In re Murray Energy Holdings Co.: BAP Hands Down Critical Practice Pointer on Defective Notices of Appeal

According to most courts, the failure to file a timely notice of appeal under Bankruptcy Rule [1] 8002 deprives the appellate court of subject-matter jurisdiction. [2] And even those courts holding that the deadline is not jurisdictional still hold that the deadline is mandatory. [3]

Obviously, then, the timeliness of a notice of appeal is critical to bankruptcy litigators. But what about the substance of the notice of appeal itself? In a case sure to keep litigators up at night, the Bankruptcy Appellate Panel for the Sixth Circuit recently underscored that what goes in a notice of appeal is often as important as its timeliness. [4]

In Murray Energy Holdings Co., a creditor filed proofs of claim seeking administrative-expense priority for a claim purportedly related to services rendered and goods provided to debtors following the petition date. The debtors objected, arguing that the services did not constitute “goods” under § 503(b)(9) [5] and that certain of the “goods” that were provided fell outside Section 503(b)(9)’s 20-day window. So the creditor filed a motion for allowance of its claims as administrative expenses.

Ultimately, the bankruptcy court sustained the debtors’ objection and denied the creditor’s motion. The creditor moved for reconsideration of those orders, but the bankruptcy court denied that motion, too. So the creditor appealed; however, in its notice of appeal, the creditor identified only the court’s order on the motion for reconsideration and not the underlying orders sustaining the debtors’ objection and denying the creditor’s motion for allowance of an administrative claim. Further, only the order on the motion for reconsideration was attached to the notice of appeal. The creditor’s brief on appeal, however, primarily addressed the merits of the underlying order on the administrative expense motion.

Even so, the Bankruptcy Appellate Panel for the Sixth Circuit (BAP) held that the merits of the bankruptcy court’s initial orders on the creditor’s entitlement to administrative expense priority were not properly before the BAP. In so holding, the BAP cited Bankruptcy Rule 8003(a)(3), which provides that “[a] final order entered by the bankruptcy court may be appealed as a matter of right by the filing of a notice of appeal that ‘must (A) confirm substantially to the appropriate Official Form; (B) be accompanied by the judgment, order, or decree, or the part of it, being appealed; and (C) be accompanied by the prescribed fee.’” [6]

Because the creditor’s notice of appeal identified and attached only the order denying reconsideration, the BAP held that the creditor had failed to perfect an appeal as to the underlying orders on administrative expense priority, despite the creditor’s briefing making clear it intended the opposite:

[Appellant’s] Notice of Appeal cited to and attached only the Reconsideration Order. It neither cited to nor attached the Administrative Expense Order or Claims Objection Order as required by Bankruptcy Rule 8003(a)(3)(B). It is irrelevant that when filing the Notice of Appeal in the bankruptcy court, [Appellant] linked those underlying orders as relevant documents. Because [Appellant] did not file a notice of appeal as to the Administrative Expense Order or Claims Objection Order, neither order was properly appealed under Bankruptcy Rule 8003. [7]

The result? The BAP held that the only issue properly before the BAP was whether the bankruptcy court applied the correct standard for addressing the motion for reconsideration. [8] The merits of the bankruptcy court’s underlying decision were off the table.

Notably, the BAP did not address Bankruptcy Rule 8003(a)(2), which provides that the “failure to take any step other than the timely filing of a notice of appeal does not affect the validity of the appeal, but is ground only for the district court or BAP to act as it considers appropriate, including dismissing the appeal.” [9]

Under that rule, some appellate courts have held that where an appellant lists only the order denying reconsideration on the notice of appeal, but the parties have treated the appeal as encompassing both the order on reconsideration and the underlying order, the appellate court will consider both orders. [10] Applying a “liberal” approach, these courts review the record as a whole to determine whether it “can be fairly inferred” that the appellant intended to appeal both orders. [11]

While the creditor in Murray had failed to list the underlying orders in its notice of appeal, the creditor had (a) linked those orders as “relevant” when filing the notice on ECF, (b) expressly raised issues concerning those orders in its designation of the issues, and (c) addressed those issues in its briefing. Perhaps, then, there was room to argue that the BAP was not prohibited from addressing the underlying orders under Bankruptcy Rule 8003(a)(2). Still, Bankruptcy Rule 8003(a)(2) appears to be discretionary.

Regardless of whether Bankruptcy Rule 8003(a)(2) may have permitted consideration of the order denying an administrative claim, Murray stands as a caution for bankruptcy litigators to ensure that notices of appeal are both timely and substantively complete.