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    The Lawletter Blog

    BANKRUPTCY: Finality—Appealability

    Posted by Timothy J. Snider on Tue, Jun 9, 2015 @ 16:06 PM

    The Lawletter Vol 40, No 4

    Tim Snider, Senior Attorney, National Legal Research Group

          Very few principles of federal appellate practice are more fundamental than that only final judgments may be appealed. Mohawk Indus. v. Carpenter, 558 U.S. 100 (2009). That said, bankruptcy presents a unique situation, in that often adversary proceedings finally conclude the dispute between and among the parties to those proceedings and thus are appealable, even though the entire bankruptcy case may not yet be concluded. Howard Delivery Serv. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006) ("Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case.").

         What rule should apply with respect to an order confirming or denying confirmation of a Chapter 13 plan? Chapter 13 of the Bankruptcy Code permits individual debtors to devise arrangements for the payment of the claims of creditors pursuant to a plan that is subject to the approval of the bankruptcy court. The court may confirm or decline to confirm the proposed plan or dismiss the case. If the court confirms the plan, then the confirmation order acts as a final judgment, resolving all the outstanding claims of all the parties to the proceeding. There is little doubt that the confirmation order, like an order of dismissal, has all the earmarks of finality that renders it subject to immediate appeal. Only plan confirmation—or case dismissal—alters the status quo and fixes the rights and obligations of the parties. When the bankruptcy court confirms a plan, its terms become binding on debtor and creditor alike. 11 U.S.C. § 1327(a). Confirmation has preclusive effect, foreclosing relitigation of "any issue actually litigated by the parties and any issue necessarily determined by the confirmation order." 8 Collier on Bankruptcy ¶ 1327.02[1][c], at 1327-6 (16th ed. 2014). But what about an order declining to confirm a plan?

         That was the issue before the Court in Bullard v. Blue Hills Bank, 135 S. Ct. 1686 (2015). There, the bankruptcy court entered an order refusing to confirm the debtor's proposed Chapter 13 plan. On appeal, the district court affirmed, and on subsequent appeal, the court of appeals dismissed for lack of jurisdiction. The Supreme Court, in an opinion authored by the Chief Justice, affirmed. He contrasted an order of confirmation with an order denying confirmation, reasoning:

         Denial of confirmation with leave to amend . . . changes little. The automatic stay persists. The parties' rights and obligations remain unsettled. The trustee continues to collect funds from the debtor in anticipation of a different plan's eventual confirmation. The possibility of discharge lives on. "Final" does not describe this state of affairs. An order denying confirmation does rule out the specific arrangement of relief embodied in a particular plan. But that alone does not make the denial final any more than, say, a car buyer's declining to pay the sticker price is viewed as a "final" purchasing decision by either the buyer or seller. "It ain't over till it's over."

    Id. at 1693.

         The Court's decision in Bullard lacks the virtue of symmetry, in that orders confirming the plan and denying confirmation are treated differently, but the logic of the Chief Justice's reasoning is compelling. As a practical matter, it may make no difference other than in an exceptional or unusual case.

    Topics: bankruptcy, Chapter 13, order declining to confirm Chapter 13 plan, automatic stay persists

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