The Seventh Circuit handed down an opinion on March 4 interpreting the Supreme Court’s Bullard opinion from last year to mean that an order is final for appellate purposes if it resolves a “discrete dispute,” not a “discrete issue” within a “discrete dispute.”

The debtor fraudulently transferred proceeds from accounts receivable to his father. The trustee sued and negotiated a settlement where the father would repay everything to the estate. The secured bank creditor objected to the settlement.

The bank had a lien on all assets, including accounts receivable. At the settlement approval hearing, the bank objected, contending that its lien conferred the right to recover receivable proceeds that were fraudulently transferred.

The bankruptcy court entered an order approving the settlement but did not decide exactly how much, if anything, the bank was entitled to receive on account of its lien. The question of what the bank should receive was reserved for a later hearing. The bank nonetheless appealed, but the district court affirmed.

In the Seventh Circuit, the appeals court raised the question of appellate jurisdiction sua sponte. District Judge Colin S. Bruce, sitting by designation, concluded that the order on appeal was not final and did not confer appellate jurisdiction under 28 U.S.C. § 158(d)(1).

Although conceding that the concept of finality is “considerably more flexible” in bankruptcy, Judge Bruce cited Bullard for the proposition that finality looks to the resolution of “disputes,” not “issues.” The bankruptcy court’s order did not “conclusively determine a separable dispute over a creditor’s claim or priority,” he said. The order on appeal only approved the settlement without deciding how much the bank should receive under its lien.

The order on appeal was not final, the circuit court ruled, because it “settled a ‘discrete issue’ within a ‘discrete dispute,’ rather than a ‘discrete dispute’ itself.”

In reality, the opinion does not represent a change in law, just an application of familiar principles.

The bank had appealed because the bankruptcy judge, at the settlement approval hearing, prescribed the methodology to use in deciding the degree to which the bank’s lien would survive. At a later hearing, the bankruptcy judge said he would take evidence, hear witnesses, and apply the formula to put a dollar value on the amount the bank should receive from the settlement.

Viewed in that light, the Seventh Circuit opinion falls under the rubric that an order is final only if “ministerial” issues remain. Because the bankruptcy court had affixed no dollar amount to the bank’s secured claim, the order was not final.