Even one year removed from the Supreme Court’s decision in Stern v. Marshall, which challenged the jurisdiction of a lower bankruptcy court, many practitioners and lenders alike are still left with unanswered questions regarding the “finality” of their bankruptcy court judgments. Recently the Eleventh Circuit Court of Appeals, in the case of In re Celotex, weighed in on the matter, finding that the court of appeals does not have jurisdiction to review a bankruptcy court decision when the lower district court chose not to exercise discretion to review an appeal of a bankruptcy court order.
The decision is narrow, but important, especially for lenders embroiled in complex bankruptcy proceedings. Although the Eleventh Circuit confirmed that the district court may review interlocutory judgments and orders of a bankruptcy court, the Eleventh Circuit has now held that such discretion is final. Thus, a litigant who disagrees with a bankruptcy court’s judgment, and is denied an appeal by the district court, now lacks the ability to appeal such a denial to the appellate court.
Although Celotex largely avoids the jurisdictional questions raised in Stern, it does clarify that if and when a district court declines to exercise appellate jurisdiction over a Bankruptcy Court’s judgment or order, the unsuccessful litigant may not bring its appeal to the Court of Appeals. Such finality is a potential financial boon for creditors, because a debtor may not use the appellate process to further extend its bankruptcy proceeding and delay payments thereunder.