Vol. 36, Number 8—August 2004

To BAP or Not to BAP:
That's the Choice for Some Bankruptcy Appeals

Only a tiny fraction of the 1.6 million cases being filed in federal bankruptcy courts each year are likely, when resolved, to be appealed. Throughout the country, such appeals go to a district judge. In five judicial circuits, however, appeals may instead go to a bankruptcy appellate panel.

The panels, or BAPs, have existed since the Ninth Circuit established one in 1979. In the Bankruptcy Reform Act of 1978, Congress said bankruptcy appeals would continue to be heard by a district judge unless a circuit created a BAP, in which appeals are considered by three bankruptcy judges.

Two circuits—the Ninth and the First—established BAPs following the 1978 legislation, but others considered doing so. The three other circuits with BAPs today—the Sixth, Eighth and Tenth—created their panels in the mid-1990s.

The parties in a bankruptcy case must agree to have an appeal heard by a BAP rather than a district judge. By law, bankruptcy judges may not hear an appeal that originated in any district to which they are appointed.

Bankruptcy judges receive no additional compensation for serving on a BAP, but a panel may be entitled to an additional law clerk if the caseload reaches a certain level.

Appeals from both BAP and district judge rulings in bankruptcy cases may be further appealed to the circuit court of appeals.

Proponents of the BAPs say that it can provide a better forum than a district court for two reasons: bankruptcy judges are more familiar with bankruptcy law, and three heads generally are better than one.

In support of the bankruptcy appellate panel provisions in a key 1994 bankruptcy law, Senator Charles Grassley (R-IA) said that BAPs "foster expertise and increase the morale of bankruptcy judges, in part by offering them an opportunity for appellate work."

Former Senator Howell Heflin (D-AL) was another prime backer and in a 1994 floor debate stated, "It should be recognized that the creation of a bankruptcy appellate panel service can help to establish a dependable body of bankruptcy case law."

In the 12-month period that ended March 31, 2004, district judges received 2,838 bankruptcy appeals and BAPs received 1,006. In the previous 12-month period, 2,678 new appeals landed in district courts; 1,077 in BAPs.

Circuit-by-circuit statistics for bankruptcy appellate panels can be found in tables B-10 and B-11 of Judicial Business of the United States Courts, on the Judiciary's website at http://www.uscourts.gov/judbus2003/appendices/b10.pdf and http://www.uscourts.gov/judbus2003/appendices/b11.pdf.