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How to File an Interlocutory Appeal in Bankruptcy

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The basis for a district court’s authority over a request to appeal an interlocutory order of the bankruptcy court is found under 28 U.S.C. § 158(a) (2) and (3). The procedural rules are provided by the Federal Rules of Bankruptcy Procedure 8001 to Rule 8017. To appeal an interlocutory order, a party must file a notice of appeal in compliance with Federal Rule of Bankruptcy Procedure 8001(a) and a motion for leave to appeal.

If the interlocutory order augments or reduces a debtor’s special right to file a Chapter 11 case plan, then the party has an involuntary right to appeal. 28 U.S.C. § 158(a)(2). However, interlocutory orders highlighting other issues can be appealed only with leave of the district court. 28 U.S.C. § 158(a)(3).

The Motion for Leave to Appeal: A motion for leave to appeal should be comprised of a statement of facts, matters to be presented on appeal, including the relief, wanted, a statement about why the appeal must be granted, and a copy of the order the party seeks to appeal. The Appellee opposing the motion for leave to appeal is required to file a response in the bankruptcy court within fourteen days. The bankruptcy court’s clerk must send the motion and answers, if any, to the district court for a decision following the end of this time limit. It’s possible for the clerk of the bankruptcy court to transmit the notice and motion for leave to appeal prior to the expiration of this time limit. In this situation, the party must file the answer in the district court within the fourteen-day period provided by Rule 8003(a).

Ruling on the Bankruptcy Appeal: Neither Rule 8003 nor section 28 U.S.C. § 158(a) (3) requires the court to verify the case for interlocutory appeal. Ultimately, it’s the district court’s ruling that decides whether an interlocutory appeal will proceed or not. Further, according to Rule 8003(c), the district court may grant leave to appeal even without a motion for leave to appeal on fil, or order the appellant to file a motion for leave to appeal. An interlocutory appeal may be approved under section 1292(b) when the issue in the appealed order includes a controlling issue of law, involving a significant ground for conflicting opinions, and an instant appeal from the order would significantly advance the definitive termination of the litigation. District courts are guided by the fundamental principle that appellate review must be delayed until the entry of an absolute verdict, and “exceptional circumstances” that require an interlocutory appeal should exist. Generally, interlocutory appeals are not preferred because they interfere with the prevailing objective of the bankruptcy system to promptly resolve important economic obscurities.

An interlocutory appeal process is appropriate when an adversary proceeding judgment does not decide all the parties’ claims. Nevertheless, an improved method may be to file a Rule 7054 motion. This makes the interlocutory order final upon an express determination that no existence of cause for postponement exists, and the entry of verdict is ordered. The jurisdiction of the courts of appeals is granted in section 158(d) (1), except in cases of direct appeals and certified interlocutory appeals. However, an interlocutory appeal may become irrevocable at the district court stage when the district court's order does not leave anything for the bankruptcy court to perform, other than to enter the final ruling. Hence, an appeal from the verdict of a bankruptcy court may be heard with leave of the district court either when the order is absolute, interlocutory, or as of right. See 28 U.S.C. §158. Further, according to the provisions of 28 U.S.C. §158(a) (3), an appeal from an interlocutory order may be heard only with the leave of the court. Moreover, only the district court or bankruptcy appellate panel can hear an appeal from an interlocutory order under this section. A circuit court of appeal’s jurisdiction is limited to final orders.

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