About This Blog
The Delaware Bankruptcy Insider is a premier blog designed to bring its readers a comprehensive analysis of the latest Delaware corporate bankruptcy news and rulings. Brought to you by Ashby & Geddes, P.A.
Judges and Courts
- Delaware Court of Chancery
- Delaware District Court
- Delaware Supreme Court
- Judge Brendan L. Shannon
- Judge Christopher S. Sontchi
- Judge Kevin Gross
- Judge Kevin J. Carey
- Judge Laurie Selber Silverstein
- Judge Mary F. Walrath
- Judge Peter J. Walsh
- Third Circuit Court of Appeals
- United States Supreme Court
- Delaware District Court Disagrees with Bankruptcy Court’s Ruling and Holds That Committee’s Challenge Rights Survived Entry of the Sale Order and Consummation of Sale
- “Straddling the Line”: Delaware Bankruptcy Court Rules That Not All Tax Liabilities Incurred During a Debtor’s Petition Year are Eligible for Administrative Expense Priority
- Insider’s Scoop: Judge Silverstein Imposes Heightened Standard Regarding Appointment of Future Claims Representative
For more information
District Court Grants Direct Certification on Question of Whether Bankruptcy Courts Have Power to Transfer Cases under 28 U.S.C. § 1631
Troisio v. Erickson (In re IMMC Corp.), Civ. No. 15-1043 (GMS), 2016 WL 356026 (D. Del. Jan. 28, 2016)
The District of Delaware in this case granted direct certification to the Third Circuit on the question, “whether bankruptcy judges have the authority to order a transfer of an adversary proceeding pursuant to 28 U.S.C. § 1631.” Op. *4-5. The issue is whether a bankruptcy court is a “court” as defined in 28 U.S.C. § 610 that is authorized under 28 U.S.C. § 1631 to transfer a civil action to another court for want of jurisdiction. Determining that the definition of “court” in this circumstance was a pure question of law with no controlling decision of the Third Circuit or United States Supreme Court, Judge Sleet held that certification was required under 28 U.S.C. § 158(d)(2).
In 2010, the liquidating trustee (“Appellant”) for IMMC Corp. (and its affiliated debtors, “Debtors”) filed an adversary proceeding asserting breaches of fiduciary duties against Debtors’ former officers and directors (“Appellees”). In 2011, the Bankruptcy Court held it lacked jurisdiction to decide the claims. In 2012, the Bankruptcy Court denied a motion to transfer the proceeding to the Eastern District of Pennsylvania. The court reasoned that bankruptcy courts were excluded from the express language of 28 U.S.C. §§ 1631 and 610, and that legislative history left doubt as to a bankruptcy court’s power to transfer a proceeding. Additionally, the District Court denied a motion to withdraw the reference, reasoning that since the bankruptcy court never had proper jurisdiction, there was no reference to withdraw. In 2015, Appellant renewed the motion to transfer, citing additional recent cases in support. The Bankruptcy Court denied the motion again and dismissed the complaint. In November 2015, Appellant filed a notice of appeal of the 2012 and 2015 decisions, as well as a request for direct certification to the Third Circuit.
28 U.S.C. § 158(d)(2) lists four circumstances where certification is mandatory: (1) there is no controlling decision of the circuit or the U.S. Supreme Court; (2) the matter is of public importance; (3) it requires resolution of conflicting decisions; or (4) immediate appeal will materially advance the progress of the case or proceeding.
The Court granted certification, holding that it was mandatory in the absence of a controlling decision on the issue. A controlling decision is “one that admits of no ambiguity in resolving the issue.” Op. at *7 (citation omitted). In detailing some of the ambiguity, the Court concluded that the Bankruptcy Court’s decision did not rest on the plain meaning of the statutory language, but considered the legislative history as a basis for its holding. Further, the Court agreed with the Bankruptcy Court that a Third Circuit case appearing to decide the transfer issue was dicta. Op. at *10 (citing Seven Fields Dev. Corp., 505 F.2d 237, 247 n.8 (3d Cir. 2007)). Appellant also argued that In re Schaefer Salt Recovery, Inc., 542 F.3d 90, 105 (3d Cir. 2007) determined that bankruptcy courts were not included in the definition of “court.” However, the District Court distinguished that case because it considered the definition of “court” under 28 U.S.C. § 451, not 28 U.S.C. §§ 163, 610—the statutes at issue here. Finally, none of the Supreme Court cases cited by the parties addressed this specific statutory section or question of law. Consequently, the Court determined that there was no controlling decision on the question, and certified the issue directly to the Third Circuit.