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Aug. 24, 2022

Demystifying bankruptcy appeals

See more on Demystifying bankruptcy appeals

M. Jonathan Hayes

BAP law clerk , U.S. Bankruptcy Court - Southern District of California


Consumer bankruptcy attorneys in my experience tend to see appeals as a massively expensive undertaking fraught with unfamiliar rules and the threat of sanctions at every turn. That is not the reality. The purpose of this short article is to allay those fears. It's a fun and satisfying process; dive in, says I.

Final order

You can only appeal a "final" order. That is not easy to figure out in the bankruptcy arena. The Supreme Court recently considered whether an order denying stay relief was a final order. It said that a final order is one which "disposes of a procedural unit anterior to, and separate from, claim resolution proceedings." Huh? See Ritzen Group, Inc. v. Jackson Masonry, LLC, 140 S.Ct 582 (2020). You would be surprised how often the issue comes up. Two important points: 1) If you appeal a non-final order, you will not be flogged at high noon. You will be politely invited to explain why it is final. If it is not final, the appeal will be dismissed and no harm, no foul. 2) if the order is final, you must timely file the Notice of Appeal or forever hold your peace.

Choosing the District Court or the Bankruptcy Appellate Panel (BAP)

This is discussed as part of every MCLE on bankruptcy appeals. Everyone has an opinion. Follow the Hayes Rule. Choose the BAP. Your appeal will be assigned to three bankruptcy experts. They will focus on your case and your issues. They know what you are talking about. And they will go through a huge amount of effort not only to get to the right result but to explain why it is the right result. The oft-heard comment that the BAP rubber stamps their bankruptcy judge buddies is nonsense. The only time you might consider a district court appeal in my view is when the order comes from state law and has nothing to do with bankruptcy.

The Notice of Appeal

The Notice of Appeal is a two-page form which must be filed 14-days after the order is entered. The time limit is jurisdictional. One minute late is too late. On the other hand, there is no downside to filing it early. You can even file it before the order is entered. It will be effective as of the date the order is entered.

Complete the form, attach the order and file it with the bankruptcy court. The bankruptcy court clerk will send it to the BAP unless one party or the other chooses the district court.

Designating the Record and Ordering Transcripts

Within 14 days after the Notice of Appeal is filed you must file a designation of record and a statement of issues with the bankruptcy court. You must also order the transcripts of the hearings at issue.

The designation of record is simply a list of the pleadings, already on the bankruptcy court docket, that the bankruptcy court considered when reaching the decision. Include the motion, the opposition, the reply, any supplements, etc. Include the complaint, the pre-trial order, trial briefs, supplements, and exhibits if you are appealing an adversary judgment. The list is not binding on you if you forget something.

The statement of issues can be included in the same pleading as the designation of record. You don't need ten issues. "Did the bankruptcy court err in denying creditor's motion for relief" will do it. The statement will not limit you later unless perhaps your statement is misleading and thereby prejudices the other party.

As to the transcripts of hearings, they are important. There are forms to complete and submit to the bankruptcy court recorder and fees to be paid although the cost is rarely significant. File a statement with the bankruptcy court noting which transcripts are necessary in the appeal and that you have ordered those. Then stay on top of that. Make sure the recorder got the form and the transcripts are coming.

The Briefs - time for filing

The BAP will send you a letter immediately telling you the due date for your opening brief which will be two to three months later. Appellee's responsive brief is due 30 days after that and appellant's reply brief 14 days after that. Either party can ask for a 30-day extension of the due date of the brief. It's a two-page motion. Extensions are routinely granted by the BAP. If you wind up in the district court, the court may not give you deadlines and then the due dates are triggered by the Rules meaning 30 days after the bankruptcy court "certifies the record." And be careful asking the district court for extensions. Don't assume you will get one.

The Briefs - telling your story

The task of writing the brief should not be intimidating. As appellate attorney extraordinaire Myron Moskovitz likes to say, "tell your story." Don't bury your story in legalese. The BAP judges know bankruptcy law and have likely dealt with your issue many times. But they don't know your facts, your story. You don't need four-five-six case citations for everything. When you do cite a case, make sure you explain why the case supports your position. Stick to Supreme Court and 9th circuit cases unless there aren't any.

If you did a decent job telling your story to the bankruptcy judge, the brief to the BAP is at least well on its way. If you did not tell the bankruptcy judge which code section or rule gives you the right to relief or present facts showing you have the right to what you want, the appellate judges will not give you much sympathy. With a couple very narrow exceptions, arguments not made to the bankruptcy court are waived on appeal.

The Briefs - the word limits

There is a word limit of 13,000 words for the opening briefs. The most common complaint I have ever heard among appellate judges is that the briefs are typically too long. Aim for 5,000 to 7,000 words and don't be afraid to turn in a brief with fewer words than that. Winston Churchill said it well, "the length of this document protects it well from the risk of ever being read."

The Excerpts of Record

You must upload the excerpts of record, sometimes called the appendix, with your opening brief. The record is a big deal to the BAP judges. They will review the pleadings the bankruptcy court reviewed as you set forth in your previous designation of record. They will review the transcripts of the hearings. Don't add a ton of additional documents that have little relevance to your appeal. Continuances, stipulations, requests for judicial notice with documents already in the record clutter the record.

The good news? You will never send a single piece of paper to the BAP. The electronic copy of everything you upload is sufficient.

The BAP Litigant's Manual

The BAP has a Litigant's Manual on its website: an excellent summary of all the rules and technical requirements including excellent practice tips. It is an easy read. And in my experience a simple phone call to the BAP office in Pasadena will get you a real person on the phone happy to help you. As I said, dive in, the water's fine.

M. Jonathan Hayes is BAP law clerk to Hon. Laura Taylor in San Diego. The views and opinions in this article are his alone. He is a bankruptcy specialist certified by the State Bar of California, Board of Legal Specialization and a senior adjunct professor of law at University of West Los Angeles.


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