IMPROVING JURISDICTION AND PROCEDURE

WORKING GROUP PROPOSAL # 4: INTERLOCUTORY APPEALS


Background

Title 28 currently provides that an interlocutory order of a bankruptcy judge may be appealed to the district court (1) if issued under section 1121(d) to increase or reduce the time for certain parties in interest to file a plan, or (2) with leave of the district court. 28 U.S.C. § 158(a). Title 28 also provides that an interlocutory order of a district court judge may be appealed to the court of appeals if it (1) grants, modifies, or refuses to grant an injunction; (2) appoints a receiver, winds up a receivership, or orders the sale or disposal of property; (3) determines the rights and liabilities in an appealable admiralty case; or (4) the district judge certifies that the order (x) involves a controlling issue of law to which there is a substantial difference of opinion, and (y) immediate appeal of the order may materially advance resolution of the litigation; and the court of appeals, in its discretion, grants leave to appeal. 28 U.S.C. §§ 1292(a) & (b).

Proposal

28 U.S.C. § 1293 should be added [ 28 U.S.C. §1293 formerly provided for a direct appeal to the courts of appeals of, among other things, the final order of a bankruptcy judge where the parties to such appeal consented. Section 1293 was repealed without comment in the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. L. No. 98-353, 98 Stat. 343 (1984).] to provide, in addition to the appeal of final bankruptcy orders, for the appeal to the courts of appeals of interlocutory bankruptcy court orders under the following circumstances: (1) an order to increase or reduce the time to file a plan under section 1121(d); (2) an order granting, modifying, or refusing to grant an injunction or an order modifying or refusing to modify the automatic stay; (3) an order appointing or refusing to appoint a trustee, or authorizing the sale or other disposition of property of the estate; (4) where an order is certified by the bankruptcy judge that it (x) involves a controlling issue of law to which there is a substantial difference of opinion, and (y) immediate appeal of the order may materially advance resolution of the litigation, and leave to appeal is granted by the court of appeals; and (5) with leave from the court of appeals.

Reasons for the Change

Defining the circumstances under which an interlocutory order may be appealed is a necessary step to ensure that the proposed modifications to the bankruptcy appellate process are successful in achieving the desired results (e.g., stare decisis) while avoiding the pitfalls (e.g., an overloaded courts of appeals docket).

Due to the nature of bankruptcy, appealable interlocutory orders are difficult to define with any precision. A list of appealable interlocutory orders would be at once over- and under-inclusive. The Proposal is an amalgamation of the current interlocutory appeal provisions contained insection 158(a) and section 1292(a) and (b). An appeal as of right is provided for certain specific interlocutory orders consistent with the current appellate practices of both the district courts and the courts of appeals. In addition, the Proposal gives the courts of appeals discretion to grant an appeal of both certified and uncertified interlocutory orders. By giving discretion to the courts of appeals, the Proposal avoids the problems inherent in attempting to codify all of the interlocutory orders that may be appealed. The parties to a dispute are in the best position to persuade or dissuade the court of appeals to grant appeal of an interlocutory order.

Competing Considerations

It may be argued that the latitude granted by the Proposal to the courts of appeals is too broad to assure review of important interlocutory bankruptcy orders, diminishing the stare decisis benefits of direct appeals.

Example of Draft Statutory Provision

28 U.S.C. § 1293. Bankruptcy court decisions

(a) The courts of appeals shall have jurisdiction of final judgments, orders and decrees of bankruptcy judges entered in cases and proceedings under section 157 of this title. An appeal under this subsection or under subsection (b) shall be taken only to the court of appeals for the judicial circuit in which the order or decree is entered;

(b) The courts of appeals shall have jurisdiction of the following orders:

(1) Interlocutory orders and decrees of bankruptcy judges,

(A) granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions;

(B) modifying or refusing to modify the automatic stay created by section 362 of title 11;

(C) appointing a trustee or refusing to appoint a trustee, authorizing a sale or other disposition of property of the estate; and

(D) increasing or reducing the time periods referred to in section 1121(b) and (c) of title 11; and

(E) with leave of the court from other interlocutory orders and decrees.

(2) When a bankruptcy judge, in making an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate resolution of the proceeding, the bankruptcy judge shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made within ten days after the entry of the order; provided, however, that application for an appeal hereunder or under subsection (1) shall not stay proceedings in the bankruptcy court unless the bankruptcy judge or the Court of Appeals or a judge thereof shall so order.