Among equitable doctrines, the doctrine of equitable mootness — which essentially allows courts to dismiss appeals from bankruptcy confirmation or sale orders where, as a result of the plan going effective or the sale closing, granting the relief requested in the appeal would be inequitable — is well known. Indeed, in the Second Circuit, it is arguably among the most significant legal rules that provide certainty to parties to a corporate transaction in a bankruptcy case. The doctrine’s emphasis on the importance of finality to the successful operation of our federal bankruptcy system can be viewed as a pragmatic solution by the appellate courts to the otherwise uncertain, litigious, and time-sensitive nature of a bankruptcy case.
A perhaps lesser known — but equally powerful — equitable doctrine in the context of bankruptcy appeals is that of judicial estoppel. Judicial estoppel prevents a party from contradicting previous declarations made, or actions taken, during the same or a later proceeding if the change in position would adversely affect the proceeding or constitute a fraud on the court. The Supreme Court of the United States has explained that, while the “circumstances under which it can be invoked are likely not reducible to any general formulation or principle,” there are several factors that inform the decision whether to apply the doctrine in a particular case: