7th Circuit Reverses Precedent, Holds No Compliance Exceptions to Rule 8006(g) Based on the Functional-Equivalence Doctrine and/or the Harmless-Error Doctrine

7th Circuit Reverses Precedent, Holds No Compliance Exceptions to Rule 8006(g) Based on the Functional-Equivalence Doctrine and/or the Harmless-Error Doctrine

In this case the Debtors moved for sanctions against Kreisler Law, P.C., alleging that the law firm violated the automatic stay arising from their bankruptcy petition by filing a lien against their home. The couple had voluntarily dismissed a prior bankruptcy petition just a few months earlier, so the bankruptcy judge denied their motion based on 11 U.S.C. § 362(c)(3), which lifts the automatic stay after 30 days in the case of a successive petition. But the bankruptcy courts are divided over the proper interpretation of § 362(c)(3), so the judge certified her order for direct appeal to the 7th Circuit under 28 U.S.C. § 158(d)(2)(A). A timely notice of appeal followed. However, the Debtors did not file a petition for permission to appeal per Fed. R. Bankr. P. 8006(g). Kreisler filed an objection.

Question presented: In a direct appeal from the bankruptcy court to the circuit court, where the bankruptcy court has approved certification, does the failure to file a petition for permission to appeal require dismissal of the appeal?

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