Denial of Confirmation Not Final, Appealable, Order

Posted by NCBRC - May 15, 2014

Where the debtor is free to propose an amended plan, the First Circuit found that denial of confirmation is not a final, appealable, order. Bullard v.  Hyde Park Savings Bank, No. 13-9009 (May 14, 2014). In that case, the debtor had proposed a hybrid plan under which his underwater mortgage would be divided into secured and unsecured portions with the unsecured portion being given its pro rata share of the estate and the secured portion being paid outside the plan in accordance with the loan agreement. The debtor argued that any other plan would not have been feasible and, therefore, would have been subject to dismissal. The bankruptcy court denied confirmation and the BAP, after granting leave to appeal, affirmed.

The debtor appealed to the First Circuit pursuant to 28 U.S.C. § 158(d)(1) (the BAP denied the debtor’s motion for certification of appeal under section 158(d)(2)). That court found that it lacked jurisdiction over the appeal because “when an intermediate appellate court ‘remands a matter to the bankruptcy court for significant further proceedings, there is no final order for purposes of § 158(d) and the court of appeals lacks jurisdiction.’ In re Gould & Eberhardt Gear Mach. Corp., 852 F.2d 26, 29 (1st Cir. 1988). Conversely, ‘[w]hen a remand leaves only ministerial proceedings, for example, computation of amounts according to established formulae, then the remand may be considered final.” In this case, the debtor had the opportunity to propose a new plan and the court stated the rule that where the debtor remains free to propose an amended plan, “[a]n order of an intermediate appellate tribunal affirming the bankruptcy court’s denial of confirmation of a reorganization plan is not a final order.”

The court noted that there is a split in the circuits as to whether denial of confirmation constitutes a final, appealable order, with the Second, Fifth, Sixth, Eighth, Ninth and Tenth Circuits finding that, unless the underlying bankruptcy case has been dismissed, it does not. On the other hand, the Third, Fourth and Fifth Circuit have held that such orders may be appealable. (Citing Lindsey v. Pinnacle Nat’l Bank (In re Lindsey), 726 F.3d 857, 859 (6th Cir. 2013); and Mort Ranta v. Gorman, 721 F.3d 241, 248 (4th Cir. 2013), for the opposing views). In this case the bankruptcy court’s denial of confirmation did not finally disposed of all issues pertaining to the dispute, nor were the court’s remaining responsibilities merely ministerial.

The court agreed that, because the debtor could not propose an alternate plan that would be feasible, the debtor was in the difficult position of having to propose a plan that he did not want, and then object to it and appeal its confirmation, or allow his petition to be dismissed and appeal the dismissal, losing the protection of the automatic stay in the meantime. But the court found that, to some extent the difficulty was of his own making as he could have pursued certification of a direct appeal to the circuit court from the bankruptcy court through 28 U.S.C. § 158(d)(2), or filed the original appeal to the district court and sought permission to take an interlocutory appeal of that court’s order under 28 U.S.C. § 1292(b). While the purely legal issue presented in this case is the type of issue for which leave to appeal may have been appropriate, the route taken by the debtor would have required a finding that the issue was not interlocutory; an incorrect finding.

Finally, contrary to the debtor’s assertion, the court found that judicial efficiency is better served by adhering to rule preventing appeals of interlocutory decisions.

Bullard opinion

In a similar case, the Tenth Circuit found that it lacked jurisdiction over an appeal in which the district court reversed a bankruptcy court plan confirmation order. Gordon v. Bank of Am., N.A. (In re Gordon), 743 F.3d 720 (10th Cir. 2014), There, the Tenth Circuit found that the district court correctly exercised jurisdiction over the appeal of the bankruptcy court’s confirmation order because it was final and appealable under section 158(a)(1). But because the district court reversed and remanded the case for further proceedings related to a new plan, the Tenth Circuit found that its decision was not a final, appealable, order under section 158(d). The court adhered to its 1990 precedent, Simons v. F.D.I.C. (In re Simons), 908 F.2d 643, 645 (10th Cir. 1990) (per curiam) in which it held that “a district court order is not final if it contemplates significant further proceedings in the bankruptcy court.” In Gordon, the district court’s remand required the bankruptcy court to engage in further significant proceedings rather than mere ministerial functions, and therefore, was not appealable.

Gordon opinion


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