PBCBA BAR BULLETINS pbcba_bulletin_april 2018 - Page 12

BANKRUPTCY C o r n e r COURTHOUSE Bankruptcy Courts Aren’t “Courts” C O M M O N S MOVE-IN READY SUITES AVAILABLE JASON S. RIGOLI It may be hard to envision that when you walk into a courtroom, appear before a judge, make motions, argues points of law, present evidence, or prosecute or defend against a complaint, you may not be before a “court,” but that is exactly what the United States District Court of Delaware recently ruled. The District Court’s Holding on the Plain Language and Legislative History of 28 U.S.C. §§ 610 and 1631 In In re IMMC Corporation, et al., Case No. 15-1043 (GMS), 2018 WL 259941, the appellant, the liquidating trustee of IMMC Corporation, appealed the decision of the bankruptcy court denying the appellant’s motion to transfer an adversary proceeding and the renew motion to transfer based on the bankruptcy court’s lack of authority. Id. at *1. There are two pertinent statutes, which were relied upon by both courts, 28 U.S.C. § 1631 (the “Transfer Statute”) and 28 U.S.C. § 610. The Transfer Statute reads as follows: Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred. 28 U.S.C. § 1631 (emphasis added). The pertinent language being italicized, “in a court as defined in section 610 of this title.” Section 610 defines “courts” as As used in this chapter the word “courts” includes the courts of appeals and district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, the United States Court of Federal Claims, and the Court of International Trade. 28 U.S.C. § 610. Adhering the “plain language” of the statutes, the District Court affirmed the bankruptcy court’s conclusion that the bankruptcy court was not a “court” for purposes of transferring an action from one court to another. IMMC Corp., at *4. The District Court went on to analyze the Legislative history of both sections, 610 and 1631, and reached the same conclusion. A Bankruptcy Court as a Unit of the District Court under 28 U.S.C. § 151 Cannot be Deemed a “Court” under 28 U.S.C. § 610 The Appellant argued that as a “unit” of the District Court, the Bankruptcy Court should be “deemed” one of the “courts” under 28 U.S.C. § 610. The District Court rejected this contention, holding that the language of § 151, that the bankruptcy court “may exercise the authority under this chapter,” limited the authority of the bankruptcy to only the authority granted in Part I, Chapter 6 of the Title 28. Id. at *5. The District Court did not address whether the outcome would be different under 28 U.S.C. §§ 157 or 1412, because the issue had not been raised by the liquidating trustee to the Bankruptcy Court. The Consequence of the Bankruptcy Court Not Being a “Court” One consequence of the Bankruptcy Court not being a “court” is that a plaintiff may run up against a limitations issue, as occurred in IMMC Corp. The liquidating trustee was seeking to transfer the adversary proceeding from the Delaware Bankruptcy Court to District Court in Pennsylvania, however, because the Bankruptcy Court is not a “court” and never had jurisdiction, the Transfer Statute could not protect the liquidating trustee from the expiration of the limitations period. Id. This article is submitted by Jason S. Rigoli, Esq., Furr Cohen, 2255 Glades Road, Suite 337W, Boca Raton, FL 33431, jrigoli@furrcohen.com. 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