Minnesota Bankruptcy Litigation: The Main Bankruptcy Courts and the Bankruptcy Appeals Courts
Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court. Bankruptcy cases cannot be filed in state court.
Litigation in the bankruptcy court is conducted in much the same way that civil cases are handled in the district court. There may be discovery, pretrial proceedings, settlement efforts, and a trial.
- Some cases will occur without objection, and automatically. There are times when creditors make no objections.
- When creditors do object, they file a complaint which creates a lawsuit, or adversary proceeding. In cases where there are objections by creditors or the trustee there will be litigation of the bankruptcy lawsuit.
After the filing of a bankruptcy petition, there is a required meeting of creditors. This is called the 341 creditors’ meeting, named after the section of the United States Bankruptcy Code requiring the meeting. During this meeting, the creditors are given an opportunity to question the debtor under oath.
Creditors have 60 days from the date of the first scheduled 341 creditors’ meeting in order to file objections. A continuance of the 341 creditor’s meeting does not change the deadline for objections, because objections must be filed within 60 days of the first scheduled 341 creditors’ meeting.
The Bankruptcy Court’s Power of Discharge
Debtors are not necessarily entitled to discharge. The rights of the debtor will depend upon the type of bankruptcy the debtor has filed.
Under chapters 12 and 13 the creditors generally cannot object to the discharge like they can in a chapter 7 case. However, in a chapter 12 or 13 bankruptcy, creditors an object to confirmation of the repayment plan. Once the repayment plan is confirmed and the debtor completes all required payments under that plan, the debtor in complete compliance with the rules of the court will receive a discharge.
Appeal of the Bankruptcy Court’s Final Decisions
Bankruptcy Appellate Panels are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals.
Bankruptcy Appellate Panels (BAPs) were established under the Bankruptcy Reform Acts of 1978 and 1994. 28 U.S.C. §158 sets forth jurisdiction for appeals of bankruptcy decisions and authorizes the establishment of BAPs upon the order of the circuit judicial councils.
BAP judges continue to serve as active bankruptcy judges in addition to their duties on the appellate panel.
Appeals from dispositive orders of bankruptcy judges may be taken to the district court or the BAP (if one has been established and the district has chosen to participate), with further appeal as of right to the court of appeals for the circuit.
In accordance with requirements of federal statutes and procedural rules, parties may elect to file an appeal of a bankruptcy court decision with the BAP or with the district court.