23andMe Debtors Win Dismissal of California AG’s Appeal of Order Approving Bankruptcy Sale

Paul, Weiss secured a victory for the 23andMe debtors when the U.S. District Court for the Eastern District of Missouri dismissed the state of California’s appeal of a bankruptcy court’s order approving sale of the 23andMe debtors’ assets. The bankruptcy court approved the $305 million sale in June 2025, and California’s three attempts to stay the sale pending appeal were rejected last summer by the bankruptcy court, the district court and the Eighth Circuit.

Following briefing, U.S. District Judge Cristian Stevens held oral argument on California’s appeal on September 14, 2026. In his decision, Judge Stevens did not reach the merits of California’s appeal—which argued that the sale violated California state law—and instead dismissed the appeal on standing and mootness grounds. Judge Stevens held that California did not have appellate standing because it suffered no pecuniary harm as a result of the sale, and separately lacked standing under Rule 2018(b) of the Federal Rules of Bankruptcy Procedure, which bars appeals of bankruptcy court orders by state attorneys general who appear in the case on behalf of consumer creditors and in the public interest. He also held that the appeal was statutorily moot under section 363(m) of the U.S. Bankruptcy Code, which bars appeals of a completed sale of assets in bankruptcy to good-faith purchasers absent a stay. Because California failed to obtain a stay of the sale pending appeal and failed to show that the bankruptcy court clearly erred in its finding of the purchasers’ good faith, Judge Stevens held that section 363(m) statutorily mooted California’s appeal.

The Paul, Weiss team is led by partners William Clareman, who argued the appeal, Christopher Hopkins, Paul Basta, Jeffrey Recher and William Marks.