Summary:
Having previously found that several claims brought by the Debtor against Bank of America were, pursuant to Stern v. Marshall, 131 S. Ct. 2594 (2011), core and subject to bankruptcy court jurisdiction, while others were “statutorily core, but did not qualify as constitutionally core”, the bankruptcy court retained the core issues and referred the non-core claims to arbitration. The Trustee then sought a stay of arbitration pending a determination of the core issues as allowing the arbitration to go forward apace with the Adversary Proceedings, could result in an arbitration award being given “preclusive effect” or the possibility of inconsistent judgments. Bank of America countered that allowing the arbitration would promote judicial economy as the non-core issues “dominate the lawsuit.”
Finding that the goal in both bankruptcy and arbitration proceedings is the “fast and fair resolution of claims”, the bankruptcy court held that stay of the arbitration was appropriate, otherwise, the arbitration would either bring the bankruptcy case to a “virtual standstill” or “ drain the debtor’s estate, and, perhaps more troubling, introduce competitive overtones with regard to which tribunal could establish a basis for estoppel first.”
For a copy of the opinion, please see:
TP, Inc - Stay of Arbitration pending Bankruptcy Court Resolution of Related Claims.pdf
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