                              In the

United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 07-1474 & 07-1484

IN RE C OMDISCO , INC.,

A PPEALS OF P HILIP A. H EWES, et al.

                          ____________
            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
      Nos. 06 C 4685 & 06 C 4686—Robert W. Gettleman, Judge.
                          ____________

   A RGUED N OVEMBER 26, 2007—D ECIDED A UGUST 13, 2008
                          ____________



  Before B AUER, R OVNER, and W OOD , Circuit Judges.
  W OOD , Circuit Judge. Philip Hewes, John Vosicky,
Thomas Flohr, Jack Slevin, and a large group known as
“Certain SIP Claimants” (collectively, “the Claimants”) are
former executives and high level employees of Comdisco,
Inc. As part of a new shared investment plan sponsored by
Comdisco, in 1998 they borrowed money from participat-
ing banks (“Lenders”) to purchase shares of Comdisco. To
secure the loans, they executed promissory notes in their
personal capacity; Comdisco acted as guarantor of the
notes. Comdisco turned out not to be such a great bet: in
2001, it filed for bankruptcy, triggering a condition of
2                                   Nos. 07-1474 & 07-1484

default on the notes and making full payment due im-
mediately. Comdisco settled its guarantor obligation
to the Lenders for a lump sum payment in exchange
for an assignment from the Lenders to Comdisco of the
right to collect payment on the notes from the Claimants.
  The subrogation rights arising from the guarantor’s
payment of the lump sum to the Lenders became the res
of a Litigation Trust. Creation of this Trust was authorized
by the Comdisco Plan of Reorganization (“Plan”). The
Trust assets eventually included not only the subrogation
rights, but also the notes.
  The trustee sought to enforce the notes against the
Claimants, relying on their promise to repay the amounts
borrowed to pay for the stock. They resisted and brought
a motion in bankruptcy court to terminate the Trust,
apparently on the theory that after the Trust terminates
no one may collect on the notes and their liability would
be extinguished. The bankruptcy court denied the
motion, the district court affirmed, and the Claimants now
appeal to this court. We conclude, however, that we lack
appellate jurisdiction because the district court’s order
does not meet even the flexible finality standard embodied
in 28 U.S.C. § 158(d). We therefore dismiss the appeal
for want of jurisdiction.


                              I
  The chronology of events that led to the Trust, though
undisputed, is important both to an understanding of the
dispute between the parties and to our concern about
appellate jurisdiction. We therefore recount it briefly here.
Nos. 07-1474 & 07-1484                                     3

  On July 16, 2001, Comdisco filed for bankruptcy. Roughly
eleven months later, on June 13, 2002, the parties filed
the First Amended Joint Plan of Reorganization, which
authorized the creation of the Litigation Trust and the
appointment of a trustee. On July 15, 2002, Exhibit C-2
(Distribution Agreement) to the Plan was filed. The
bankruptcy court entered its order confirming the Plan on
July 31, 2002. Once the Plan was confirmed, the Trust came
into being. Its assets included “those assets to be trans-
ferred to and owned by the Litigation Trust . . . , which are
comprised of the SIP Subrogation Claims” (defined as
“claims of Comdisco against any SIP Participant resulting
from payments made to the SIP Lenders under the SIP
Guarantee Agreement, or otherwise in respect of the SIP
Notes, against any SIP Participant”). On December 7, 2004,
the Trust was amended to expand the definition of Trust
Assets so that it explicitly included the SIP Note Claims.
Finally, on December 9, 2004, the bankruptcy court ap-
proved the settlement between Comdisco and the
Lenders, in which the rights under the notes were trans-
ferred to the Trust in exchange for a payment of over
$126 million to the Lenders.


                             II
  This is an adversary proceeding in which the trustee
is attempting to collect funds for the Trust. The trustee
takes the position that the Claimants (who include all
of the people who borrowed money to purchase the
SIP stock and who signed the promissory notes) must
make good on the promissory notes they signed, despite
4                                   Nos. 07-1474 & 07-1484

the fact that the stock that Claimants bought with the
borrowed money may now be worthless. The Claimants
do not want to pay up. They argue instead that the Trust
should be terminated because it has fulfilled its main
purpose, which they characterize as “pay[ing] the C-4
creditors,” who are defined in the plan as the people
holding “general unsecured claims against Comdisco.”
There are also two groups of C-5 creditors whose
interests have some bearing on this case. Class C-5A
includes those who have an allowed interest in Comdisco,
while Class C-5B includes people with allowed subordi-
nated claims against Comdisco. Even though one of the
stated purposes of the Trust is the liquidation of the Trust
assets (that is, reducing the notes to cash by forcing
payment from the Claimants), the Claimants argue
that the C-4 creditors have already received sufficient
recovery. (The Claimants, it is worth noting at this junc-
ture, have since been classified as C-5 creditors.) As the
Claimants see it, liquidation of the notes would result in
a recovery for the C-4 creditors in an amount exceeding
100% of the allowed amount of their claims. Such an
outcome, they conclude, is forbidden by both the Plan
and the Bankruptcy Code.
   The appellees point out that the Plan involved a compro-
mise between the interests of the C-4 and the C-5 creditors.
It embodies an escalating sharing arrangement between
the two groups, under which the C-5 creditors begin
sharing in the proceeds from the wind-down of Comdisco
before the C-4 creditors receive a 100% recovery on their
claims. (Ordinarily equity holders are at the back of the
queue, and so they would not begin to collect until all
Nos. 07-1474 & 07-1484                                    5

creditors have been satisfied.) In exchange for giving up
their right to full reimbursement before the C-5 creditors
begin to collect, the C-4 creditors retained an interest in
the proceeds of the estate even after they recovered 100%
of their claim, if and only if distributions reached such
high levels. It is also worth noting that the C-4 creditors
excluded interest from the amounts of their allowed
claims, and thus the “100%” number being discussed did
not really reflect 100% of the claims.
  The bankruptcy court denied the Claimants’ Termination
Motion, finding that the purpose of the Trust had not been
accomplished; that none of the termination events listed
in the Trust instrument had occurred; that a recovery
beyond 100% of the allowed C-4 claims was contemplated
by the parties to the Plan; that such a recovery and a
splitting of the Trust assets between the C-4 creditors and
the C-5 creditors does not offend the Bankruptcy Code;
that the property rights involved have vested and should
not be readjusted now; and that the proposed Trust
termination would be an unwarranted Plan modification
after substantial consummation of the Plan. The Claimants
then appealed to the district court.
  The district court found that the adjudication of the
Claimants’ Termination Motion was a core proceeding
under 28 U.S.C. § 157(b)(1) and denied that motion. It held
that because the bankruptcy judge’s order disposed of a
discrete dispute, it had jurisdiction over the appeal pursu-
ant to 28 U.S.C. § 158(a)(1) (final judgments). Tellingly,
however, the court also observed in a footnote that even if
the order were interlocutory (as the trustee had argued), it
6                                   Nos. 07-1474 & 07-1484

could still entertain the appeal under § 158(a)(3) which
allows interlocutory appeals to the district court with the
court’s permission. Although the difference between
subparts (a)(1) and (a)(3) did not matter for the district
court, it does for this court. With the exception of a rela-
tively new procedure for certain interlocutory appeals
that has not been invoked here, see § 158(d)(2), the courts
of appeals have jurisdiction only over appeals from final
decisions entered by district courts under § 158(a) and
bankruptcy appellate panels under § 158(b). See
§ 158(d)(1).


                            III
  Before we may reach the merits of this appeal, we
must ensure that we have appellate jurisdiction. Neither
party has contested jurisdiction at this stage, despite
the fact that the district court in essence ruled in the
alternative that it could resolve the case under either
§ 158(a)(1) or § 158(a)(3). We, however, cannot finesse
the issue. We must decide whether the bankruptcy
judge’s decision not to terminate the Litigation Trust, as
affirmed by the district court, meets the standards of
finality that have been established for § 158(d) appeals.
  No one doubts that the bankruptcy judge resolved one
particular issue: the question whether the time has come
to terminate the Trust because its purposes have been
fulfilled. If the bankruptcy court had ruled in favor of the
Claimants and terminated the Trust, then this part of the
case would be over, and the aggrieved trustee and other
beneficiaries of the Trust would have been entitled to
Nos. 07-1474 & 07-1484                                      7

appeal to the district court under § 158(a)(1) and then
either side could have continued on to this court using
§ 158(d)(1). But that is not what happened. Instead, by
rejecting the termination motion, the bankruptcy court
was allowing the Trust to continue and further disburse-
ments to be made in accordance with its terms. Just as an
order in a simple case between two parties that grants
summary judgment on the whole case to one side is
appealable under 28 U.S.C. § 1291, but an order denying
summary judgment is not (because proceedings will
continue in the district court), it seems that in this
case an order granting termination would have been
appealable but an order denying termination ought not to
be appealable.
  It is well established that the concept of finality for
purposes of bankruptcy appeals is more flexible than the
one that applies to ordinary appeals governed by 28 U.S.C.
§ 1291. Thus, the First Circuit observed that “Congress
has long provided that orders in bankruptcy cases may
be immediately appealed if they finally dispose of discrete
disputes within the larger case . . . .” In re Saco Local Dev.
Corp., 711 F.2d 441, 444 (1st Cir. 1983) (emphasis removed).
But what exactly is a “discrete dispute,” and how does it
differ from merely a “discrete issue” within a dispute? Saco
offers some insight into the answer to that question. There,
the court went on to note, for example, that “any dispute
between a bankrupt and his creditors over a claim or
priority was a separate ‘proceeding,’ ” id. at 445. It con-
cluded that for purposes of the predecessor statute it
was applying, 28 U.S.C. § 1293(b), a “ ‘final judgment,
order, or decree’ . . . includes an order that conclusively
8                                     Nos. 07-1474 & 07-1484

determines a separable dispute over a creditor’s claim
or priority.” Id. at 445-46.
  This court offered a rule-of-thumb for deciding when a
separable dispute exists in bankruptcy many years ago, in
In re Morse Electric Co., 805 F.2d 262 (7th Cir. 1986). There
we said that “[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. Such a claim is far
enough along to be intelligently resolved, without duplica-
tive appellate review of the same creditor’s situation.” Id.
at 265. Accord, Zedan v. Habash, 529 F.3d 398, 402 (7th
Cir. 2008). The final disposition of an adversary proceeding
within a core proceeding thus falls within our jurisdiction.
Id. at 402-03.
  Unfortunately, this area still suffers from a lack of clarity.
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 that is provided in 16 C HARLES A LAN
W RIGHT, A RTHUR R. M ILLER & E DWARD H. C OOPER, F EDERAL
P RACTICE AND P ROCEDURE § 3926.2, at 298-324 (2d ed. 1996),
is dismayingly long and inconsistent. One point that
comes through, however, is that 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.
  The orders described by Wright, Miller, and Cooper that
resolve a discrete adversary proceeding generally fit
within the description in Morse of a disposition that would
be final if we imagined the dispute as a stand-alone case
rather than as part of the larger bankruptcy proceeding. In
Nos. 07-1474 & 07-1484                                      9

the matter before us, by contrast, the question is whether
the purposes of the Litigation Trust have been fully
achieved. That is something that might change from day to
day. Both the bankruptcy court and the district court
thought that the answer was “no,” as of the time the
Claimants made their motion. (Our review of the entire
file has given us no reason to doubt the correctness of
this ruling.) This is exactly what a court would say if this
had been a separate proceeding, and in that setting it
would be clear that the order rejecting the Claimants’
argument was not final. It is equally apparent here: monies
are being disbursed all the time, as the trustee tries to
collect new funds for the Trust, and the situation is con-
stantly shifting.
   The most one can say about the order from which the
Claimants are trying to appeal is that the bankruptcy
court does not agree with their argument that satisfaction
of the “100%” recovery for the C-4 claimants is, by itself,
reason enough to terminate the Trust. We recognize that it
is possible to think of this as a discrete issue, but there is
a difference between a discrete issue and a discrete dis-
pute, and the ruling here fails to qualify as a separable
dispute.
  The appeal is D ISMISSED for want of jurisdiction.




                            8-13-08
