From The Top In Brief - May/June 2015

On May 4, 2015, the U.S. Supreme Court handed down its first 2015 ruling in a case involving an issue of bankruptcy law. In Bullard v. Blue Hills Bank, No. 14-116, 2015 BL 129010, ___ S. Ct. ___ (May 4, 2015), the court reviewed a ruling by the First Circuit Court of Appeals that an order of a bankruptcy appellate panel affirming a bankruptcy court's denial of confirmation of a chapter 13 plan is not a final order and therefore is not appealable under 28 U.S.C. § 158(d), so long as the debtor remains free to propose an amended plan. See Bullard v. Hyde Park Sav. Bank (In re Bullard), 752 F.3d 483 (1st Cir. 2014), cert. granted, No. 14-116, 2014 BL 349325 (Dec. 12, 2014). The Second, Sixth, Eighth, Ninth, and Tenth Circuits had also held that such an order is not final so long as the debtor may still propose another plan. The Third, Fourth, and Fifth Circuits had adopted the minority approach that such an order can be final.

The Supreme Court affirmed the First Circuit's ruling, resolving the circuit split in favor of the majority approach. Writing for a unanimous court, Chief Justice Roberts explained that the finality rules in bankruptcy are different from those that apply in ordinary federal litigation because bankruptcy cases typically involve many discrete disputes within the larger case. For this reason, Congress has provided that orders in a bankruptcy case may be appealed immediately if they finally dispose of such a discrete dispute.

Confirmation of a chapter 13 plan, Justice Roberts reasoned, is immediately appealable because it "alters the status quo[,] . . . fixes the rights and obligations of the parties . . . and has preclusive effect." The consequences are similarly significant, he explained, when confirmation is denied and the case is dismissed because dismissal "dooms the possibility of a discharge and the other benefits available to a debtor under Chapter 13."

By contrast, according to Justice Roberts, denial of confirmation with leave to amend the chapter 13 plan "changes little" and " '[f]inal' does not describe this state of affairs." The conclusion that an order denying confirmation of such a plan with leave to amend is not final is bolstered by 28 U.S.C. § 157(b)(2)(L), which lists "confirmations of plans" as a "core" proceeding but does not contain any reference to confirmation denials.

A rule against immediate appeal of an order denying plan confirmation, Justice Roberts noted, avoids delays and inefficiencies...