MOAC Mall v. Transform Holdco: Appellate Review and Section 363(m)
The dispute arose from the bankruptcy of Sears Holdings Corporation. In 2019, Sears sold assets, including a lease at Minnesota’s Mall of America, to Transform Holdco, the entity backed by former Sears Chairman Eddie Lampert, which “bought” Sears Holdings Corporation out of bankruptcy.
Case: MOAC Mall Holdings LLC v. Transform Holdco LLC
Decided: April 2023 (U.S. Supreme Court)
Key Issue: Whether §363(m) of the Bankruptcy Code limits appellate jurisdiction
Background
The dispute arose from the bankruptcy of Sears Holdings Corporation. In 2019, Sears sold assets, including a lease at Minnesota’s Mall of America, to Transform Holdco, the entity backed by former Sears Chairman Eddie Lampert, which “bought” Sears Holdings Corporation out of bankruptcy.
MOAC Mall Holdings, the landlord, objected to the lease assignment, arguing that Transform did not intend to operate a retail business at the premises as required by the lease terms. When the bankruptcy court allowed the lease transfer, MOAC appealed. But the Second Circuit dismissed the appeal, citing §363(m) of the Bankruptcy Code—which limits appellate relief if the sale was made to a good-faith purchaser.
In bankruptcy, Section 363(m) of the U.S. Bankruptcy Code protects buyers of assets sold through a bankruptcy court from having their purchase undone on appeal, as long as they bought in good faith and the sale wasn't stayed (paused) during the appeal.
So if someone buys something through a court-approved sale and later someone tries to undo that sale (e.g., saying it was unfair or illegal), §363(m) can block that reversal to give buyers confidence.
MOAC took the case to the Supreme Court, challenging whether §363(m) is jurisdictional and whether it bars all appellate review post-closing.
Supreme Court Decision
In a unanimous decision authored by Justice Jackson, the Court held that:
Section 363(m) is not jurisdictional. Courts retain appellate authority even after a sale closes.
The Court clarified that while §363(m) protects certain sale outcomes from being unwound, it does not bar appellate courts from hearing the case or ruling on the legal merits.
This ruling overturned years of lower court precedent—particularly in the Second and Third Circuits—where §363(m) had been interpreted as a jurisdictional bar.
Legal and Practical Implications
1. More Flexible Appellate Process
Parties now have greater ability to challenge asset sales, even after consummation, without being shut out on jurisdictional grounds.
2. Good-Faith Purchasers Still Protected
While appellate courts can now hear challenges, §363(m) still prevents the unwinding of sales made in good faith and for value. This provides continued protection for buyers.
3. Sale Orders Must Be Carefully Drafted
Parties must build strong factual records and consider potential appellate exposure, especially in contested assignments or leases.
Key Figures
2019 – Year of Sears’ asset sale, including Mall of America lease
$10 million+ – Estimated value of disputed leasehold rights
9–0 – Supreme Court vote clarifying that §363(m) is not jurisdictional
Strategic Insight from White Knight Restructuring
This decision recalibrates risk in distressed M&A transactions. For debtors and asset buyers, it’s a reminder that certainty post-closing is not absolute.
White Knight helps:
Structure sale procedures that minimize post-sale litigation risk
Anticipate appellate exposure when advising buyers or landlords
Support stakeholders in building defensible sale records
Whether you're assigning leases, acquiring assets, or evaluating transactional risk—we help you think three moves ahead.
In the post-MOAC world, finality in asset sales is no longer just about closing—it’s about planning for the challenge that might come next.
