January 06, 2020

MONTH-IN-BRIEF: Bankruptcy & Finance

Janet M. Nadile, Taryn Darling

Bankruptcy Law

Stipulating Away Your Appeal

By Michael Enright

Stipulations entered into by the parties heading into a trial can narrow the issues and expedite resolution. But they can also eliminate important rights the parties may retain in the absence of the stipulation. That risk of losing an important right was highlighted recently in In re Odyssey Contracting Corp., Case Nos. 19-1150 & 19-1151 (3d Cir. Dec. 12, 2019). The debtor was a subcontractor involved in painting the Queensboro Bridge, and claimed that it had been underpaid. In an adversary proceeding to resolve the underpayment issue, the parties entered into a final pretrial stipulation that provided that if the Bankruptcy Court determined that Odyssey was the party that breached the contract, then “all of the [p]arties’ pending claims will be withdrawn and disposed of in their entirety with prejudice” and the adversary proceeding “shall be deemed to be finally concluded in all respects.” Odyssey lost that fight when the Bankruptcy Court decided that it was Odyssey that breached the contract.  Odyssey appealed, and the defendant sought to dismiss the appeal, arguing that, under the terms of the stipulation, Odyssey had released its claims and waived its right to appeal. The Third Circuit agreed, and dismissed the appeal. The court noted that the stipulation did not expressly waive the right to appeal, or even mention that right, but reasoned that the intent of the parties was clear enough to support a waiver. In particular, the use of the term of art “with prejudice” indicated a level of finality inconsistent with any right to appeal. Furthermore, the court found support in the defendant’s reliance on cases holding that a party cannot appeal from a consent judgment if it did not expressly reserve its right to do so. The moral of the story is clear: If you stipulate to a resolution process that suggests finality, be clear in expressing the parties’ intention regarding any relief from the trial court’s determination, or risk waiving your appeal rights.

Janet M. Nadile

Counsel; Simpson, Thacher & Bartlett LLP

Janet M. Nadile is Counsel at Simpson, Thacher & Bartlett LLP.  Her practice focuses on a broad array of commercial law with an emphasis on issues regarding Articles 8 and 9 of the Uniform Commercial Code.  She advises lenders and borrowers on all aspects of drafting and negotiating collateral security documents in a wide variety of secured transactions, including credit facilities, asset based lending, secured bond transactions, project finance and funds finance.  She also advises on all matters involving collateral subject to the UCC and other statutes, frequently for the technology, media, telecommunications, automotive, healthcare and natural resources industries.  Janet created and conducts the Firm-wide CLE seminars on various aspects of secured lending.

Taryn Darling

Board Member, William H. Dwyer Inns of Court

Taryn began her career as a bankruptcy lawyer almost ten years ago. Her practice includes reorganization, insolvency, receivership, work-outs, and bankruptcy and all related litigation. Taryn has litigated at the trial level and appellate level on behalf of her clients in a number of adversary proceedings and in consumer protection litigation. Taryn’s clients include individuals, business owners, and closely held corporations and businesses. Her breadth of experience in the area of bankruptcy and insolvency enables her to take a preventive approach when clients come to her at the outset of a problem. Taryn develops creative solutions to mitigate the impact or consequences when it becomes clear that a bankruptcy or receivership is the best course of action.