MOAC Mall Holdings LLC v. Transform Holdco LLC
The Supreme Court unanimously ruled that a Bankruptcy Code provision limiting the effect of appeals of property sales is not a 'jurisdictional' rule, meaning parties can lose the right to invoke it through waiver, estoppel, or similar fairness doctrines.
The decision resolves a split among federal appeals courts and protects parties in bankruptcy proceedings from opponents who strategically sit on their rights until after an unfavorable ruling.
How it got here: The bankruptcy court approved the lease assignment; the district court vacated it on the merits, then reversed itself treating §363(m) as jurisdictional; the Second Circuit affirmed; the Supreme Court took the case to resolve a circuit split.
The Case in Depth
What happened
When Sears went bankrupt, it sold most of its assets to Transform Holdco, including the right to assign Sears's lease at Minnesota's Mall of America. The mall's owner, MOAC, objected when Transform assigned the lease to its own subsidiary, arguing adequate financial assurances weren't provided as the Bankruptcy Code requires. The bankruptcy court approved the assignment over MOAC's objection. Transform had initially promised not to use §363(m) against MOAC's appeal, then reversed course and invoked it after losing on the merits at the district court level.
The question before the Court
Can a buyer in a bankruptcy sale invoke a Bankruptcy Code provision to automatically strip courts of power to hear an appeal — even after the buyer already promised not to use it and waited until losing on the merits to raise it?
The Court's answer
No — §363(m) is not jurisdictional. The Court applied its "clear-statement" rule, under which a statute only carries the "jurisdictional" label — meaning it strips courts of power entirely, cannot be waived, and must be raised by courts on their own — if Congress clearly said so. Nothing in §363(m)'s text addresses courts' authority. Instead, the provision takes for granted that courts will hear and decide appeals of property-sale authorizations, and simply limits what effect a successful appeal can have by protecting good-faith purchasers whose transactions were not paused pending appeal.
Because §363(m) presupposes that courts exercise jurisdiction, is separated from the Bankruptcy Code's actual jurisdictional provisions, and reads like a targeted protection for good-faith buyers rather than a limit on court power, it is not jurisdictional. Fairness doctrines like waiver and estoppel can therefore apply to it — meaning Transform could not escape the consequences of its belated invocation simply by labeling the provision jurisdictional. The lower courts' dismissal of MOAC's appeal is vacated.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Buyers and sellers in bankruptcy property sales can no longer treat this provision as an automatic trump card that forces courts to dismiss appeals at any stage, no matter how late or strategically the argument is raised. Courts may now apply ordinary fairness rules — like holding a party to its earlier promises — when the provision is invoked.
What changes now
The case goes back to the Second Circuit for further proceedings consistent with the Court's ruling. The lower courts must now address the merits of the appeal under the correct framework — one in which §363(m) can be subject to waiver and estoppel — rather than dismissing for lack of jurisdiction. Whether MOAC can ultimately recover the Mall of America lease or obtain any other practical relief remains an open question for the lower courts to work through.
What this does not decide
The Court explicitly does not decide whether §363(m) actually applies to the specific lease assignment at issue, what §363(m)'s scope or meaning is in other respects, or whether any legal vehicle remains available for MOAC to recover the lease. Those questions return to the lower courts.
How the Court got there
The legal reasoning, step by step
- The Court started with its 'clear-statement' rule: a statutory rule is only 'jurisdictional' — meaning it strips courts of the power to act and cannot be waived — if Congress clearly said so. Congress need not use magic words, but a jurisdictional reading that is merely 'plausible' or 'better' than alternatives does not clear the bar. The distinction matters enormously because jurisdictional rules must be raised and enforced at any time, while non-jurisdictional rules are subject to ordinary doctrines like waiver, forfeiture, and estoppel.
- The Court examined §363(m)'s text and found no clear jurisdictional statement. Rather than restricting courts' authority, the provision takes it as a given that appellate courts can review and reverse bankruptcy-sale authorizations — it just says that, under certain conditions, a reversal may not undo the underlying transaction for a good-faith buyer. That structure reads like a targeted protection for buyers, not a withdrawal of court power.
- Statutory context reinforced the conclusion. Congress placed §363(m) in the Bankruptcy Code's substantive provisions, separated from the separate federal statutes that actually grant bankruptcy jurisdiction to the courts. Other Code provisions explicitly cross-reference jurisdictional grants when they want to limit court power; §363(m) makes no such tie.
- The Court rejected Transform's argument that §363(m) reflects traditional 'in rem' jurisdiction principles — the idea that a bankruptcy court's power over property disappears once the property leaves the estate. Even accepting that framing, §363(m) explicitly allows courts to disturb transfers to bad-faith purchasers after property leaves the estate, which undermines the claimed jurisdictional logic. The Court said this argument offered a reason to think Congress might have intended a jurisdictional result, but that falls short of the required clear statement.
- The Court rejected Transform's second argument — that Congress transplanted a 1976 bankruptcy procedural rule (Rule 805) into §363(m), and that rule was historically understood as jurisdictional. Every lower-court case Transform cited to prove that Rule 805 was jurisdictional predated §363(m)'s 1978 enactment and long predates the Court's modern effort to bring discipline to jurisdictional labeling. Old cases using loose jurisdictional language cannot supply the clear congressional statement the doctrine requires.