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SCOTUS Adopts Bright Line Rule on Bankruptcy Appeals

United States legal documents focused on Chapter 11 Bankruptcy.
By Laura Temme, Esq. on January 16, 2020 12:35 PM

The Supreme Court adopted the rule used by many federal circuits regarding the window for appeals in bankruptcy cases this week, affirming a decision by the 6th Circuit.

Ordinarily, federal courts only hear appeals from "final decisions," where the case has been resolved. However, that doesn't make much sense for bankruptcy court. Bankruptcy proceedings centralize all matters relating to a debtor in one place, and the court is expected to resolve numerous individual controversies as the matter moves along.

How Final is "Final?"

The Court contemplated a similar issue in a 2015 case, where the justices held that an immediate appeal might be appropriate where an order "finally dispose[s] of discrete disputes" in the larger bankruptcy case. In Ritzen Group, Inc. v. Jackson Masonry, LLC, the court was asked to decide the appropriate time for a creditor to appeal an order denying their motion to lift the stay of automatic efforts to collect.

Resolving The Issue

The unanimous ruling states that the order in Ritzen "constitutes a final, immediately appealable order" for the purposes of Section 158. Therefore, the Bankruptcy Code's 14-day window to appeal the denial of such a motion begins when the court rules on the motion - rather than when the reorganization plan is confirmed.

Most federal circuits already operate under this framework, but the decision by SCOTUS certainly helps to ensure consistency by making it the law of the land. It's unclear just how broadly the rule might be applied, although Justice Ginsburg pointed out that the orders at issue are those with "large practical consequences" - rather than disputes over "minor details about how a bankruptcy case will unfold."

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