Opinion ID: 559587
Heading Depth: 2
Heading Rank: 2

Heading: The District Court's Standard of Review of a Bankruptcy Court's Section 305 Order

Text: 11 Goerg argues that this Court should hold that the district court must review a bankruptcy court's section 305 order at a de novo hearing. Moreover, he claims that this review should require the district court to provide the parties with the opportunity to submit additional evidence not presented before the bankruptcy court. The creditors contend that the district court should subject the bankruptcy court's factual findings to the clearly erroneous standard of review while reviewing questions of law de novo. 6 12 Section 157(b)(1) of Title 28 states that Bankruptcy Judges may hear and determine all cases under title 11 ... referred to [them] under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title. 28 U.S.C. Sec. 157(b)(1) (emphasis added). Accordingly, a bankruptcy court's section 305 order, which is a determination of whether to dismiss or abstain from a case under title 11, is subject to review pursuant to 28 U.S.C. Sec. 158(a). 7 Appeals brought pursuant to this section shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts and in the time provided by Rule 8002 of the Bankruptcy Rules. 28 U.S.C. Sec. 158(c). In a bankruptcy appeal, a district court will subject the bankruptcy court's determinations of law to de novo review. In re Sublett, 895 F.2d 1381, 1383 (11th Cir.1990). The district court will apply the clearly erroneous standard of review to the bankruptcy court's factual findings. Id.; Bankr.Rule 7052 (incorporating Fed.R.Civ.P. 52); Bankr.Rule 8013. The district court is not authorized to make independent factual findings; that is the function of the bankruptcy court. In re Sublett, 895 F.2d at 1383 (citing Bankr.Rules 7052, 8013, and Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir.1987)). If the bankruptcy court's factual findings are ambiguous or silent as to an outcome-determinative factual question, the district court must remand the case to the bankruptcy court. Id. The drafters of the amendment to section 305 clearly intended that in most cases the bankruptcy court should make the initial determination of whether to issue a section 305 order. 8 See Report of the Federal Courts Study Committee, part II, p. 77, part III, pp. 371-374. 9 The Committee recognized that in most cases the decision to abstain from a bankruptcy case turns on considerations unique to bankruptcy law and thus is especially suited for the expertise of the bankruptcy court. Id.