Vol 12 (2015) - Issue 6

Article preview

An Order Denying Confirmation of a Plan in Chapter 13 is not an Immediately Appealable 'Final' Order

In the United States, district courts have jurisdiction to hear appeals in bankruptcy actions from (i) 'final judgments, orders, and decrees', (ii) 'interlocutory orders and decrees' issued under Bankruptcy Code section 1121(d) that increase or reduce the debtor’s exclusive period to file a plan; and (ii) other interlocutory orders and decrees with leave of the court. In other words, if an order is 'final', it can be immediately appealed, but if it is interlocutory (i.e., not final), the appellant must first obtain leave of the court. The ability to seek immediate appellate review is often essential – but when is an order 'final'? In the bankruptcy context, 'final' is not the same as in ordinary civil litigation, because a bankruptcy case involves 'an aggregation of individual controversies', many of which would be stand-alone lawsuits but for the bankruptcy case. The test is more flexible, and generally allows an order to be final when it definitely resolves a discrete dispute within a larger case.
Flexibility, however, sometimes results in uncertainty as to whether an order will be deemed final or interlocutory. For example, while it is generally understood an order confirming a plan of reorganisation is final, circuit courts disagreed as to whether an order denying confirmation of a repayment plan under chapter 13 of the Bankruptcy Code was final or interlocutory. On 4 May 2015, the Supreme Court of the United States (the 'Supreme Court') sided with the majority in the circuit split and held that an order denying confirmation of a repayment plan pursuant to a chapter 13 bankruptcy case is not a final order that the debtor can immediately appeal. The decision is silent as to whether it applies to corporate reorganisations in chapter 11 of the Bankruptcy Code, but it may well be influential with respect to the finality of such orders in chapter 11.

Background
Petitioner Louis Bullard filed a petition under chapter 13 of the Bankruptcy Code, which enables individuals with regular income streams to obtain some debt relief through a repayment plan while remaining in possession of their property. Under a repayment plan confirmed by the bankruptcy court, debtors repay (usually a part of) their debt from their future income within three to five years, and are discharged from the residual debt thereafter if they successfully carry out the plan.