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Should a bankruptcy court’s preliminary injunction be subject to appellate review? Taking the negative position, the U.S. District Court for the Eastern District of New York recently held that it had the “discretion … to decline to hear” an appeal from a bankruptcy court’s preliminary injunction. Navient Solutions, LLC et al. v. Homaidan et al., 2022 WL 17252459, *4 (E.D.N.Y. Nov. 28, 2022), quoting In re Kassover, 343 F.3d 91, 95 (2d Cir. 2003) (Note: The author succeeded in losing the appeal in Kassover.) The court’s unremarkable findings purported to support its position: a) the preliminary injunction was not a final order; b) leave to appeal was not warranted; and c) the appellant failed to show why the “extraordinary remedy” of mandamus was warranted. But the court conceded that district courts are split on the important issue of whether bankruptcy court preliminary injunctions, admittedly interlocutory, are appealable to the district court as of right under 28 U.S.C §1292(a)(1) (courts of appeals have jurisdiction, and appellate review exists as of right over “interlocutory orders … granting [or] refusing … injunctions”). In the court’s view, 28 U.S.C. §158(a)(1) required the court to review only “final” orders and “does not mention preliminary injunctions.” Id. at *2. Besides, said the court, the bankruptcy court will eventually “revisit the merits and appropriate parameters of the Preliminary Injunction.” Id. at *3.
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Appellate Courts Skeptical About Bankruptcy Court Sanctions
By Michael L. Cook
Recent appellate decisions reflect a distaste for appeals from bankruptcy court sanction orders. A split Fourth Circuit even refused to hear such an appeal. Other courts tend to limit sanctions or, alternatively, accept a bankruptcy judge’s findings under a stringent “abuse of discretion” standard.
Supreme Court’s Rejection of Purdue Pharma Settlement Redefines Releases In Chapter 11
By Angelo Castaldi
The U.S. Supreme Court has issued its most anticipated bankruptcy decision in recent memory. In a 5-4 decision entered June 27, the Supreme Court struck down the nonconsensual third-party releases. Writing for the Court, Justice Neil Gorsuch ruled that nothing in the Bankruptcy Code authorized the nonconsensual release or discharge of claims of opioid victims against the Sacklers, who were not debtors themselves.
Ninth Circuit: Debt In Asset Case Is Nondischargeable If Debtor Fails to Properly Schedule the Debt
By Lawrence J. Kotler and Geoffrey A. Heaton
In a recent published decision, the U.S. Court of Appeals for the Ninth Circuit addressed a previously unresolved question in that circuit: whether a debtor’s failure to properly schedule a debt in an “asset case” renders the debt nondischargeable.
Is the Rule Preventing Bankruptcy Judges from Appointing Special Masters Outdated?
By Mark B. Conlan and Noel L. Hillman
Rule 9031 of the Federal Rules of Bankruptcy Procedure prevents all bankruptcy judges, and, if broadly interpreted, any federal judge hearing bankruptcy cases and proceedings, from appointing special masters. The rule has not been amended since its adoption in 1983. It is outdated and should be repealed or amended to accord with the reality of today’s complex Chapter 11 cases.