Bankruptcy Jurisdiction: Where is the Site of the Fight?

Wilmington and Philadelphia partner Andy Kassner and associate Joe Argentina co-authored an article for the Legal Intelligencer titled, “Bankruptcy Jurisdiction: Where is the Site of the Fight?”

In the article, Andy and Joe write that there are two considerations for selecting a forum for bankruptcy proceedings: (i) “is the claim arising under or related to a bankruptcy case or a civil proceeding arising under the Federal Bankruptcy Code; and (ii) does the bankruptcy court have the power to adjudicate the case an­­d enter a final order or judgment?”

Andy and Joe note that “Often these two separate but equally important questions are confused.”  This confusion is demonstrated by two U.S. Supreme Court decisions almost 30 years apart and a recent Delaware bankruptcy court ruling, which indicate that “understanding the breadth of federal jurisdiction over claims involving a debtor in bankruptcy and what cases the bankruptcy court can hear is no easier today than in 1983.”

Andy and Joe discuss the 1982 Supreme Court decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., the 2011 decision in Stern v. Marshall, and the 2011 Delaware Bankruptcy Court decision in Fairchild Liquidating Trust v. State of New York. 

They conclude that, “Whether you are prosecuting or defending such claims, the issue of where they should be brought and whether the bankruptcy court can or should adjudicate the claims should be examined carefully in light of these decisions.”