On May 4, the U.S. Supreme Court ruled that debtors are not entitled to immediately appeal if a bankruptcy court refuses to confirm their proposed repayment plan. The court's unanimous ruling will impact bankruptcy filings in Pennsylvania and across the nation.
On December 14, 2010, the owner of a Randolph, Massachusetts, home voluntarily petitioned the court for a Chapter 13 reorganization of the property's $387,000 mortgage, which is held by Blue Hills Bank. He amended his filing three times over the next two years. His final amendment added a controversial hybrid repayment proposal that split his debt into a secured claim, which was backed by the property, and an unsecured claim. The secured claim would be paid in full over five years, but only a small portion of the unsecured claim was scheduled for repayment. The plan was rejected by Blue Hills Bank, and a bankruptcy court also rejected his plan on July 24, 2012.
The owner appealed, and a bankruptcy appellate panel and a circuit court split over whether he had the right to appeal because the bankruptcy court's rejection was not a final order. However, the bankruptcy court's rejection was ultimately affirmed. He then appealed to the Supreme Court, arguing that a "long line of decisions has established that finality in bankruptcy is a broader concept than finality in ordinary civil litigation." The high court ruled that as long as an individual or company remains free to amend a bankruptcy filing, a confirmation rejection is not a final order and cannot be appealed.
This case demonstrates that obtaining court approval for Chapter 13 reorganization can sometimes be a long and complex process. Any debtor who has had their repayment plan rejected by a court may wish to work with an attorney to amend their bankruptcy filing.
Source: Courthouse News Service, "Bankruptcy Plan Appeal Fails to Sway High Court," Dan McCue, May 4, 2015