Legal Updates

Sixth Circuit Establishes a Two-Prong Test for Finality in Bankruptcy Appeals

The Sixth Circuit Court of Appeals recently addressed the issue of finality in bankruptcy appeal cases. In Ritzen Group, Inc. v. Jackson Masonry, LLC, case nos. 18-5157/5161 (6th Cir. 2018), the court established a two-prong test that should be applied when considering timing of an appeal from a bankruptcy court. The test is that “a bankruptcy court’s order may be immediately appealed if it is (1) ‘entered in a . . . proceeding’ and (2) ‘final’—terminating that proceeding.”  A “proceeding” is defined as “a discrete dispute within the overall bankruptcy case, resolved through a series of procedural steps.” A proceeding is “final” when “it is both procedurally complete and determinative of substantive rights.”

The motion to lift the automatic stay filed by Ritzen in the underlying case was found to be a “proceeding” and the order denying the motion was a “final” order. The Sixth Circuit determined that because the decision was final, it should have been appealed within fourteen days. Because Ritzen failed to meet that deadline, the Sixth Circuit affirmed the district court’s decision that the appeal was untimely. This recent opinion provides some clarity in determining the trigger for appeal deadlines.