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Bankr. W.D.N.C.: In re Best Wall- Bankruptcy Subject Matter Jurisdiction does not require Financial Distress

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By Ed Boltz, 15 March, 2024

Summary:

The bankruptcy court found that the lack of financial distress does not deprive  it of subject matter jurisdiction. For a more detailed summary (which will recommend reading the entire 59-page opinion)  see Rochelle's Daily Wire "Lack of Financial Distress Doesn’t Divest a Court of Subject Matter Jurisdiction".

Commentary:

Judge Beyer provides a very comprehensive  survey of the history of bankruptcy law from the eighteenth century to the present writing that:

While the language of the Bankruptcy Clause, the history of American bankruptcy law, and the Supreme Court’s descriptions of the bankruptcy power do not definitively answer, or even directly address, the question of whether constitutional subject matter jurisdiction requires a debtor in financial distress, the absence of support for the Committee’s argument is conspicuous. There are simply no cases at any level (of which this court is aware) that explicitly endorse the proposition that bankruptcy courts do not have subject matter jurisdiction unless a debtor has a sufficient degree of financial distress.

This complements the recent law review article, by Rafael Pardo, Rethinking Antebellum Bankruptcy.  

This case (which has been appealed to the district court already) and its potential conflict with  In re LTL Management LLC  from the Third Circuit could lead to the Supreme Court to provide more definitive parameters for the scope of the Bankruptcy Clause  beyond relying on the 182 year old opinion of Justice Catron (sitting as a Circuit Judge).

To read a copy of the transcript, please see:

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Western District

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