Don’t overlook the ability to keep your client and any litigation that you want or need to go forward post petition together, in bankruptcy court.
You can keep them together by removing pending state court actions to bankruptcy court.
I say “bankruptcy court” because that’s almost inevitably where the case, removed according to statute to the district court, will end up.
Removal will promote efficiency and hopefully consistent rulings.
Removing actions to bankruptcy court
The relevant statute is 28 USC 1452.
In contrast to the removal statutes that precede it in the chapter, where the right to remove is confined to defendants, §1452 entitles “a party” in a civil action to removal when it relates to a bankruptcy case.
The right to removal requires the district court (read “bankruptcy court”) to have jurisdiction of over the claim under 28 USC 1334.
Section 1334 helpfully provides:
(e) The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction—(1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate….
That covers a lot of territory.
Removal procedure
The time lines and the how-to’s are found in FRBP 9027.
Different deadlines cover cases pending in other courts when the bankruptcy case is filed contrasted with cases filed elsewhere during the pendency of the case.
Actions pending at commencement of the bankruptcy are removal for the longer of 90 days from the order for relief, or other shorter periods running from termination of the stay or appointment of a Chapter 11 trustee.
Actions filed while the bankruptcy is pending may be removed within 30 days of service of the summons.
Removal is accomplished by giving notice of removal, accompanied by a “short and plain” statement of the facts entitling the movant to removal.
The notice is to be accompanied by a copy of all the pleadings in the court in which the matter was originally filed.
The propriety of removal can be challenged by a motion to remand. Rule 9027(d).
Add removal to your quiver of weapons when there’s war in your client’s future.
Image courtesy of Flickr and Dev null.
What are the type of state court actions to which you refer? Wouldn’t most cases in which the debtor is the defendant be stayed pursuant to 11 usc 362(a)? While there might be a counter-claim, that belongs to the estate and its up to the Trustee to pursue the counterclaims, if she/he so desires. And if the lawsuit is for a claim that might be excepted from the discharge under s 523(a)(2),(4), or (6), then it would have to beget an adversary proceeding. So what type of state court cases would you suggest are ripe for removal to the Federal District/Bankruptcy court?
I had the same questions. Did you figure out what the answer is?
I did not.