Summary:
Debtor brought an Adversary Proceeding against Defendants alleging unpaid invoices a little more than two months after its Chapter 11 plan was confirmed. Defendants moved to dismiss the complaint for lack of subject matter jurisdiction.
Pursuant to 28 U.S.C. §§ 1334(b) and 157(a) a matter “is within the jurisdiction of [a Bankruptcy] Court if it is ‘arising under,’ ‘arising in,’ or ‘related to’ the corresponding bankruptcy case.” Citing to In re Celotex Corp., 124 F.3d 619, 625 (4thCir. 1997) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rdCir. 1984)), the bankruptcy court held that “[t]he usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Both confirmation and then later substantial consummation of the debtor’s plan, however, narrows the ‘related to’ jurisdiction such that an action “must affect an integral aspect of the bankruptcy process—there must be a close nexus to the bankruptcy plan or proceeding.” Valley Historic Ltd. P’ship v. Bank of New York, 486 F.3d 831 (4th Cir. 2007).
In the present case, the Debtor/Plaintiff had the burden of establishing jurisdiction was proper and failed to make any showing that the plan had not been substantially consummated pursuant to 11 U.S.C. § 1101 and “substance of [the] Complaint [was] insufficiently related to [the] plan of reorganization.” Accordingly, the bankruptcy court allowed thirty (30) days for a motion to have the Complaint withdrawn to the District Court.
For a copy of the opinion, please see:
C.R. Peele Construction v. DTC Engineers- Post-Confirmation “Related To” Jurisdiction.pdf
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