Key Points

  • The Third Circuit dismissed RMI Insurers' appeal of the Imerys and Cyprus Mines debtors' sale of certain indemnification rights to Johnson & Johnson as moot under 11 U.S.C. § 363(m).
  • Section 363(m) bars appellate modification of a Section 363(b) sale where the purchaser acted in good faith and the challenger did not obtain a stay pending appeal.
  • The panel held that Johnson & Johnson purchased in good faith and that RMI did not obtain a stay, after the Bankruptcy Court, the District Court, and the Third Circuit each declined to stay the sale.
  • The panel also held that RMI's arguments, if credited, would strike at the heart of the transaction and affect the validity of the sale, which Section 363(m) does not permit.
  • The opinion, by Circuit Judge Bove for a panel with Chief Judge Chagares and Judge Matey, is nonprecedential and does not reach the merits of RMI's objections.

A federal appeals court on Oct. 9 dismissed a challenge by RMI Insurers to the sale of indemnification rights by bankrupt talc companies to Johnson & Johnson. The court held that because the challenger never obtained an order halting the sale, the Bankruptcy Code barred the court from disturbing the deal, whatever the merits of the objections.

Circuit Judge Bove wrote the opinion for a U.S. Court of Appeals for the Third Circuit panel that also included Chief Judge Chagares and Circuit Judge Matey. The panel held that the appeal by RMI Insurers was moot under 11 U.S.C. § 363(m), because "Johnson & Johnson purchased the property in good faith, and RMI did not obtain a stay." The opinion is nonprecedential, and under the court's internal operating procedures it "is not binding precedent."

The dismissal leaves in place the Bankruptcy Court's approval of the sale. The panel did not decide whether that approval was correct. The opinion instead rested on a statutory bar that applies when the buyer acted in good faith and the challenger did not secure a stay of the sale pending appeal.

The debtors include Imerys Talc America, Inc. and Cyprus Mines Corporation, whose bankruptcy cases share the appeal's caption. "Debtors deal in talc," Judge Bove wrote. "Facing tort liability arising from their operations, including their distribution of talc to Johnson & Johnson, Debtors filed for Chapter 11 bankruptcy," the opinion said.

During the bankruptcy, the debtors agreed to sell certain indemnification rights to Johnson & Johnson. The opinion does not describe the rights, identify who owes the indemnity, or state the price.

The debtors sought approval of the sale under 11 U.S.C. § 363(b). The opinion identifies RMI Insurers, which challenged the sale, as a "third party." RMI objected, and the Bankruptcy Court rejected the objections and approved the sale.

Three courts then refused to put the sale on hold. The Bankruptcy Court declined to stay the sale, Judge Bove wrote, as did "the District Court, and our Court." The case reached the Third Circuit on appeal from the U.S. District Court for the District of Delaware, where Judge Thomas L. Ambro handled the matter, No. 1:24-cv-01232. The panel described RMI's appeal as timely.

Before reaching mootness, the panel confirmed that each court in the chain had authority to act. The Bankruptcy Court had jurisdiction to approve the sale, and the District Court had jurisdiction to hear the appeal from that approval, the panel said, citing a separate statutory basis for each. The Third Circuit had jurisdiction to review the District Court under 28 U.S.C. § 158(d)(1), the panel said, citing its 2026 decision in In re Thomas.

The panel then turned to Section 363(m). "Congress has prohibited appellate modification of a § 363(b) sale where the purchaser acted in good faith and the challenger fails to secure a stay of the sale pending appeal," Judge Bove wrote. The opinion called this "statutory mootness" provision "dispositive here," citing the Third Circuit's 2025 decision in In re Boy Scouts of America.

Both conditions were met, the panel held. Johnson & Johnson bought in good faith, and RMI had no stay. The opinion states the good-faith conclusion without describing any dispute over it.

The panel added a second point. RMI's arguments on appeal, "if credited, would 'strike at the heart' of the transaction and 'affect the validity' of the sale," Judge Bove wrote, quoting the Boy Scouts decision and citing the court's 2020 ruling in In re Energy Future Holdings Corp. "That is impermissible under § 363(m)," the opinion said.

The opinion is brief. It notes at the outset that the court assumed "the parties' familiarity with the underlying facts, procedural history, and issues on appeal." It does not set out the specific objections RMI raised in the Bankruptcy Court or on appeal, and it does not address their merits.

The case was submitted to the panel on Sept. 18, 2026, and the opinion was filed three weeks later. "Accordingly, we will dismiss the appeal as moot," the panel concluded. The ruling ends RMI's appeal, docketed in the Third Circuit as No. 25-2786, and leaves the Bankruptcy Court's order approving the sale of the indemnification rights to Johnson & Johnson undisturbed.