High Court to Consider Bankruptcy Plan Denial

(CN) - The Supreme Court agreed Friday to consider whether a debtor who filed for Chapter 13 bankruptcy protection has a right to appeal when a court refuses to ratify his plan for repaying creditors.

The question arises from the case Bullard v. Hyde Park Savings Bank, in which the 1st Circuit held a bankruptcy court's order denying confirmation of the repayment plan was a final judgment, and therefore not appealable.

Petitioner Louis Bullard is the owner of a property in Randolph, Mass., on which the respondent, Hyde Park Savings Bank, holds a $387,000 mortgage.

On December 14, 2010, Bullard filed a voluntary petition for Chapter 13 bankruptcy, and over the next two years, he amended his filing three times, adding, finally, a proposed "hybrid" repayment scheme, which divided his debt into a secured claim, backed by the property, and an unsecured claim. Both of these were to be repaid over a five-year term.

On July 24, 2012, the bankruptcy court rejected the plan because it viewed Bullard's proposal as inconsistent with certain provisions of the Bankruptcy Code. On appeal, a bankruptcy appellate panel affirmed.

Bullard, however, was undeterred, particularly in light of a split among the circuits on the question of appeal ability in cases like his -- "A long line of decisions [that] has established that finality in bankruptcy is a broader concept than finality in ordinary civil litigation."

In his writ of certiorari, Bullard argued that orders denying confirmation of a given repayment plan should be appealable because they " ... resolve a discrete dispute the frequently is decisive for the balance of the bankruptcy case.

"The debtor should not have to engage in a cumbersome and doubtful procedural maneuver to obtain appellate review of a plan denial," he continued. "Such a requirement places an unjustifiable hurdle in the paths of debtors and nay effectively preclude their ability to obtain any review of meritorious claims."

Hyde Park Savings Bank also filed a writ of certiorari, stating that the "question presented herein is critical to the administration of bankruptcy proceedings in both the business and consumer context as corporate Chapter 11 plans are also implicated by this question."

It adds, "In the event that the Court grants the Petitioner's request for certiorari, the Court should resolve this critical question by affirming the decision of the First Circuit and the majority of other circuits that have considered this question."

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