Bankruptcy Court Preliminary Injunctions Are Not Appealable as of Right to the Tenth Circuit BAP Under § 1292(a)(1); Leave Required Under § 158

Case: BOTW Holdings, LLC v. John McCall, Jr. Court: U.S. Bankruptcy Appellate Panel (Tenth Circuit) Date: 2026-01-20 Disposition: Appeal dismissed as interlocutory; leave to appeal denied

1. Introduction

This decision arises from a Chapter 11 dispute involving three affiliated debtors—BOTW Holdings, LLC, Huskemaw Optics, LLC, and Best of the West Productions, LLC (collectively, the “Debtors” or “Appellees”). The bankruptcy court entered an Order Granting Preliminary Injunction enjoining John A. McCall, Jr. and Stealth Vision, LLC (the “Appellants”) from prosecuting a separate civil action pending in the Eastern District of Texas (the “Texas Litigation”) while the adversary proceeding in the bankruptcy court proceeded to trial on the merits.

Appellants attempted to appeal that preliminary injunction order to the Tenth Circuit BAP as a matter of right. The central procedural issue was whether an interlocutory bankruptcy court order granting a preliminary injunction is immediately appealable as of right (by analogy to 28 U.S.C. § 1292(a)(1)) or whether the appeal requires discretionary leave under 28 U.S.C. § 158.

2. Summary of the Opinion

The panel also rejected Appellants’ reliance on Harrington v. Purdue Pharma L.P., reasoning that Purdue Pharma concerned permanent nondebtor releases akin to a discharge benefit, whereas the order on appeal was a temporary injunction pausing related litigation pending resolution on the merits.

3. Analysis

3.1 Precedents Cited

The opinion is primarily an application—and reaffirmation—of existing Tenth Circuit BAP and Tenth Circuit authority on bankruptcy appellate jurisdiction and interlocutory review.

• Saffa v. Wallace (In re Wallace), No. 04-22, 2004 WL 1664060, at *2 (10th Cir. BAP July 19, 2004) (unpublished).
  Influence: The panel relied on this decision for the direct proposition that “an appeal of a preliminary injunction . . . is an appeal of a non-final order.” This anchors the threshold conclusion that the injunction order is interlocutory for purposes of § 158(a)(1).
• Bailey v. Connolly, 361 F. App'x 942, 950 n.10 (10th Cir. Jan. 22, 2010) (unpublished).
  Influence: Cited for the point that § 1292(a)(1) does not provide appeals as of right from preliminary injunction orders “when issued by bankruptcy judges,” and that § 158 lacks a parallel “injunction-as-of-right” provision.
• Lane v. Bank of Jackson Hole, No. 21-8051, 2021 WL 6622403, at *1 (10th Cir. Sept. 2, 2021) (unpublished).
  Influence: Reinforces a textual distinction: § 1292(a) expressly governs certain interlocutory district court orders, but “there is no similar provision” for bankruptcy court orders; therefore interlocutory bankruptcy orders are generally appealable only “with leave of the court.”
• Wright & Miller, § 3926.1 Bankruptcy Appeals—Structure, 16 Fed. Prac. & Proc. Juris. § 3926.1 (3d ed.).
  Influence: Secondary authority supporting the structural proposition that there is “no provision for appeal as of right from an injunction order of a bankruptcy judge” to the district court (or, by extension, to a BAP), even though some injunction orders may later become appealable if they merge into final judgments.
• Alliant Nat'l Title Ins. Co. v. Larson (In re Larson), 466 B.R. 147, 149 n.4 (10th Cir. BAP 2012).
  Influence: This is the opinion’s key doctrinal “bridge” case: it states that while 28 U.S.C. § 1292(a) permits appeals as of right to the courts of appeals from certain interlocutory district court orders regarding injunctions, it “does not apply” to appeals from bankruptcy courts to the BAP, which are governed by 28 U.S.C. § 158. The panel treated this as controlling BAP precedent foreclosing Appellants’ statutory-interplay argument.
• Personette v. Kennedy (In re Midgard Corp.), 204 B.R. 764, 769 (10th Cir. BAP 1997).
  Influence: Provides the standard for granting discretionary leave to appeal an interlocutory bankruptcy order: “exceptional cases” involving (i) a controlling question of law, (ii) substantial ground for difference of opinion, and (iii) a likelihood that immediate resolution will materially advance termination of the litigation. The panel applied this framework to deny leave.
• Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992).
  Influence (and limitation): Appellants invoked Germain to argue that § 158(c)(2)’s “taken in the same manner” language imports § 1292’s interlocutory appeal rights into bankruptcy appeals. The panel did not treat Germain as overriding Tenth Circuit/BAP precedent distinguishing § 1292’s district-court focus from § 158’s bankruptcy appellate regime.
• In re Midstate Mortgage Inv. Grp., No. 06-2581, 2006 WL 3308585 at *4 (D.N.J. Nov. 6, 2006) (unpublished).
  Influence (as contrasted authority): Appellants cited this out-of-circuit district court view interpreting § 158(c) to make § 1292(a) applicable so that injunctive bankruptcy orders could be appealed without leave. The panel did not adopt this approach, instead adhering to its own precedent (notably In re Larson) and Tenth Circuit indications (e.g., Bailey, Lane).
• Harrington v. Purdue Pharma L. P., 603 U.S. 204 (2024).
  Influence (and limitation): Appellants argued Purdue Pharma supported the claim that bankruptcy courts lack authority to enjoin nondebtor claims against nondebtors absent clear statutory authorization. The panel found Purdue Pharma “appears inapposite” because it involved permanent releases/discharge-like relief for nondebtors, whereas this case involved a temporary injunction pending trial.

3.2 Legal Reasoning

A. Jurisdictional gateway: finality vs. interlocutory posture

The BAP began with the foundational jurisdictional rule: it hears timely appeals from “final judgments, orders, and decrees” under 28 U.S.C. § 158(a)(1). A preliminary injunction entered by a bankruptcy court is ordinarily not final because it does not conclusively resolve the adversary proceeding; it preserves the status quo pending a merits determination. Citing Saffa v. Wallace (In re Wallace), the panel treated the appealed order as non-final.

B. Rejection of “§ 1292(a)(1) as-of-right” theory for bankruptcy court injunctions

Appellants’ principal statutory argument was functional: because § 1292(a)(1) allows immediate appeals as of right from interlocutory district-court orders “granting . . . injunctions,” and because § 158(c)(2) requires bankruptcy appeals to be “taken in the same manner” as civil appeals, § 1292(a)(1) should be available in bankruptcy appeals as well.

The panel rejected that position as inconsistent with the structure and precedent governing bankruptcy appellate jurisdiction in the Tenth Circuit. It relied on Alliant Nat'l Title Ins. Co. v. Larson (In re Larson) for the proposition that § 1292(a)—by its terms—addresses interlocutory orders of “district courts” and does not apply to appeals from bankruptcy courts to the BAP, which are instead governed by § 158. The panel also emphasized supporting Tenth Circuit authority indicating the absence of an “injunction-as-of-right” pathway from bankruptcy judges (Bailey v. Connolly; Lane v. Bank of Jackson Hole).

In effect, the opinion treats Appellants’ approach as an attempt to import into § 158 a category-based entitlement to appeal (injunction orders) that Congress expressly provided for district courts in § 1292(a), but did not replicate for bankruptcy court orders in § 158. The panel declined to create such a right by interpretation where binding circuit/BAP precedent treats § 158 as the exclusive gateway.

C. Discretionary leave to appeal: Midgard’s “exceptional case” standard

Having found no appeal as of right, the BAP addressed the alternative request for leave. Applying Personette v. Kennedy (In re Midgard Corp.), the panel required Appellants to show:

• a controlling question of law,
• substantial ground for difference of opinion, and
• that immediate review would materially advance the termination of the litigation.

The panel denied leave because Appellants did not meaningfully identify a qualifying controlling legal question, did not demonstrate substantial disagreement in the relevant legal authorities, and did not explain how immediate review would speed resolution of the overall dispute.

D. Treatment of Purdue Pharma: temporary litigation pause vs. permanent nondebtor release

Appellants attempted to frame the preliminary injunction as raising a constitutional or ultra vires problem akin to the issues discussed in Harrington v. Purdue Pharma L.P. The BAP assumed arguendo that the argument could be read as identifying a legal question (whether bankruptcy courts may enjoin nondebtor-on-nondebtor litigation absent clear statutory authority), but found Appellants failed to show substantial grounds for disagreement and, critically, that Purdue Pharma did not fit the posture.

The panel’s key distinction was remedial and temporal:

• Purdue Pharma concerned permanent releases that “effectively extend to nondebtors the benefits of a Chapter 11 discharge usually reserved for debtors.”
• This case involved a temporary injunction staying prosecution of separate litigation while the bankruptcy adversary proceeding proceeds to trial on the merits.

That distinction allowed the panel to conclude that Purdue Pharma did not create a substantial ground for difference of opinion warranting interlocutory review in this procedural setting.

3.3 Impact

A. Doctrinal impact within the Tenth Circuit BAP

The decision consolidates a clear, administrable rule for practitioners: a bankruptcy court’s preliminary injunction order is interlocutory and not appealable as of right to the Tenth Circuit BAP under § 1292(a)(1). Parties must proceed under § 158(a)(3) (interlocutory appeals “with leave of the court”) and satisfy In re Midgard Corp.’s stringent criteria.

B. Litigation strategy and case-management consequences

The ruling tends to:

• limit immediate appellate disruption of bankruptcy court case management decisions (including injunctions aimed at centralizing disputes),
• increase the importance of building a leave-to-appeal record—identifying specific controlling legal questions, demonstrating genuine jurisprudential disagreement, and explaining how appeal will shorten the case, and
• encourage merits adjudication in the bankruptcy court before appellate review, unless exceptional circumstances are well substantiated.

C. Substantive bankruptcy implications: nondebtor disputes and Purdue Pharma aftershocks

Although the panel did not reach the merits of the bankruptcy court’s authority to enjoin the Texas Litigation, its treatment of Purdue Pharma signals that litigants should be careful not to overread that decision as categorically barring temporary bankruptcy injunctions affecting nondebtor litigation. The panel’s framing suggests a meaningful doctrinal separation between:

• temporary injunctive relief used to preserve the bankruptcy court’s ability to adjudicate core disputes and prevent interference with reorganization, and
• permanent nondebtor releases that resemble discharge and require distinct statutory/constitutional analysis.

Future litigants invoking Purdue Pharma in the Tenth Circuit will likely need to show close similarity in remedy and effect (permanence, discharge-like characteristics), not merely that nondebtor claims are being affected.

4. Complex Concepts Simplified

• Final vs. interlocutory order: A “final” order ends a discrete proceeding and leaves nothing substantive for the court to do but execute the decision. A “preliminary injunction” typically does not decide the ultimate rights; it temporarily preserves the status quo. That makes it “interlocutory” (non-final).
• Why § 1292(a)(1) doesn’t automatically apply here: Section 1292(a)(1) expressly authorizes immediate appeals from certain injunction orders of “district courts.” Bankruptcy appeals, however, run through § 158, which (as applied by this panel’s precedent) does not include an automatic, injunction-based appeal right from bankruptcy judges.
• “Leave to appeal” under § 158(a)(3): For non-final bankruptcy orders, an appellant must ask permission. The BAP grants permission only in exceptional cases—typically where deciding a legal question now (instead of later) would materially streamline or end the litigation.
• Controlling question of law / substantial ground for difference of opinion: A “controlling” question is one that materially affects the outcome of the case. “Substantial ground for difference of opinion” means more than citing a single case; it generally requires a genuine split in authority or unresolved, difficult legal issue.
• Temporary injunction vs. permanent release (Purdue Pharma context): A temporary injunction pauses litigation. A permanent nondebtor release extinguishes claims and can resemble a discharge. Courts treat these remedies very differently.

5. Conclusion

The Tenth Circuit BAP’s order reinforces a procedural rule with practical bite: preliminary injunctions issued by bankruptcy courts are interlocutory and are not appealable as of right to the BAP under § 1292(a)(1). Appellants must instead seek discretionary leave under § 158 and satisfy the demanding Personette v. Kennedy (In re Midgard Corp.) criteria. The decision also narrows the immediate utility of Harrington v. Purdue Pharma L.P. as a vehicle for interlocutory review where the bankruptcy court’s order is temporary and case-management oriented rather than a permanent, discharge-like nondebtor release.