and because the Court has historically applied it loosely, the Court requires a clear signal from Congress before treating a provision as jurisdictional.
- Starting with the text of § 363(m), the Court found nothing that speaks to court authority. The provision assumes courts can reverse or modify covered sale authorizations, then adds a caveat: reversals do not always affect the validity of a completed sale to a good-faith buyer. This structure — a targeted protection for buyers that operates even after a court exercises jurisdiction — is the opposite of a provision that strips courts of power. The Court noted that similar built-in exceptions (for bad-faith buyers, stayed sales) were treated as significant evidence of non-jurisdictional status in Reed Elsevier, Inc. v. Muchnick (the 2010 case holding that a copyright-registration requirement was not jurisdictional).
- Statutory context reinforced the textual reading. Section 363(m) is physically separated from the Code provisions that actually grant federal courts jurisdiction over bankruptcy matters. Other Bankruptcy Code sections that do limit court power — such as § 305(c) — contain explicit cross-references to those jurisdictional grants; § 363(m) has none. That separation and the absence of a clear tie to the jurisdictional provisions weighed heavily against treating § 363(m) as a limit on court power.
- Transform argued that § 363(m) reflects traditional in rem jurisdiction principles — the idea that once property leaves a court's control, the court loses power over it. The Court rejected this as an argument about legislative intent, not a clear statement in the text. Moreover, § 363(m)'s own terms undercut the argument: the provision expressly permits courts to affect some completed sales (for example, those made to bad-faith buyers), which is inconsistent with a rule that courts simply lose power over transferred property.
- Transform's second argument — that an old procedural rule (Rule 805, promulgated in 1976) was understood to be jurisdictional, and that Congress codified that understanding in § 363(m) — failed because every lower-court case Transform cited predated § 363(m)'s 1978 enactment and thus long predated the Court's modern effort to use the word 'jurisdictional' precisely. Old, imprecise uses of that label by lower courts do not establish that Congress clearly intended § 363(m) to be a limit on court power.
Doctrinal impact
Cases affected by this decision
Reaffirms Boechler v. Commissioner (596 U.S. ___)
The clear-statement rule requiring Congress to plainly designate a provision as jurisdictional remains good law.
Reaffirms Reed Elsevier, Inc. v. Muchnick (559 U.S. 154)
A statute's built-in exceptions that allow courts to act regardless of a condition are significant evidence the provision is not jurisdictional.
Reaffirms Chaffin v. Chaffin (568 U.S. 165)
A case is not moot simply because the winning side argues on the merits that no practical relief remains available.