Recent Decisions Illustrate the Limits of the Post-Confirmation Jurisdiction of the Bankruptcy Court

October 19, 2011

Publication| Bankruptcy & Corporate Restructuring

Bankruptcy court jurisdiction suddenly has become a hot topic in light of the U.S. Supreme Court’s June 2011 opinion in Stern v. Marshall. However, Stern is not the only issue affecting bankruptcy court jurisdiction.

In four recent opinions, the Delaware Bankruptcy Court has found that it lacked subject matter jurisdiction over post-confirmation adversary proceedings. Last year, in BWI Liquidating Corp. v City of Rialto (In re BWI Liquidating Corp.), Judge Mary F. Walrath held that the court did not have subject matter jurisdiction over a pre-confirmation breach of contract claim brought by a liquidating trust post-confirmation. More recently, in July, Judge Christopher S. Sontchi, in The Fairchild Liquidating Trust v. New York (In re The Fairchild Corp.), similarly held that the court did not have subject matter jurisdiction over a liquidating trust’s post-confirmation action alleging a pre-confirmation breach of contract. Both courts held that there was no jurisdiction merely because the claims could have been brought pre-confirmation and the confirmed plans purported to generally preserve the bankruptcy court’s jurisdiction.

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