Sixth Circuit: Rejection of Chapter 11 Plan not a “Final Appealable Order” for Purposes of Appellate Jurisdiction
Lindsey v. Pinnacle Nat’l Bank (In re Lindsey), Appeal No. 12-6362 (6th Cir., Aug. 13, 2013)
The Sixth Circuit held this week in a published opinion that a bankruptcy court’s denial of confirmation of a Chapter 11 plan is not a final appealable order. In so holding, the Sixth Circuit joins four other circuits, while three other circuits have held to the contrary.
In Lindsey, the Chapter 11 individual debtor proposed a reorganization plan in which he would retain property. Impaired creditors objected to the plan, arguing that it did not comply with the “absolute priority rule,” which bars debtors from retaining any property unless the reorganization plan pays all dissenting creditors in full. The debtor argued that under BAPCPA, the absolute priority rule does not apply to individual debtors in Chapter 11 cases. The bankruptcy court denied confirmation, and the district court affirmed. The debtor appealed to the United States Court of Appeals for the Sixth Circuit.
Without reaching the merits of the appeal, the Sixth Circuit dismissed the appeal for lack of jurisdiction and vacated the district court’s order. The Sixth Circuit held that the district court’s rejection of the reorganization plan did not create a final appealable order. The court noted that orders may be appealed to the Sixth Circuit if they are “final judgments, order, and decrees,” or they may be received for interlocutory review if they are first properly certified and accepted.
Here, the district court’s order was not certified for interlocutory review, and the Sixth Circuit found that the order was not a “final” order. The Sixth Circuit reasoned that although confirmation of the plan was denied, the debtor must still propose another plan, which might be confirmed. The court rejected the proposition that bankruptcies demand a flexible approach to finality given number of parties involved and number of issues at stake. If such flexibility is required, orders may be certified for interlocutory review.
Because a circuit split exists on this issue, it may be prime for review by the Supreme Court. It is not yet known whether a writ of certiorari will be filed.
Laura's practice focuses on bankruptcy, municipal law, collections, and trial-level and appeals litigation. In the bankruptcy arena, she represents primarily Chapter 7 trustees. Laura has handled a wide range of trial and appellate matters for individual and business clients and has appeared before the U.S. Sixth Circuit Court of Appeals, the Michigan Court of Appeals, and the United States Bankruptcy Court for the Western District of Michigan, as well as Michigan circuit and district courts across the state.View All Posts by Author ›