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Bankruptcy Court’s Jurisdiction Held Not to Extend to Post-Confirmation ERISA/LMRA Claims Asserted Against Reorganized Debtor

Int’l Union v. Visteon Corp., No. 1:13-cv-01742-RGA, 2014 WL 3547014 (D. Del. July 18, 2014)

Through this decision, Delaware District Court Judge Andrews retained jurisdiction over a post-confirmation proceeding commenced by a group of retirees formerly employed by Visteon Corporation (“Visteon”).  More specifically, the plaintiffs asserted, under the Labor-Management Relations Act and the Employee Retirement Income Security Act, that Visteon and others wrongfully terminated their post-employment benefits following Visteon’s emergence from bankruptcy – a right which was reserved by Visteon in its confirmed plan of reorganization.  The defendants urged the District Court to refer the post-confirmation matter to the Bankruptcy Court, asserting that the issues in the case were “inextricably intertwined” with orders entered by the Bankruptcy Court during Visteon’s chapter 11 proceeding, including the confirmation order.  As discussed in the Delaware Bankruptcy Insider’s recent Caribbean Petroleum post, if the defendants’ argument proved factually accurate, referral to the Bankruptcy Court would be appropriate.  See Binder v. Price Waterhouse & Co., LLP (In re Resorts Int’l., Inc.), 372 F.3d 154, 167 (3d Cir. 2004) (“At the post-confirmation stage, the claim must affect an integral aspect of the bankruptcy-process – there must be a close nexus to the bankruptcy plan or proceeding.”).  However, the District Court did not agree with the defendants that the matter at hand implicated any conduct during the prior bankruptcy proceedings.  According to the Court, the plaintiffs’ claims arose solely from post-bankruptcy conduct and did not require the interpretation or enforcement of any prior Bankruptcy Court order.  Accordingly, the close-nexus required by the Third Circuit was missing, and the District Court retained jurisdiction over the suit.