The Impact of a Bankruptcy Filing on a Pending Appellate Proceeding

This article is a guide for lawyers who have questions about what happens when someone in a court case files for bankruptcy. It’s important for appellate lawyers to understand how bankruptcy can affect ongoing cases. When someone files for bankruptcy during an ongoing court case, it may stop the case from continuing. But if the bankruptcy case involves trying to get money from someone else, the automatic stay may not apply to the appeal. It’s important for the bankruptcy lawyer to let the court and other people involved in the case know about the bankruptcy filing. XYZ Corp. files a lawsuit against the debtor and wins. The debtor appeals the decision. Then, XYZ Corp. files another lawsuit against the debtor and wins again. The debtor appeals the second decision. The automatic stay applies to the second appeal because the original lawsuit was against the debtor. The fact pattern in example C has caused a lot of confusion for courts and lawyers. Some courts used to say that the automatic stay didn’t apply when a debtor wanted to appeal a decision against them. But now, most courts say that the automatic stay does apply in this situation. This means that the debtor is protected from having to keep going with the appeal while they’re in bankruptcy. If the debtor or someone else involved in the appeal still wants to go ahead with it, they can ask the bankruptcy court for permission. After a hearing, the bankruptcy court might allow the appeal to continue, with certain limitations. If a party in a court case files for bankruptcy, the court may put a hold on the case. The court will ask the parties to tell them if the bankruptcy court allows the case to continue, or if the hold is lifted. If nothing happens within 120 days, the parties need to give a status update. In some cases, the court may ask the parties to explain how the bankruptcy rules apply to their case.

If a person files for Chapter 7 bankruptcy, a trustee will usually handle any legal cases from before the bankruptcy. But if the trustee gives up the case, the person can still handle it. In Chapter 13 bankruptcy, the person can usually handle their own cases. Chapter 11 of the Bankruptcy Code is for reorganization. In a Chapter 11 bankruptcy, the debtor usually keeps control of their property unless a trustee is appointed. They can also continue with an appeal, but may need permission to do so if the appeal is against them. The impact of a bankruptcy filing on an appeal can vary, and may result in a delay, party substitution, or halt to the case. It’s important for lawyers to understand these principles when dealing with a party that has filed for bankruptcy. Some court cases have been affected by bankruptcy filings, and the automatic stay doesn’t always apply to appeals by the debtor. There are also cases where court orders for attorneys’ fees and costs in favor of the debtor were challenged. Some previous court decisions have been overruled by later ones. These references are from court cases that have ruled on whether the automatic stay applies to appeals being prosecuted by the debtor of an adverse order. It has been established in various court cases that the automatic stay does apply in this context. The cases cited include those from federal circuit courts and Florida state courts. This means that when a person files for bankruptcy, any appeals they are involved in may be put on hold due to the automatic stay. Section 554 of the Bankruptcy Code talks about what happens to property in a bankruptcy case. Chapter 13 plans are sometimes called “wage earner plans.” Judges and trustees can take action on behalf of the bankruptcy estate. Judge Douglas A. Wallace is a judge on the Second District Court of Appeal. This information is from the Appellate Practice Section.

Source: https://www.floridabar.org/the-florida-bar-journal/the-impact-of-a-bankruptcy-filing-on-a-pending-appellate-proceeding/