The United States Supreme Court typically hears less than one hundred full cases each year, and out of that small sample, usually only one or two involve the federal bankruptcy laws.
But on May 20, 2019 the Supreme Court announced that it will decide a bankruptcy dispute in the next term, which begins in October, 2019.
The case that’s going all they way to Washington is called Ritzen Group v. Jackson Masonry, and the issue at stake is whether a bankruptcy judge’s ruling against a creditor’s request to lift the automatic stay is a “final order” that can be immediately appealed by the losing party.
Ritzen Group and Jackson Masonry were involved in a failed real estate deal several years ago that ended up in litigation in a Tennessee state court. Then Jackson Masonry filed for Chapter 11 bankruptcy protection; as soon as the bankruptcy case was filed, the state court case was immediately frozen by the automatic stay that goes along with bankruptcy protection.
Ritzen filed a motion asking the bankruptcy judge to lift the stay so their lawsuit could proceed, but the judge refused to do this and denied the motion. Ritzen then filed a Proof of Claim in bankruptcy court, but that was denied as well. Frustrated, they then appealed both losses, but were told they had missed the fourteen day window for appealing a final order concerning the automatic stay.
In most civil cases, only final orders can be immediately appealed; this prevents the litigants from bogging down the system with premature appeals. The Supreme Court now faces the question of whether the same logic applies to a bankruptcy judge’s ruling on whether to lift the automatic stay or not.
It is already generally known that an order granting a request to lift the stay is “final” and can be appealed; the Jackson Masonry case will decide if a denial of the motion will be treated likewise.
Expect the case to be argued in the fall of 2019, with a decision likely some time in early 2020.