Checkett & Pauly, P.C.

Recent Developments in Bankruptcy Appeals

January 1, 1997, found Missouri bankruptcy practitioners faced with a dramatic change in appellate procedure. Until then all appeals were taken from bankruptcy court to U.S. District Court. Now the Eighth Circuit Bankruptcy Appellate Panel (BAP), consisting of six judges whose clerk is located at 1114 Market Street, Room 511, St. Louis, Missouri 63101, will hear all appeals. The change to the BAP calls for counsel to face new procedural requirements.

Under Bankruptcy Rule 8001 any aggrieved party may appeal a final judgment either to the district court or to the BAP so long as the notice of appeal and filing fee are filed with the bankruptcy clerk within the allowable time. Bankruptcy Rule 8002 requires the notice of appeal shall be filed with the bankruptcy clerk within ten days of the date of the entry of the judgment order. The notice must substantially comply with Official Form 17 which requires the names of all parties to the judgment, their addresses, and the phone numbers of the respective attorneys. The clerk of the bankruptcy court must serve notice of the filing of the appeal on each attorney of record. Bankruptcy Rule 8004. Local Rule 8004-1 of the Bankruptcy Filing Procedure Manual for the Western District of Missouri further requires counsel for the appellant to file sufficient copies of the notice of appeal for the clerk to effect service of mail for counsel for each party and the U.S. Trustee as well as two additional copies for the court, all together with self-addressed stamped envelopes for each party except the U.S. Trustee.

Rule 8002 allows counsel comfort that in the event of a premature filing, the notice of appeal will be treated as received on the date the judgment is actually entered. The bankruptcy judge may extend the time for filing the notice of appeal, under authority of Bankruptcy Rule 8002, unless the judgment grants relief from the automatic stay, authorizes the sale of property or the use of cash collateral, authorizes the obtaining of credit, authorizes the assumption of an executory contract or unexpired lease, approves a disclosure statement, or confirms a Chapter 11, 12, or 13 plan. Any request to extend the time for the appeal notice must also be filed within ten days. The court may allow a late filing upon a showing of excusable neglect.

Any party to an appeal may opt out of the BAP to have the matter heard by the district court. 28 U.S.C. § 158(c) However, the opt out time is short and absolute. The appellant must file the election to opt out at the time the appeal is taken. All other parties to the appeal must opt out no later than thirty (30) days after service of the notice of appeal. The filing of any document by any party to the appeal waives the right to elect to have the matter heard by the district court.

The BAP has an internal operating procedural manual as well as its own local rules. Counsel should carefully examine those documents for the exacting requirements which must be met for a successful appeal. Of course, these rules must be taken against the backdrop of Bankruptcy Rules Part VIII for all appellate procedure.

When the appeal is received by the clerk of the BAP, a briefing schedule is established. The transcript must be ordered within ten (10) days and must be filed thirty (30) days from the date the appeal is opened. Appellant's brief and appendix are due fifteen (15) days after the transcript is due. Appellee's brief is due fifteen (15) days after service of appellant's brief. Cases will be screened after briefing for oral argument. The panel hopes to have oral argument within sixty (60) days after the filing of the appellee's brief. Obviously, the BAP drafted its rules to keep all appeals on a fast track.

In keeping with the philosophy of a speedy resolution of appeals, the BAP has committed itself to render a decision within sixty (60) days after final submission.

Appellant's counsel should be aware that while Rule 8005 allows a stay pending appeal, in many instances a supersedeas bond is required. The bankruptcy judge may suspend the enforcement of the order, subject to the power of the district court and the BAP, while the appeal goes forward. It is important to remember there is a substantial body of law that if no stay is entered pending appeal and the judgment is fully enforced, the appeal is then moot and dismissed. In Re: Roller, 999 F.2d 346 (8th Cir. 1993).

Counsel should note there may be inconsistencies between the Bankruptcy Rules, the rules of the BAP, and the local rules for appellate practice before the district court. Counsel should carefully outline all three authorities to be certain an appeal goes smoothly. For example, this wake-up call: the BAP recently held that even though an appellant did not receive a copy of the judgment until the last day for filing the notice of appeal, counsel should have more carefully monitored the developments in the case and could not rely upon the exceptional circumstances doctrine to cure the late notice of appeal. In Re: Henry Brothers Partnership, 214 B.R. 192 (B.A.P. 8th Cir. 1997). What is more, the BAP narrowly defined "excusable neglect" in dismissing an appeal over counsel's allegation of a mistake in calculating the time for filing the notice of appeal. In Re: Food Barn Stores, Inc., 214 B.R. 197 (B.A.P. 8th Cir. 1997).

While bankruptcy appeals provide litigants with a second bite out of the apple, counsel must be exact to satisfy all procedural requirements or any chance for review will be lost.

This article by Kevin Checkett was originally published in the Missouri Lawyers Weekly newspaper.