Supreme Court holds bankruptcy stay a final order for purposes of appeal
© WikiMedia (David Dugan)
Supreme Court holds bankruptcy stay a final order for purposes of appeal

The US Supreme Court ruled Tuesday in Ritzen Group Inc. v. Jackson Masonry that a bankruptcy court’s order unreservedly denying relief from the automatic stay constitutes a final, immediately appealable order.

In bankruptcy, a creditor’s rights to collect a debt are automatically stayed once a debtor files a bankruptcy petition. The creditor must then obtain an order from the bankruptcy court granting relief from that stay to attempt collection or enforcement of other legal remedies.

The issue in Ritzen was whether such a stay constitutes a “final order” under 28 USC § 158(a)(1) thus, rendering the order immediately appealable. Justice Ruth Bader Ginsberg, writing for the unanimous court, wrote that it is.

Prior to bankruptcy in 2014, Ritzen sued Jackson in Tennessee state court over a failed $1.55 million real estate deal. However, just before trial, Jackson filed for bankruptcy, halting the lawsuit under the automatic stay. Ritzen was subsequently denied relief from the automatic stay and forced to litigate the matter in the bankruptcy court. Ultimately, the bankruptcy court found in favor of Jackson, triggering Ritzen’s appeal to district court on both the merits of the case and the bankruptcy court’s original denial for relief from stay.

While in civil litigation generally, a court’s determination is not “final” for purposes of appeal until completion of the entire case. However, bankruptcy is different, Ginsburg wrote.

“Adjudication of a motion for relief from the automatic stay forms a discrete procedural unit within the embracive bankruptcy case. That unit yields a
final, appealable order when the bankruptcy court unreservedly grants or denies relief,” said the court.