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Supreme Court Issues Ruling on “Final” Bankruptcy Orders

The United States Supreme Court recently issued a ruling on bankruptcy orders, and when, exactly, they are considered “final.” While seemingly trivial and technical, this area of ambiguity has caused significant uncertainty for those seeking bankruptcy protection in the federal courts. By its ruling, the Supreme Court has clarified the rights of parties when they can appeal a decision regarding what is known as an application for relief from the automatic stay.

The ruling comes out of Ritzen Group, Inc. v. Jackson Masonry, LLC, in which the two parties were involved in a state court lawsuit over a contract claim before the defendant filed for bankruptcy and came under the protection of an automatic stay, preventing further collection efforts by its creditors until either the bankruptcy case was resolved or the stay was lifted. The plaintiff duly asked for relief from the automatic stay so they could proceed with their state court case. The bankruptcy court denied plaintiff’s request. The question then became whether the ruling on that relief was considered “final”.  If so, the plaintiff would be able to immediately appeal that ruling.  If not, the entire bankruptcy case had to proceed to completion before any appeal could be filed. The plaintiff chose not to immediately appeal the order denying relief from the automatic stay, and instead waited until the defendant successfully completed its entire bankruptcy case before filing an appeal.

According to the Supreme Court in Ritzen, even though the bankruptcy case as a whole was still ongoing, the ruling to grant or deny relief on the automatic stay constituted a final ruling which could be immediately appealed by the parties in the case. This ruling provides clarity for parties in future bankruptcy disputes and provides notice that creditors can appeal a denial of relief from the automatic stay more easily, and with far less delay, than they otherwise would.

The attorneys at Hunziker, Jones & Sweeney understand that financial distress is an extremely emotional and difficult time for anyone to go through, whether as an individual or as a business. If you are experiencing severe financial distress and may be considering bankruptcy as an option, or want to know more about what a bankruptcy filing may do to help you or your business, call The Law Offices of Hunziker, Jones & Sweeney at (973) 256-0456 or fill out our contact form for a consultation.

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