Insolvency and Secured Transactions

It Ain't Over Till It's Over; or Is It?

Author: Andrew Turner

The U.S. Supreme Court, on January 14, 2019, handed down a unanimous decision on appealability of an order denying relief from stay in bankruptcy court. Resolving a circuit split, the Supreme Court held an order denying a motion for relief from the automatic stay is immediately appealable “when the bankruptcy court unreservedly grants or denies relief.”

Speaking for a unanimous court, Justice Ginsburg stated that a lift stay motion is a procedural unit separate from the remainder of the bankruptcy case, even though the decision may potentially be pertinent to other disputes in the case. In discussing finality, Justice Ginsberg noted the usual rules of finality are not attuned to the distinctive aspects of bankruptcy litigation, quoting Colliers. Thus, unlike the more traditional notions of finality which apply in non-bankruptcy litigation, matters in bankruptcy court may be appealable when they “definitively dispose of discrete disputes within the overarching bankruptcy case.”

Justice Ginsberg did note that the Court was not deciding whether an order denying relief from stay without prejudice to later renewal was appealable. This could leave creditors exposed, should a bankruptcy court deny stay relief without prejudice to renewal as the bankruptcy case progresses. In the facts before the Court in this case, Justice Ginsberg pointed out, the Bankruptcy Court order denied stay relief and left nothing more for the Bankruptcy Court to do in that proceeding.

The Court’s ruling leaves the creditor bound by the Bankruptcy Court’s underlying holdings, as the creditor did not appeal within 14 days of the Court’s denial of its stay motion, waiting to appeal until after confirmation of a plan in the Bankruptcy Court.

The case discussed is Ritzen Group, Inc. v. Jackson Masonry, LLC, case no. 18-938 (slip op. January 14, 2020).

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