by Jason W. Harbour
Hunton & Williams, LLP; Richmond, Va.
The Second and Third Circuits recently issued opinions that support the enforceability of otherwise valid arbitration clauses in core bankruptcy matters. The opinions also highlight a circuit split regarding the appropriate legal standard to be used to determine whether bankruptcy courts have discretion to refuse to enforce arbitration clauses in core matters. In the Second and Fourth Circuits, bankruptcy courts have discretion to refuse to enforce arbitration clauses in core matters if the dispute is based on Bankruptcy Code provisions and arbitration would inherently conflict with the purposes of the Code or if arbitration of the dispute would necessarily jeopardize the objectives of the Code. See MBNA America Bank N.A. v. Hill, 436 F.3d 104, 110 (2d Cir. 2006); Philips v. Congelton L.L.C., (In re White Mountain Mining Co.), 403 F.3d 164, 170 (4th Cir. 2005). In the Third and Fifth Circuits, bankruptcy courts have such discretion only if the dispute is based on Code provisions and arbitration would inherently conflict with the purposes of the Code. See Mintze v. American Gen. Fin. Serv. Inc. (In re Mintze), 434 F.3d 222, 231 (3d Cir. 2006); Gandy v. Gandy (In re Gandy), 299 F.3d 489, 495 (5th Cir. 2002).
by Karl Schaffer
Carter Ledyard & Milburn LLP; New York
In Industrial Clearinghouse Inc. v. Mims (In re Coastal Plains Inc.), 338 B.R. 703 (N.D. Texas 2006), the U.S. District Court for the Northern District of Texas took the majority view of 28 U.S.C. §1452, holding that when that section refers to removal to a “district court,” it includes bankruptcy courts in that group. According to this view, it is not necessary to file a notice of removal with a district court before having the case referred to the bankruptcy court for that district. The jurisdictional scheme adopted pursuant to the Bankruptcy Amendments and Federal Judgeship Act of 1984 served as a basis for that holding. Id. at 711.
by Hannah Mufson McCollum
Pepper Hamilton LLP; Detroit
In ordinary litigation proceedings, lawyers often introduce summaries for a variety of purposes, either evidentiary, demonstrative or both. Unfortunately, many bankruptcy lawyers who do not litigate as frequently and who may not be as familiar with the Federal Rules of Evidence are not aware of the different types of summaries and the rules that apply to each type. When bankruptcy lawyers are not familiar with the rules, the bankruptcy court may be called upon to decide whether an appropriate showing has been made to allow the use or the admission of a summary. An unfavorable decision can result in an unpleasant surprise to a bankruptcy attorney diligently advocating for a client. Keeping the following guidelines in mind when using or opposing summaries in court proceedings can avoid both unfavorable decisions and unpleasant surprises.