                United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 15-2060
                       ___________________________

Opportunity Finance, LLC; Opportunity Finance Securitization, LLC; Opportunity
  Finance Securitization II, LLC; Opportunity Finance Securitization III, LLC;
 International Investment Opportunities, LLC; Sabes Family Foundation; Sabes
 Minnesota Limited Partnership; Robert W. Sabes; Janet F. Sabes; Jon R. Sabes;
                                  Steven Sabes

                           lllllllllllllllllllllAppellants

                                         v.

    Douglas A. Kelley, Chapter 11 Trustee; Unsecured Creditors Committee

                           lllllllllllllllllllllAppellees
                       ___________________________

                               No. 15-2061
                       ___________________________

    DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main

                           lllllllllllllllllllllAppellant

                                         v.

              Douglas A. Kelley; Unsecured Creditors Committee

                           lllllllllllllllllllllAppellees
                          ___________________________

                                  No. 15-2062
                          ___________________________

Epsilon Global Active Value Fund 1-B Ltd.; Epsilon Global Active Value Fund II,
 L.P.; Epsilon Global Active Value Fund II-B, L.P.; Epsilon Global Active Value
Fund II-B, Ltd.; Epsilon Global Active Value Fund III Ltd.; Epsilon Global Active
 Value Fund Ltd.; Epsilon Global Active Value Fund, L.P.; Epsilon Global Asset
   Management Ltd.; Epsilon Global Master Fund II, L.P., also known as Epsilon
   Global Master Fund II, L.P., Sub 1; Epsilon Global Master Fund, L.P.; Epsilon
   Structured Strategies Master Fund, L.P., also known as Epsilon Global Master
    Fund III Structured Strategies, L.P.; Epsilon Investment Management, LLC;
  Stafford Town Ltd.; Westford Asset Management, LLC; Westford Global Asset
    Management Ltd.; Westford Special Situations Fund Ltd.; Westford Special
Situations Fund, L.P.; Westford Special Situations Master Fund, L.P.; Steve G. Stevanovich

                               lllllllllllllllllllllAppellants

                                             v.

                Douglas A. Kelley; Unsecured Creditors Committee

                               lllllllllllllllllllllAppellees
                                      ____________

                     Appeals from United States District Court
                     for the District of Minnesota - Minneapolis
                                    ____________

                            Submitted: November 19, 2015
                                Filed: May 16, 2016
                                   ____________

Before SMITH, BYE, and BENTON, Circuit Judges.
                           ____________



                                            -2-
BENTON, Circuit Judge.

       In the aftermath of Thomas Petters’ Ponzi scheme, Douglas A. Kelley—as
trustee for Petters Company, Inc. (PCI) and eight associated special-purpose entities
(SPEs)—filed Chapter 11 bankruptcy petitions. On Kelley’s motion, the bankruptcy
court consolidated the bankruptcy estates of PCI and the SPEs “for all purposes
substantive and administrative.” Lenders to PCI and the SPEs appealed. The district
court1 dismissed, holding the Lenders did not have standing to appeal the
consolidation order because they were not “persons aggrieved.” Westlb AG v. Kelley,
531 B.R. 783, 795 (D. Minn. 2015). The Lenders appeal. Having jurisdiction under
28 U.S.C. § 158(d)(1), this court affirms.

                                         I.

       Petters, convicted of wire fraud, mail fraud, conspiracy and money laundering,
conducted a multi-billion-dollar Ponzi scheme using PCI and eight wholly-owned
SPEs. See United States v. Petters, 663 F.3d 375, 378 (8th Cir. 2011). PCI and the
SPEs were placed into receivership. The receiver filed Chapter 11 bankruptcy
petitions for PCI and the SPEs. Kelley was appointed as the Chapter 11 trustee in
each bankruptcy case, which the bankruptcy court consolidated into one jointly-
administered case.

       To fund PCI, Petters used various SPEs, which held illusory accounts
receivable and had no appreciable assets entering bankruptcy. PCI also served as a
holding company for several of the SPEs. Two groups of Lenders made loans to
certain SPEs. Another group of Lenders did not make loans directly to the SPEs, but
only to other Lenders. Each Lender was a net winner from the Ponzi scheme.


      1
      The Honorable Patrick J. Schiltz, United States District Judge for the District
of Minnesota.

                                         -3-
      As net winners, none of the Lenders filed a proof of claim. Kelley, however,
named the Lenders as defendants in separate avoidance actions. Seeking to recover
funds for the bankruptcy estates, Kelley alleges that the SPEs wrongfully transferred
funds to the Lenders. If the Lenders were found liable in the avoidance actions, they
could then file proofs of claim in the bankruptcy case.

       Kelley—with the support of the Committee of Unsecured Creditors—moved
to substantively consolidate PCI and the SPEs. See generally Sampsell v. Imperial
Paper & Color Corp., 313 U.S. 215, 219 (1941) (recognizing bankruptcy referee’s
power “consolidating the estates” of two related entities); In re Giller, 962 F.2d 796,
799 (8th Cir. 1992) (recognizing “the bankruptcy court’s power to order substantive
consolidation”). The Lenders, along with nonparty Elistone Fund, objected to the
consolidation. Kelley moved to strike their objections, asserting they were not parties
in interest. The motion to strike was denied by the bankruptcy court. Granting the
consolidation motion and consolidating the assets and liabilities of PCI and the SPEs
in the main bankruptcy case, the bankruptcy court found that PCI and the SPEs were
interrelated, and had engaged in “massive commingling and the erosion of corporate
boundaries.”

       The Lenders and Elistone Fund appealed the consolidation. Kelley first moved
to certify those appeals directly to this court, which was denied. Kelley then moved
to dismiss the appeals, arguing that the Lenders did not have standing as “persons
aggrieved” to appeal the bankruptcy court’s order. The Lenders responded that (1)
Kelley was estopped from objecting to their standing because he expressly stated in
his certification motion that the district court had jurisdiction to hear the appeals and
(2) nevertheless, they were persons aggrieved.

       The district court dismissed the appeals, holding Kelley was not estopped, and
that the Lenders were not “persons aggrieved.” The Lenders appeal.



                                          -4-
                                            II.

       The Lenders argue Kelley should be estopped from asserting they lacked
standing to appeal. The Lenders note that, in the certification motion, Kelley said that
the district court had “jurisdiction over . . . the pending appeal pursuant to 28 U.S.C.
§§ 158(a) and 1331 and Federal Rule of Bankruptcy Procedure 8001(f)(3)(C).” Thus,
according to the Lenders, Kelley should be estopped from invoking the “persons
aggrieved” doctrine (which Kelley contends is jurisdictional).

      The district court declined to estop Kelley from arguing that the Lenders were
not persons aggrieved. This court reviews an application of the judicial estoppel
doctrine for an abuse of discretion. Van Horn v. Martin, No. 15-1710, 2016
WL537592, at *1 (8th Cir. Feb. 11, 2016). This court “will not overturn a district
court’s discretionary application of the judicial estoppel doctrine unless it plainly
appears that the court committed a clear error of judgment in the conclusion it reached
upon a weighing of the proper factors.” Stallings v. Hussman Corp., 447 F.3d 1041,
1046-47 (8th Cir. 2006)

       Judicial estoppel, an equitable doctrine, “prevents a party from prevailing in one
phase of a case on an argument and then relying on a contradictory argument to
prevail in another phase.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001). This
doctrine “protects the integrity of the judicial process.” EEOC v. CRST Van
Expedited, Inc., 679 F.3d 657, 679 (8th Cir. 2012). The Supreme Court has
articulated three non-exhaustive factors to aid a court in determining whether to apply
the doctrine: (1) whether a party’s later position is clearly inconsistent with its earlier
position; (2) whether the party has succeeded in persuading a court to accept that
party’s earlier position, so that judicial acceptance of an inconsistent position in a later
proceeding would create the perception that the court was misled; and (3) whether the
party seeking to assert an inconsistent position would derive an unfair advantage or
impose an unfair detriment on the party if not estopped. Jones v. Bob Evans Farms,
Inc., No. 15-2068, 2016 WL 308659, at *2 (8th Cir. Jan. 26, 2016), citing New

                                            -5-
Hampshire, 532 U.S. at 749-51. “Notably, judicial estoppel does not apply when a
debtor’s prior position was taken because of a good-faith mistake rather than as part
of a scheme to mislead the court.” Stallings, 447 F.3d at 1049.

       The district court did not abuse its discretion in declining to estop Kelley’s
arguments. First, Kelley’s statement that the district court had jurisdiction under 28
U.S.C. §§ 158(a) and 1334 is not clearly inconsistent with his later position that the
Lenders are not parties aggrieved. The cited statutes address the finality of
bankruptcy court judgments, orders, and decrees. There is nothing clearly inconsistent
with arguing that, based on the finality of the bankruptcy court’s order, the district
court has jurisdiction over the appeal, and later arguing, because the Lenders did not
have standing to appeal, that the appeal should be dismissed. See Simon v. Safelite
Glass Corp., 128 F.3d 68, 73 (2d Cir. 1997) (“If the statements can be reconciled there
is no occasion to apply an estoppel.”).

        As to the second New Hampshire factor, the Lenders claim that the district court
accepted Kelley’s earlier position by agreeing in its denial of the certification motion
that it “has jurisdiction over the appeals under 28 U.S.C. § 158(a).” Section 158(a)
governs the finality of a bankruptcy court order, not standing. There was nothing
clearly inconsistent with the court noting the finality of the bankruptcy court order.
More importantly, this factor aims to avoid “the perception that either the first or the
second court was misled.” New Hampshire, 532 U.S. at 750. Here, the same court
presided over both stages of the proceedings and showed no concern that Kelley was
“playing fast and loose with the courts.” See CRST Van Expedited, 679 F.3d at 679.

       Under the final New Hampshire factor, the Lenders argue that Kelley’s
inconsistent statements prejudiced them because they (1) expended money briefing
the certification motion and (2) had to respond to Kelley’s standing arguments in their
reply brief rather than their opening brief. Each contention is without merit. As the
district court correctly noted, at the time of the certification motion, an additional
appellant that has since settled—Elistone Financial—had standing to appeal as a net

                                          -6-
loser in the scheme. While still in bankruptcy court, Kelley moved to strike the
Lenders’ objections on the basis that they were not parties in interest and lacked
prudential standing to object. Thus, the Lenders have not demonstrated that they
suffered an unfair detriment or that Kelley gained an unfair advantage by his
statement.

       The district court did not abuse its discretion in declining to estop Kelley from
asserting that the Lenders are not persons aggrieved.

                                          III.

       The Lenders argue that, even if Kelley is not estopped, the persons aggrieved
doctrine invalidly restricts their ability to appeal bankruptcy court orders. According
to the Lenders, this court should “reconsider” the doctrine because it is no longer valid
after the 1978 amendments removed explicit references to the doctrine in the
Bankruptcy Code.

       The Lenders concede that this court has long applied the persons aggrieved
doctrine. This court even stated that the original foundation of the doctrine has been
repealed. See In re O&S Trucking, Inc., No. 15-2048, 2016 WL 279269, at *2 (8th
Cir. Jan. 22, 2016) (“Although the modern Bankruptcy Code does not articulate a
standard for appellate standing, our circuit consistently has applied a ‘person
aggrieved’ standard derived from the Bankruptcy Act of 1898.”); In re AFY, 734 F.3d
810, 819 n.10 (8th Cir. 2013) (“The ‘persons aggrieved’ standard is ‘[d]erived from
the now-repealed Bankruptcy Act of 1898.’”). Having held that the persons aggrieved
doctrine survives the 1978 amendments to the Bankruptcy Code, this court declines
to reconsider the doctrine. See Cnty. of Charles Mix v. U.S. Dep’t of Interior, 674
F.3d 898, 902 (8th Cir. 2012) (noting that a panel of this court cannot overturn the
decision of a previous panel). See generally In re Westwood Cmty. Two Ass’n, Inc.,
293 F.3d 1332, 1334 (11th Cir. 2002) (collecting decisions of First, Second, Third,



                                          -7-
Sixth, Seventh, Ninth and Tenth Circuits applying the persons aggrieved doctrine after
the 1978 amendments).



                                           IV.

       The Lenders argue that, even if the persons aggrieved doctrine is valid, they
satisfy its requirements as persons aggrieved. This court reviews de novo a district
court’s determination whether a plaintiff has standing. Hargis v. Access Capital
Funding, LLC, 674 F.3d 783, 790 (8th Cir. 2012). Whether an appellant is a person
aggrieved is generally a question of fact for the district court, but where the facts are
undisputed, this court may treat the question as an issue of law. In re El San Juan
Hotel, 809 F.2d 151, 154 n.3 (1st Cir. 1987).

       Standing in a bankruptcy appeal is narrower than Article III standing. O&S
Trucking, 2016 WL 279269, at *2. “The governing rule—a so-called person
aggrieved doctrine—was derived from the Bankruptcy Act of 1898, and it carried over
to practice under the modern Bankruptcy Code.” In re Peoples, 764 F.3d 817, 820
(8th Cir. 2014). “‘Person aggrieved’ is, of course, a term of art: almost by definition,
all appellants may claim in some way to be ‘aggrieved,’ else they would not bother
to prosecute their appeals.” Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737, 741
(3d Cir. 1995). “[I]n bankruptcy proceedings, which typically involve a myriad of
parties . . . indirectly affected by every bankruptcy court order . . . , the need to limit
collateral appeals is particularly acute.” Id. (second alteration in original).

       “The doctrine limits standing to persons with a financial stake in the bankruptcy
court’s order, meaning they were directly and adversely affected pecuniarily by the
order.” In re Peoples, 764 F.3d at 820. An appellant is a party aggrieved “if the
bankruptcy court order diminishes the person’s property, increases the person’s
burdens, or impairs the person’s rights.” In re Marlar, 267 F.3d 749, 753 n.1 (8th
Cir. 2001).

                                           -8-
        The Lenders believe that they are persons aggrieved because the substantive
consolidation (1) diminished their property by increasing Kelley’s potential recovery
against them and decreasing the value of their contingent claims, and (2) impaired
their rights by precluding potential affirmative defenses in the avoidance actions.

       Here, however, any potential pecuniary harm to the Lenders is several steps
removed and not a “direct” pecuniary impact. See In re Peoples, 764 F.3d at 820.
Several steps must occur before the Lenders suffer a pecuniary harm: Kelley must
prevail in the avoidance actions, the Lenders must pay the judgment in full, and then
they must file a valid proof of claim against the consolidated estate. This possibility
of harm does not satisfy the persons aggrieved standard. See Travelers Ins. Co., 45
F.3d at 742 (holding that party was not person aggrieved because they were “at least
two steps removed from any possible diminution of its property”); Rohn & Hass Tex.,
Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 208 (5th Cir. 1994) (noting that
pecuniary impact must be “real and immediate” (emphasis added)).

      The Lenders emphasize that they are persons aggrieved because the
consolidation order impairs their affirmative defenses in the avoidance actions.
According to the Lenders, the substantive consolidation order transforms two groups
of Lenders into initial transferees of PCI, rather than subsequent transferees. This
change, the Lenders say, eliminates good faith affirmative defenses otherwise
available in the avoidance actions. See 11 U.S.C. § 550(b)(1) (“The trustee may not
recover . . . from a transferee that takes for value . . . , in good faith, and without
knowledge of the voidability of the transfer avoided . . . .”).

       Generally, a bankruptcy court order allowing litigation to proceed against an
adversary defendant does not make that defendant a party aggrieved. See In re LTV
Steel Co., 560 F.3d 449, 453 (6th Cir. 2009) (“[W]e are aware of no court that has
held that the burden of defending a lawsuit, however onerous or unpleasant, is the sort
of direct and immediate harm that makes a party ‘aggrieved’ so as to confer standing
in a bankruptcy appeal.”). This is true even if, as here, litigation has already begun

                                         -9-
against the defendant, and the possibility of liability is more than theoretical. See id.
at 454.

       In an analogous case, the Eleventh Circuit held that an adversary defendant is
not a person aggrieved, even if the bankruptcy court order strips the defendant of a
defense in the adversary proceedings. In re Ernie Haire Ford, Inc., 764 F.3d 1321,
1327 (11th Cir. 2014). The trustee there filed adversary proceedings against a former
creditor, who moved to enjoin the proceedings as untimely under the bankruptcy
plan’s litigation-bar date. Id. at 1324. The trustee then moved to amend the plan to
allow the adversary proceedings to go forward. Id. The bankruptcy court granted the
motion. Id. The adversary defendant sought to appeal. Id.

       The Eleventh Circuit held that the adversary defendant was not a person
aggrieved by the bankruptcy court’s order. The court held that an order that subjects
a party to the risks of litigation causes only indirect harm to that party. Id. at 1326.
Further, even if a bankruptcy court order deprived a party of “a defense that would
have otherwise been available to him,” it did not render the defendant a party
aggrieved. Id. at 1326-27.

       Here, as in Ernie Haire, the bankruptcy court’s order arguably strips the
Lenders of certain defenses in their avoidance actions. The Lenders attempt to
distinguish Ernie Haire by asserting that, unlike their Code-based affirmative defense,
the defense in Ernie Haire was created by the bankruptcy plan, not the Bankruptcy
Code itself. As the dissent notes, the Ernie Haire court considered that distinction:
“Even if we considered [the defendant’s] interest in avoiding litigation by enjoining
a lawsuit as different from his interest in avoiding liability, we would not deem [the
defendant] a person aggrieved because his interest is not protected by the Bankruptcy
Code.” Id. at 1327; see also id. at 1327 n.4 (“[W]e are not saying that an adversary
defendant can never be a person aggrieved. An adversary defendant may satisfy our
standard if his appeal attempts to defend an interest that is protected by the
Bankruptcy Code.”). These quotations from Ernie Haire, however, are not the

                                          -10-
ultimate holding, but rather facts that “only serve[d] to highlight that [the adversary
defendant] is not a person aggrieved.” Id. at 1327.

       The court in Ernie Haire did not hold that a defendant with a potential Code-
based defense is automatically a person aggrieved with standing to appeal from a
bankruptcy court order. Here, the Lenders’ citation of a Bankruptcy Code provision
whose application may be altered by the bankruptcy court’s order does not change the
fact that the Lenders’ interest in avoiding liability is antithetical to the primary
purposes of the Bankruptcy Code. See In re LTV Steel Co., 560 F.3d at 454 (stating
that the interest in avoiding liability to the estate “is diametrically opposed to the
primary goal of . . . the Bankruptcy Code in general, which is to minimize the injury
to creditors” (alteration in original)). Moreover, even if the Lenders’ interests are
arguably protected by the Bankruptcy Code, the harm they suffered remains indirect.
See Ernie Haire, 764 F.3d at 1326 (“Allowing appeals from parties who have suffered
only an indirect harm or who hold interests outside the scope of the Bankruptcy Code
would defeat the very purpose underlying our person aggrieved standard.”).

       The principles underlying the persons aggrieved doctrine support the district
court’s conclusion that the Lenders are not persons aggrieved. The doctrine is
designed “to prevent bankruptcies from being needlessly prolonged by parties whose
interests are not central to the process.” Id. at 1327; see also In re First Cincinnati,
Inc., 286 B.R. 49, 51 (B.A.P. 6th Cir. 2002) (noting that doctrine is intended “to
prevent marginally interested parties from litigating satellite issues up and down the
appellant chain while the bankruptcy case stalls out and neither creditors nor debtors
receive their relief intended by the Code.”). The Lenders’ interests here are not central
to the bankruptcy process, and allowing them to appeal the bankruptcy court’s order
“would completely undermine the rationale behind [the] standard and bring
bankruptcy proceedings to a grinding halt.” Ernie Haire, 764 F.3d at 1327. The
district court did not err in dismissing the Lenders under the persons aggrieved
doctrine.



                                          -11-
                                      *******

      The judgment is affirmed.

BYE, Circuit Judge, dissenting.

      I respectfully dissent from Part IV of the majority opinion because I believe the
Lenders’ arguable loss of their Code-based defenses to the Trustee’s avoidance action
makes them “persons aggrieved” by the bankruptcy court’s substantive consolidation
order. I therefore believe they have standing to appeal.

       A few additional facts are necessary to explain the impact of the substantive
consolidation order on Epsilon/Westford (Epsilon) and Opportunity Finance, LLC
(Opportunity Finance).2 During the Tom Petters Ponzi scheme, Petters Company, Inc.
(PCI) purported to buy electronics and resell them to other companies at a markup.
Petters formed Special Purpose Entities (SPEs) as vehicles to collect the loans that
fueled this business. Companies would lend money to the SPEs secured by the
“collateral” – illusory accounts receivable – the SPEs owned. The SPEs then funneled
the money upward through PCI, which was a central repository for all the transactions.
The money that traveled through the SPEs represented the majority of funds in the
Ponzi scheme, roughly $30 billion over the seven-year scheme.

      Each SPE had only a single creditor. Thus, Epsilon was the sole creditor of the
SPE called PL Ltd., Inc., and Opportunity Finance was the sole creditor of two
separate SPEs: PC Funding, LLC, and SPF Funding, LLC. This corporate structure
has played a significant role in the Petters bankruptcy proceedings.




      2
        DZ Bank AG was a senior lender to Opportunity Finance from 2001 to 2003
for a series of loans, and its interest is therefore consistent with Opportunity Finance’s
interest. For simplicity, I refer to them collectively as “Opportunity Finance.”

                                          -12-
       After the Ponzi scheme unraveled, PCI and each of the eight SPEs filed for
bankruptcy separately, so the Petters bankruptcy proceedings, collectively, began as
nine separate bankruptcy proceedings. Since Opportunity Finance and Epsilon were
net winners in the Ponzi scheme, Chapter Eleven Trustee Douglas Kelley (the Trustee)
filed an avoidance action on behalf of the estates of the SPEs against them, seeking
to recover money that the Trustee alleged had been wrongfully transferred from the
SPEs to Opportunity Finance and Epsilon – the “winnings” from the Ponzi scheme.
These transactions totaled over $2.2 billion to Opportunity Finance and $3.2 billion
to Epsilon.

       The structure of the bankruptcy proceedings gave Opportunity Finance and
Epsilon the ability to assert two potentially significant defenses to the avoidance
action. First, a trustee may only use its avoidance power on behalf of a creditor of the
debtor. See 11 U.S.C. § 544(b). But because Epsilon was the sole creditor in the
bankruptcy proceeding of its SPE (PL Ltd., Inc.), and it filed no claims against the
estate, it argued the Trustee was not using its power on behalf of a creditor of the
debtor because there were no creditors in the PL Ltd., Inc.’s bankruptcy proceeding.
Epsilon therefore argued the Trustee lacked standing to avoid the transactions from
PL, Ltd., Inc., to Epsilon. Opportunity Finance made the same arguments in the
avoidance action, because it was the sole creditor of each of its SPEs and it had filed
no claims against either estate.

       Second, to the extent that the Trustee made avoidance claims against
Opportunity Finance and Epsilon on behalf of the PCI estate, the fact that the transfers
went from PCI through the SPEs before they reached Opportunity Finance and
Epsilon made them subsequent transferees of PCI. Opportunity Finance’s and
Epsilon’s status as subsequent transferees allowed them to assert a good faith defense
to the avoidance that they might not have been able to assert if they were initial
transferees of the PCI estate – i.e., if PCI had transferred money directly to
Opportunity Finance or Epsilon. Compare, e.g., 11 U.S.C. § 550(a)(1) (providing that
a trustee may recover from the initial transferee without further showing), with 11

                                         -13-
U.S.C. § 550(b)(1) (providing that a trustee may not recover from a subsequent
transferee that “takes for value, including satisfaction or securing of a present or
antecedent debt, in good faith, and without knowledge of the voidability of the
transfer avoided”).

       In short, the corporate structure of the Ponzi scheme – and, derivatively, the
structure of the bankruptcy proceedings – gave Opportunity Finance and Epsilon two
significant defenses to potentially escape billions of dollars of liability in the Trustee’s
avoidance actions.

       But that was before substantive consolidation. The substantive consolidation
order dissolved the corporate structure of the Ponzi scheme and combined all nine
bankruptcy proceedings into one bankruptcy proceeding with one bankruptcy estate.
Now, there are no SPEs separating Opportunity Finance and Epsilon from PCI. As
a result, they have arguably lost their two defenses to the avoidance action: (1) they
can no longer argue the Trustee lacks standing to pursue the avoidance action because
there are dozens of creditors of PCI on whose behalf the Trustee may act; and (2) they
can no longer defend the avoidance action on the grounds they acted in good faith as
subsequent transferees, because without the SPEs as intermediaries between them and
PCI, they are now initial transferees of PCI.

       I believe the effect of this substantive consolidation order makes Opportunity
Finance and Epsilon persons aggrieved with standing to appeal the order. A party is
considered a person aggrieved when the bankruptcy court order impairs the party’s
rights. In re Marlar, 267 F.3d 749, 753 n.1 (8th Cir. 2001). Prior to the substantive
consolidation order, the Bankruptcy Code gave Opportunity Finance and Epsilon the
right to defend the avoidance action on the grounds that the Trustee lacked standing
and that they were good faith subsequent transferees. The substantive consolidation
order stripped these defenses. Because this order impaired Opportunity Finance’s and
Epsilon’s rights, I believe they are “persons aggrieved” by the substantive
consolidation order.

                                           -14-
      The majority disagrees. It reasons an order that strips a party’s defenses is
analogous to an order that allows litigation to proceed against an adversary defendant.
And since an order that merely allows litigation to proceed against an adversary
defendant does not make the defendant a person aggrieved, an order that strips a
party’s defenses does not make the party a person aggrieved either.

        To reach this conclusion, the majority relies on In re Ernie Haire Ford, Inc., 764
F.3d 1321, 1325 (11th Cir. 2014) cert. denied sub nom. Atkinson v. Ernie Haire Ford,
Inc., 136 S. Ct. 104 (2015). In Ernie Haire, a bankruptcy court empowered a
liquidating agent to sue third parties that allegedly owed money to the estate as long
as the litigation began by a certain date, the litigation bar date. 764 F.3d at 1324.
After the litigation bar date passed, the bankruptcy court, at the request of the
liquidating agent, entered an order modifying the litigation bar date so the liquidating
agent could sue an additional defendant. Id. The defendant attempted to appeal the
order, but the Eleventh Circuit held the defendant was not a person aggrieved with
standing to appeal. Id. at 1325-26. The court’s reasoning was twofold. First,
“[o]rders allowing litigation to go forward do not burden a party’s ability to defend
against liability; they simply require parties to exercise that ability.” Id. at 1326.
Second, the court reasoned that for a party to be aggrieved, its interest “must be one
that is protected or regulated by the Bankruptcy Code,” and because the defendant’s
“sole interest [was] that of an adversary defendant in avoiding liability,” his interest
was “antithetical to the goals of bankruptcy.” Id. at 1326-27.

       But neither basis for the Eleventh Circuit’s conclusion is present where, as here,
an order strips a party of Bankruptcy Code-based defenses. First, an order that strips
a party’s defenses goes a step beyond an order that merely allows litigation to go
forward, because it requires a party to defend a lawsuit and it hobbles its defense.
This additional step is significant because it changes the odds of the litigation. While
an order that allows litigation to proceed against a party may force the party to assert
its defenses, the order does not change the probability that the party will win the
lawsuit because the party still retains all of its defenses. Since the order does not

                                          -15-
change the party’s legal position, it does not “impair” the rights of the party such that
the party has standing to appeal. See Ernie Haire, 764 F.3d at 1325-26; see also In re
LTV Steel Co., 560 F.3d 449, 453 (6th Cir. 2009) (“[W]e are aware of no court that
has held that the burden of defending a lawsuit, however onerous or unpleasant, is the
sort of direct and immediate harm that makes a party ‘aggrieved’ so as to confer
standing in a bankruptcy appeal.”) (emphasis added); Travelers Ins. v. H.K. Porter
Co., 45 F.3d 737, 743 (3d Cir. 1995) (“[A]n order which simply allows a lawsuit to
go forward does not necessarily ‘aggrieve’ the potential defendant for purposes of
appellate standing.”).

        But a defense-stripping order does impair the party’s rights, because it changes
the probability that the party will win the lawsuit. By removing the party’s defenses,
the order imposes an additional legal burden on the party’s “ability to defend against
liability,” Ernie Haire, 764 F.3d at 1326, and this additional legal burden distinguishes
a defense-stripping order from an order that merely allows litigation to proceed.

       This case illustrates the distinction. Opportunity Finance and Epsilon would
have had to defend the Trustee’s avoidance action whether the bankruptcy court
substantively consolidated the estate or not, so the substantive consolidation order was
not an order that “simply allow[ed] a lawsuit to go forward.” Travelers Ins. Co., 45
F.3d at 743. The effect of the order, rather, is that it takes away two of Opportunity
Finance’s and Epsilon’s defenses and makes it harder for them to defend the lawsuits.
Simply put, it is now less likely they will prevail in the avoidance action because of
the substantive consolidation order. Thus, the substantive consolidation order impairs
Opportunity Finance’s and Epsilon’s legal rights and gives them standing to appeal.

       Second, because the defenses Opportunity Finance and Epsilon could lose are
defenses the Bankruptcy Code gives them, their interests are not “antithetical to the
goals of bankruptcy.” Ernie Haire, 764 F.3d at 1326-27. The majority discounts
Opportunity Finance’s and Epsilon’s citation of the Code-based defenses they stand
to lose, reasoning that these lost defenses do “not change the fact that the Lenders’

                                          -16-
interest in avoiding liability is antithetical to the primary purposes of the Bankruptcy
Code.” But the question is not whether the harmed interests are consistent with the
“primary purpose” of the Code. It is whether the harmed interests are “interests the
Bankruptcy Code seeks to protect or regulate.” Id. at 1326. While it is true that the
Code’s primary interest is minimizing the injury to creditors, this is not its singular
interest. The Code is also interested in protecting subsequent transferees from having
their transactions avoided if they acted in good faith, see 11 U.S.C. § 550(b)(1), and
in protecting parties from having their transactions avoided when the trustee is not
acting for the benefit of a creditor, see 11 U.S.C. § 544.

       I therefore disagree with the majority that Opportunity Finance’s and Epsilon’s
citation to the Bankruptcy Code defenses they may lose in substantive consolidation
does not make them persons aggrieved. To the contrary, it is precisely the fact that
the Code gives them these defenses that shows they are persons aggrieved, because
the substantive consolidation order has stripped them of these “interests the
Bankruptcy Code seeks to protect.” Ernie Haire, 764 F.3d at 1326; see also id. at
1327 n.4 (“Of course, we are not saying that an adversary defendant can never be a
person aggrieved. An adversary defendant may satisfy our standard if his appeal
attempts to defend an interest that is protected by the Bankruptcy Code.”).

       Finally, this is not the type of appeal the persons aggrieved doctrine was
designed to prevent – an appeal by “marginally interested parties . . . litigating satellite
issues up and down the appellate chain while the bankruptcy case stalls out and
neither creditors nor debtors receive the relief intended by the Code.” Travelers Cas.
& Sur. v. Corbin (In re First Cincinnati, Inc.), 286 B.R. 49, 51 (B.A.P. 6th Cir. 2002).
The substantive consolidation order fundamentally alters the entire Petters bankruptcy
proceeding. It could allow the Trustee to void billions of dollars of transactions and
therefore transfer billions of dollars from Opportunity Finance and Epsilon back to the
estate. True, the appeal will prolong the bankruptcy. But this is not merely a “satellite
issue” and Opportunity Finance and Epsilon are not “marginally interested parties.”
This is a fundamental reorganization of a bankruptcy proceeding that strips

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Opportunity Finance and Epsilon of two significant defenses to a billion-dollar
avoidance action. The persons aggrieved doctrine was not designed to prevent appeals
of this magnitude.

      I believe Opportunity Finance and Epsilon are persons aggrieved by the
substantive consolidation order, because the order arguably strips them of two Code-
based defenses to the Trustee’s avoidance action. Therefore, they have standing to
appeal the order. I respectfully dissent.
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