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BankruptcyThe Bankruptcy StrategistFeatures

Third Circuit Sides With Magistrates On Bankruptcy Appeals

By Michael L. Cook
June 30, 2025

“We hold that, upon consent of the parties and referral by a district court, a magistrate judge may enter a final judgment in a bankruptcy appeal.” In re MTE Holdings LLC, 2025 WL 5682927*4 (3d Cir. May 7, 2025). This holding represents a split with the Fifth and Seventh Circuits. See, e.g., In re Elcona Homes Corp., 810 F. 2d 136, 140 (7th Cir. 1987) (“… the district court did not have the authority to refer the appeal from the bankruptcy court to a magistrate….”); Minerex Erdoel, Inc. v. Sina, Inc., 838 F. 2d. 781, 785 (5th Cir. 1988) (“… reference by District Court to a magistrate of an appeal from a bankruptcy court decision was not proper.”) See also, Virginia Beach Fed’l. Sav. and Loan Ass’n. v. Wood, 901 F.2d 849, 851 (10th Cir. 1990) (dicta) (“… magistrates are not permitted to enter final decisions in bankruptcy appeals.”). Most significant, MTE effectively overrules In re Morrissey, 717 F. 2d 100, 101 (3d Cir. 1983), an earlier Third Circuit decision relied on by the Seventh and Fifth Circuits in Elcona and Minerex.

Procedural Facts


The bankruptcy court had awarded summary judgment for the defendant in an adversary proceeding over withheld royalties. The plaintiff appealed to the district court, but the parties on the appeal had “consented to proceed before a magistrate judge for all proceedings, including final judgment.” Id., at *1. Relying on 28 U.S.C. §636(c), the magistrate judge (hereinafter “magistrate”) affirmed the bankruptcy court’s judgment, but the Court of Appeals affirmed in part and remanded on the merits after disposing of the jurisdictional issue. But the appellate jurisdictional analysis here is important.

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