Recent appellate decisions have shown a growing reluctance to entertain appeals from bankruptcy court sanctions. Notably, a divided Fourth Circuit panel declined to hear such an appeal, suggesting a trend towards limiting the scope of bankruptcy courts’ authority in this area.
The Fifth Circuit has taken a middle-ground approach, affirming that bankruptcy courts have only civil contempt powers. For instance, in In re Highland Capital Management, the court emphasized that sanctions by a bankruptcy court must remain compensatory rather than punitive.
Contrastingly, the Second Circuit employs a more meticulous review standard. In PHH Mortg. Corp. v Senesenich (In re Gravel), the Second Circuit noted that its duty to rigorously scrutinize contempt orders remains paramount, especially when the orders are based on ambiguous directives.