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How to Appeal a Bankruptcy Court Decision

The media report or dramatize appeals all the time. However, because bankruptcy courts are not typical federal courts created by Article III of the U.S. Constitution, you might want to know how appeals work in New York bankruptcy. Here’s the answer.

28 U.S.C. § 158 establishes the authority of federal district court in the district where a bankruptcy case is pending as having subject matter jurisdiction over appeals in bankruptcy cases. However, not every decision by a bankruptcy court judge can be appealed. Debtors can only contest final judgments, orders, and decrees in a higher court. What’s the difference between these?

  • Examples of final orders are decisions in adversary proceedings, motions for relief from the automatic stay, the validity of exemptions, and dismissal orders.
  • Interlocutory orders are provisional decisions on legal issues. These can only be appealed when the bankruptcy court gives the party leave to do so. The only exception is interlocutory orders relating to increasing or decreasing the time limits for filing chapter 13 repayment plans.
  • An example of a decree is the final decree given by the bankruptcy court when non-exempt property in the bankruptcy estate has been distributed to the creditors. Often the decree will occur after the discharge.

Some circuit courts have convened bankruptcy appellate panels to decide bankruptcy appeals instead of district courts. The 2nd Circuit, which contains New York, has not done so, but you might hear about bankruptcy appellate panels deciding cases in other parts of the country.

Sometimes bankruptcy cases will be appealed again, this time to the circuit court of appeals for the district the bankruptcy case was pending in. There are rare circumstances when after a final order is entered, an appeal goes directly from the bankruptcy court or the district court (or the bankruptcy appellate panel) to the circuit court without an intervening decision. This can only happen when one of the lower courts, either on its own initiative or on motion by one of the parties, or all the appellants and appellees certify that one of the three situations is present:

(1)  The final order governs an issue that hasn’t been decided by either the circuit court or the U.S. Supreme Court, or involves a matter of “public importance.”

(2)  The final order requires a higher court to reconcile conflicting decisions.

(3)  An appeal would “materially advance” the bankruptcy case.

These might sound like open-ended situations that give rise to endless appeals, but they really don’t come up often.

Importantly, parties wishing to appeal a final order have only 10 14 days, including weekends and holidays, to file their appeals. This is a fairly short window, shorter than the one for appeals in other federal court cases.

Bankruptcy appeals can take a long time to resolve, so if you have reason to believe that your case has some kind of legal issue that will require an appeal, then you will definitely need an experienced New York bankruptcy lawyer to handle the matter.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy lawyer Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

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