Tuesday, December 16, 2014

Supreme Court Grants Certiorari on Chapter 13 Bankruptcy Appeal Issue

Last week, the United States Supreme Court granted the writ of certiori in the case of Bullard v. Hyde
Park Savings Bank. The case presents the issue of whether an order denying confirmation of a chapter 13 plan of reorganization is a "final judgment" and therefore appealable.

Case Below - BAP and First Circuit 

In the case below, the chapter 13 debtor appealed the bankruptcy court's order first to the First Circuit's Bankruptcy Appellate Panel (BAP) under both 28 U.S.C. § 158(a)(1) [as to a "final order"] and (a)(3) [with leave of court for an interlocutory order].  The BAP agreed to hear the appeal under (a)(3) as an interlocutory appeal and upheld the Bankruptcy Court's order denying confirmation of the chapter 13 plan. 

The debtor next filed a notice of appeal to the First Circuit and also requested that the BAP certify the matter for a direct appeal to the First Circuit pursuant to 28 U.S.C. § 158(d)(2).  The BAP denied the motion for a direct appeal and the First Circuit issued an order to show cause why the appeal should not be dismissed on the basis the BAP's order affirming the Bankruptcy Court's order was not a final order as required by 28 U.S.C. § 158(d)(1). The Court noted that it had previously held that a BAP's order could not be a final order unless the underlying bankruptcy court order was a final order. 

The First Circuit, dismissed the appeal for lack of statutory jurisdiction pursuant to 28 U.S.C. § 158(d)(1) based on its holding that an order denying confirmation of a chapter 13 plan is not a final order. The First Circuit explained that the issue presented was an issue of statutory jurisdiction and not an Article III Constitutional issue. 

Circuit Split

In its decision, the First Circuit noted that the Sixth, Second, Eighth, Ninth, and Tenth Circuits previously that an order denying confirmation is not final if the bankruptcy case has not been dismissed and the debtor remains free to propose another plan.  On the other hand, it noted that the Fourth, Third, and Fifth Circuit held otherwise - that such an order can be final even if the underlying bankruptcy case has not been dismissed.


Final Analysis: Determining Appealability of a Judgment or Order