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Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.
The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

Jurisdiction: Appellate Process
Problem ReferencedProposed Solutions
Leon S. ForemanScholar-in-Residence - American College of Bankruptcy - Selective Professional Association of 7, 13 & 11 Attys; Accts; Professors; Judges * Gov't Officials (Approx. 300 Fellows).
28 U.S.C. § 158
Two levels of appeals of bankruptcy court orders is time consuming, costly and creates huge stare decisis problems.Direct Appeals to Circuit Court. Appealability of material orders should be as of right, although currently treated as interlocutory.
Hon. Leif M. ClarkJudiciary; United States Bankruptcy Court for the Western District of Texas
28 U.S.C. § 157(d)
It is common in some districts for the district judge to "refer" bankruptcy appeals to a "magistrate" judge. The net result of this practice is that the decision of one non-Article III court is being reviewed by another non-Article III court, defeating the clear intentions of Congress in the 1984 amendments to assure Article III review of bankruptcy court final orders adjudicating arguably private rights disputes, changes which were made in direct response to Marathon. Such appeals could be unconstitutional.Minor clarifying amendments to 28 U.S.C. § 157(d) and 28 U.S.C. § 636 would easily remedy the problem.
American Bankruptcy Institute Statement Before NBRCNation's largest multi-disciplinary organization devted to researcg and education issues related to insolvency.Oral Testimony
on June 20, 1996
28 U.S.C. 158
Whether the current appellate structure worksThe current bankruptcy appellate structure is not only time consuming and expensive, but because the appeal is conducted by another trial judge, the appeal lacks precedential value. The historical background behind the present appellate structure to the U.S. District Court is largely based on outdated reasons that were valid only during the period of the Bankruptcy Act.
Philip B. SchwartzThe Business Law Section of the Florida Bar
The appellate process is too slow.The Commission should consider whether to amend 28 U.S. § 158 to speed the appeal process by either (i) mandating that each of the Appellate Circuits establish a BAP; or (ii) eliminating appeals to the District Court and allowing direct appeals to the Circuit Court
Gary White, on behalf of the Natl. Assoc. of Credit ManagementChair, Government Affairs Comm., Natl. Assoc. of Credit Management

Working group's proposal regarding interlocutory appeals could create unneccessary delays in court administration.NACM opposes the working group's proposal on interlocutory appeals.
Geraldine MundBankruptcy Judge (C.D. Cal.)

The author comments on the need for certainty in appellate law: 1. Participants in bankruptcy cases, who are among those least able to afford extensive appellate review, are burdened with an additional level of appellate review not required of other cases in the federal system. Thus, even though there is an appeal "of right" to the Circuit Court of Appeals, it is seldom taken because of the financial burden on the parties, leading to great uncertainty of the law. 2. As the district court sitting as an appellate court does not bind itself to its own decisions, trial courts have absolutely no certainty with respect to the law of the district or circuit. The first level of appeal needs to be binding on all trial level courts in that circuit. The author cites to her opinion in In re Barakat, 173 B.R. 672 (Bankr. C.D. CA, 1994), in which she holds that Bankruptcy Appellate Panel decisions are binding on all bankruptcy courts in a circuit, but not on district courts as trial courts (athough they should be persasive) within the same circuit, or the district courts as appellate courts. 3. As a result of this uncertainty, bankruptcy courts are creating law through voluminous dialogue of opinions, none of which are binding. This process is inefficient. Moreover, the constitution requires that there be uniform laws of bankruptcy on a nation-wide basis.Bankruptcy court process should be reformed to provide that the first level of appeal is binding on all trial level courts in that circuit.
Geraldine MundBankruptcy Judge (C.D. Cal.)Copy of opinions
from In re Barakat

While the author agrees that there should be a direct appeal from the Bankruptcy Court to the Circuit, she notes that if the Bankruptcy Appellate Panels are to be retained, it is critical that the law clairfy who is bound by their rulings. Such a law would be the only way to determine this issue as there is no way to force the circuits to rule on this matter. By way of example, she encloses three of her opinions on the case of In re Barakat. 173 B.R. 672 (Bkrtcy. C.D. Cal. 1994).NBRC should create legislation that defines who is bound by rulings of the Bankruptcy Appellate Panels.
National Bankruptcy ConferenceNational Bankruptcy Conference (NBC), Bernard Shapiro - Chair

National Bankruptcy Conference believes that the following issue merits study by the NBRC: whether bankruptcy appeals should be made directly to the Court of Appeals. The current two-step appellate process is a waste of judicial resources and needlessly delays the resolution of bankruptcy cases.Bankruptcy system should be restructured so that appeals are made directly to the Court of Appeals.
Commercial Law League of AmericaCommercial Law League of America (CLLA)

The Commerical Law League of America believes that the following issues should be considered by the NBRC: (1) whether the current appellate system should be changed to eliminate the district court review; (2) whether Congress should eliminate provisions which require withdrawl of the district court's reference to the bankruptcy court.The CLLA believes that the first issue should receive top priority, and the second should receive moderate priority. While the second issue is interesting, it is probably not worth the investment of the NBRC's limited resources.
Arthur J. SpectorBankruptcy Judge (E.D. Mich.)Copy of opinion
from In re Dow
Corning Corp.

While the author has no strong opinion in the wisdom of having Bankruptcy Appelalte Panels, he suggests that better staffing of the panels would dispel much of the criticism they have drawn.In order to address institutional and constitutional concerns, the Bankruptcy Appellate Panels should consist of two Article III juducial officers (either a district judge and a circuit judge or two district judges) together with one bankruptcy judge. Every order the Panel issues should require at least two votes. The presence of the Article III judge will give the orders precedential effect, and the Bankruptcy Judge will contribute expertise.
Arthur J. SpectorBankruptcy Judge (E.D. Mich.)Copy of opinion
from In re Dow
Corning Corp.

Current appellate process is flawed because (1) in small cases, parties rarely have the financial wherewithal or amount at stake to proceed through two trials and two appeals, and (2) by the time a second appeal is concluded, important events could either moot the appeal or be substantially delayed at great prejudice to the litigants or other parties in interest.The author also supports the creation of direct appeal to the Courts of Appeals.
Leon S. FormanOn behalf of the American College of Bankruptcy (ACB)"Revised Summary of College Positions," and names and addresses of ACB focus group members

ACB concludes that two levels of appeal in bankruptcy proceedings of final orders as of right lead to delay in achieving a final resolution of disputes as well as increased costs. In addition, because an appellate decision by a district judge is not binding precedent, the same issues are constantly being relitigated.ACB recommends that direct appeal from the Bankruptcy Court be created, thereby eliminating the intermediate appeal to the District Court. If intermediate appeal is to be retained, Bankruptcy Appellate Panels (BAP's) consisting of bankruptcy judges should be mandatory in every circuit. If a BAP is made mandatory, the legislation should provide that a BAP decision is binding precedent upon bankruptcy judges in that circuit.
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material

In this statement before the NBRC, the author states that ABI members generally believe that appeals to the U.S. District Court are not only time consuming and expensive, but the resulting appeal lacks precednetial value and frequently is not affordd the same degree of analytical review as an appellate panel decision.Supports an amendment that would eliminate appeal of bankrtupcy cases to U.S. District Courts.
John P. Hennigan, Jr.Professor, St. John's University
28 U.S.C. §§ 158, 1291, 1292, 1334, 1452305The author provides a copy of an article he wrote entitled "Thoughts on Regularizing the Bankruptcy Appeals Statutes." The author concludes that the confusion besetting appealability in bankruptcy would be consdierably dissipated if the courts would adhere to the non-bankruptcy federal law of appealability unless departure is justified by some clearly-articulated peculiarity of bankruptcy litigation.28 U.S.C. §§ 158(a), 158(d), 1291, 1292, 1334, and 1452 and 11 U.S.C. § 305 should be amended to eliminate "irregularities" and "regularize" their application. Suggested statutory language is provided.
New York Law JournalCorporate Update column, The New York Law Journal (author not listed)

In this article entitled "Lawyers Wary of New System Begun This Month," the author reports that "[the Bankruptcy Appellate Panel] program begun this month in the Second Circuit is aimed at speeding up bankruptcy appeals and bringing a degree of specialization to the process." The program, however, has met skepticism from local bankruptcy attorneys who say the problems intended to be corrected do not exist in the Second Circuit.None.
Paul BaisierAttorney

11Author heard that commission is seriously considering having banruptcy appeals heard directly by the court of appeals. That was the thrust of an article he and David Epstein wrote in the American Bankruptcy Law Journal in the Fall or 1995.Author supports having bankruptcy appeals heard directly by the court of appeals.
Richard H. WalkerGeneral Counsel, Securities and Exchange CommissionDocument entitled "Issues Identified by Division of Enforcement and Office of General Counsel of Securities and Exchange Commission for Consideration by Bankruptcy Review Commission.

Currently, appeals from bankruptcy courts are taken to the district courts. In the majority of cases, the district court decision is unpublished. Reversals of bankruptcy decisions often do not get reported. This is a particular problem where the bankrutpcy court published its decision and it is erroneously being cited as precedent.A table system should be established in the Bankruptcy Reporter to publish the outcomes of bankruptcy appeals.
Robert M. ZinmanProfessor of Law, St. John's UniversityMemo dated May 19, 1997 to Bob Zinman from John Hennigan

Author is forwarding copies of two articles written by Prof. John Hennigan dealing with the same subject matter as Proposal #4 of the Jurisdiction Working Group. Copies of the articles were not included in the material for the database.See articles.
Richard L. HaeusslerAttorney

"I believe that an appeal to the District Court is a waste of time.""I do believe that the review by the BAP is a worthwhile substitute. and (sic) then review by the Circuit Court of Appeals. One change I would suggest is that no oral argument be allowed for appeals to the Circuit Courts unless the Court asks for argument. The Court could ask for supplemental briefing in lieu of oral argument at its option."


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