In the

United States Court of Appeals

For the Seventh Circuit

No. 08-1271

IN RE:

LONNIE E. MCKINNEY,

Debtor-Appellee.

APPEAL OF:

SALTA GROUP, INC.

Appeal from the United States District Court 

for the Central District of Illinois.

No. 06 C 1194—Joe Billy McDade, Judge.

ARGUED DECEMBER 8, 2009—DECIDED JUNE 23, 2010

Before EASTERBROOK, Chief Judge, and ROVNER and

TINDER, Circuit Judges.

TINDER, Circuit Judge. Lonnie McKinney owned and

lived in a duplex for which he owed $5786.66 in property

taxes for the year 2001. Peoria County, where the duplex

is located, sold the tax debt to Salta Group at its annual

tax sale in 2002. At a tax sale in Peoria County, an

investor can bid on delinquent taxes by announcing

what interest rate the investor will charge on the delin-
2 No. 08-1271

quent fees. The lowest bidder (he who proposes the

lowest interest rate) will own the tax debt in return for

his payment of the full value of the tax debt plus costs.

As owner of the tax debt, Salta Group could make

money in two ways. First, McKinney had two years to

pay the debt plus the interest to the county, who would

pass it on to Salta Group; this would generate revenue

for Salta Group based on the interest rate it charged.

Second, if McKinney did not pay off the debt in two

years, Salta Group could get a tax deed to the property.

McKinney did not pay off the debt and on April 21, 2005,

he was notified that the duplex had been sold for delinquent taxes but that he could redeem the property until

September 1. After that date, a hearing would be held

on the issuance of a tax deed to Salta Group.

On August 31, 2005 (one day before the end of the

redemption period), McKinney filed for Chapter 13

bankruptcy. In his proposed bankruptcy plan, he was

given five years to pay off the tax debt with interest. Salta

Group objected to the plan, arguing that pursuant to

11 U.S.C. § 108(b), which provides a time limit for

curing a default, McKinney had no more than 60 days

to pay the tax debt. Salta Group argued that if McKinney

did not pay his taxes within 60 days, it was entitled to a

tax deed on the property. (Indeed, Salta Group got a tax

deed in state court soon after the Chapter 13 filing;

the bankruptcy court voided the deed because it violated the bankruptcy stay. Salta Group does not appeal

the order declaring the deed void.) The bankruptcy

court disagreed and denied Salta Group’s objection. Salta
No. 08-1271 3

Group appealed the denial of the objection to the

district court, which affirmed the bankruptcy court.

Salta Group’s appeal has now reached us but we must

first assess whether we have jurisdiction to consider it.

Salta Group, remember, is not appealing an order confirming the proposed bankruptcy plan (indeed that order

has not been entered because Salta Group asked for and

was granted a stay of the proceedings in the bankruptcy

court), but instead is simply appealing the denial of its

objection to the plan. Salta Group argues that we have

jurisdiction to hear the appeal under 28 U.S.C. § 158(d)(1),

which provides for appeals from final decisions of the

bankruptcy court, as well as a series of interlocutory

orders not relevant here. McKinney, for his part, argues

that the decision below was not sufficiently final to vest

jurisdiction in this court, because while the bankruptcy

court denied the objection to the confirmation of the

plan, future proceedings with regards to Salta Group’s

rights are still pending. For instance, Salta Group has not

submitted its proof of claim to the bankruptcy court and

the interest rate that Salta Group is owed has not been

determined. (Salta Group argued that because it was

entitled to payment within 60 days, its claim could not

be considered part of the estate). McKinney argues

that Salta Group should be able to appeal only when the

plan, which establishes the amount of Salta Group’s

claim and an appropriate interest rate, is confirmed.

The proposed basis for our jurisdiction, 28 U.S.C.

§ 158(d)(1), gives us jurisdiction over appeals “from all

final decisions, judgments, orders, and decrees entered
4 No. 08-1271

under subsections (a) and (b) of [§ 158].” This appeal

was taken from the district court, which claimed jurisdiction under subsection (a) as an appeal from the final

judgment of the bankruptcy court. So, our jurisdiction

depends on whether what the district court heard was

an appeal from a final judgment or order of the bankruptcy court.

Finality is a fairly strict concept in most federal litigation. Generally, a party must wait for the entire case to

be disposed of before taking an appeal. See Mohawk Indus.,

Inc. v. Carpenter, 130 S. Ct. 599, 605 (2009). But in the

bankruptcy context, some decisions are more final than

others. In bankruptcy we deal with the concept of

“flexible finality.” See Zedan v. Habash, 529 F.3d 398, 402

(7th Cir. 2008). While perhaps a contradiction in terms,

the concept of flexible finality is based both on the traditional approach to bankruptcy proceedings and the

commonsense understanding that the breadth of bankruptcy cases necessitates an approach that allows for

the efficient resolution of certain discrete disputes that

may arise in a given bankruptcy.

Bankruptcies are sprawling events that are made up

of smaller, discrete proceedings. See In re Morse Elec. Co.,

805 F.2d 262, 264 (7th Cir. 1986). Then-Judge Breyer,

writing for the First Circuit, explained that the term

“proceeding” within a bankruptcy is actually a term of

art, traditionally referring to “any dispute between a

bankrupt and his creditors over a claim or priority.” In re

Saco Local Dev. Corp., 711 F.2d 441, 445 (1st Cir. 1983)

(analyzing finality under a predecessor jurisdictional
No. 08-1271 5

statute, 28 U.S.C. § 1293(b)). Judge Breyer, in the modern

context, characterized these proceedings as “contested

matters, adversary proceedings, and plenary suits” and

described these smaller proceedings as the judicial units

from which appeals should be taken. Id. (quotation omitted). “[A] ‘proceeding’ within a bankruptcy case [is] the

relevant ‘judicial unit’ for purposes of finality, and . . . a

‘final judgment, order, or decree’ . . . includes an order

that conclusively determines a separable dispute over

a creditor’s claim or priority.” Id. at 445-46; see In re

Comdisco, Inc., 538 F.3d 647, 651 (7th Cir. 2008).

That much is clear; the hard part is figuring out what

stage of these proceedings must be terminated for

finality to attach. As we have noted, “this area still

suffers from a lack of clarity.” Comdisco, 538 F.3d at 651.

Generally, the easiest way to tell whether an order is

sufficiently final in the bankruptcy context is whether

it resolves a proceeding within the bankruptcy that

would be a freestanding lawsuit if there were no bankruptcy action. Zedan, 529 F.3d at 402 (“[T]he test we

have utilized to determine finality under § 158(d) is

whether an order resolves a discrete dispute that, but

for the continuing bankruptcy, would have been a standalone suit by or against the trustee.”); Morse Elec. Co., 805

F.2d at 265 (“A disposition of a claim that would be

final as a stand-alone suit outside of bankruptcy is also

final under § 158(d) in bankruptcy.”). But, the “standalone” test leaves room for enough interpretation to

make the “illustrative list of orders that are either found

to be final for purposes of appeals under § 158(d) or that

are not considered final . . . dismayingly long and incon-
6 No. 08-1271

sistent.” Comdisco, 538 F.3d at 651 (citing 16 Charles Alan

Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure § 3926.2, at 298-324 (2d ed. 1996)).

In this case, Salta Group’s claim does not present an

issue that would ordinarily be a freestanding lawsuit.

Salta Group simply objects to the proposed plan for the

management of McKinney’s debts. The bankruptcy

court rejected the objection and ordered that there be a

continued hearing on “the amount of Salta’s secured

claim and the interest rate to be paid” on that claim. In

its opinion denying Salta Group’s objection, the bankruptcy court found that the amended plan “treats

SALTA’s claim permissibly by classifying it as fully

secured and proposing to pay it in full over the term of

the plan. SALTA has not filed a proof of claim, however,

having taken the position that it is not a creditor and

has no claim [i.e., that the tax debt must be paid outside

the bankruptcy]. That position having now been

rejected, the issue of the proper amount of SALTA’s

claim and the interest rate to be paid . . . must now be

addressed and a hearing will be scheduled.”

Orders that dispose of a creditor’s claim count as final

for bankruptcy purposes “when the claim has been accepted and valued, even though the court has not yet

established how much of the claim can be paid given

other, unresolved claims.” Morse Elec. Co., 805 F.2d at 264.

Salta Group argues that its claim has been valued even

though it really hasn’t submitted the claim. Salta Group

argues that figuring out the actual amount of its claim

is simply a “ministerial task.” See Saco Local Dev. Corp.,

711 F.2d at 446 (“[O]rders in ordinary cases that effec-
No. 08-1271 7

tively settle a controversy and merely leave the court

with ministerial or mechanical tasks concerning

damages are normally viewed as final, even if a precise

damage figure has not been committed to paper.”). Therefore, according to Salta Group, the situation here is analogous to the “stand-alone” situations we described above.

Fundamentally, Salta Group’s argument is that it has

only one horse running in this bankruptcy—whether the

tax lien it holds on McKinney’s duplex is properly considered part of the bankrupt’s estate. Now that the bankruptcy court found that the tax lien is properly included

(and subject to whatever plan is settled on), Salta Group

believes that its horse is out of the race and the dispute

has been resolved. In UAL Corp., we noted that “[i]n a

strict sense a Chapter 11 bankruptcy is not final until a

plan of reorganization is confirmed. But as soon as the

right of a particular creditor is determined, the ruling

determining that right is appealable, although until the

plan is confirmed there will be uncertainty concerning

how much of his right he will actually be able to enforce.”

In re UAL Corp., 411 F.3d 818, 821 (7th Cir. 2005).

We have analogized the finality determination to the

finality determination in a civil suit. “A judgment

does not lose its finality merely because there is uncertainty about its collectibility, corresponding to uncertainty about how many cents on the dollar the creditor

will actually receive on his claim once all the bankrupt’s

assets are marshaled and compared with the total of

allowed claims, and the priorities among those claims

are determined.” In re Szekely, 936 F.2d 897, 899 (7th Cir.

1991). In UAL Corp. we implied that some proceedings

that are not akin to stand-alone lawsuits may be
8 No. 08-1271

appealed before the confirmation of the plan. There, we

held that a bankruptcy court’s decision to vacate a previous order establishing the status of certain airplane

leases within United Airlines’ bankruptcy was sufficiently final to be appealable. UAL Corp., 411 F.3d at

822. An appeal was proper even though the final bankruptcy plan hadn’t been confirmed because the decision

to vacate the previous order “fixed the bank’s status as a

creditor, determining both the amount due it and the

priority of its claim.” Id. We offer no opinion on

whether our decision in UAL Corp. opened up a new

universe of appealable bankruptcy orders because,

under UAL Corp.’s specific terms, the order below did not

fix Salta Group’s status as a creditor. It determined

neither the amount due to Salta Group nor the priority of

its claim.

Salta Group has not even submitted its claim to the

bankruptcy estate and its claim has therefore not been

valued as part of the bankruptcy estate. See In re FortyEight Insulations, Inc., 115 F.3d 1294, 1299 (7th Cir. 1997)

(finding that an order that failed to “ultimately establish”

the creditor’s entitlement to funds was not final and

therefore unappealable). While the issue that Salta

Group cares about may have been resolved, its basic

dispute with the bankrupt estate has not been resolved

and therefore the judgment below is not final. When

we talk about finality in bankruptcy we talk about proceedings resolving disputes, not issues. “[A] decision or

order that resolves only an issue that arises during the

administration of a bankruptcy estate is too small a litigation unit to justify treatment as a final judgment.”

Comdisco, 538 F.3d at 651; see also id. at 652 (“[T]here is a
No. 08-1271 9

difference between a discrete issue and a discrete

dispute, and the ruling here fails to qualify as a

separable dispute.”); Saco Local Dev. Corp., 711 F.2d at 445-

46 (“[W]e conclude that a ‘final judgment, order, or

decree . . . includes an order that conclusively determines a separable dispute over a creditor’s claim or

priority.”). While Salta Group may claim that it does

not care about the interest rate it is subject to, or the way

its claim is treated within the bankruptcy plan, those

issues must be resolved before it can take an appeal.

Accordingly, we have no jurisdiction over this appeal.

Lonnie McKinney died fifteen days after oral argument. Both his attorneys and Salta Group’s have submitted briefs explaining how his death affects the

outcome of his case. McKinney’s attorneys explain

that the continuation of the proceedings depends on

whether continuing is in the best interest of the parties

and whether the case may proceed as though

McKinney’s death has occurred. See Fed. R. Bankr. P.

1016. The parties dispute whether both conditions are

satisfied. Salta Group further argues that new representatives must be brought in to represent McKinney’s estate

and that the failure of McKinney’s counsel to do so

should result in dismissal. See Fed. R. Bankr. P. 7025.

Because we don’t have jurisdiction over the matter, we

take no position on the parties’ arguments. The effects

of McKinney’s death will be appropriately taken up by

the bankruptcy court in the first instance.

The appeal is DISMISSED for want of jurisdiction.

6-23-10