Chapter IX Jurisdiction and Venue

JurisdictionUnited States

IX. Jurisdiction and Venue

A. Bankruptcy vs. Other Courts: A Clarification

Any discussion of bankruptcy jurisdiction needs to begin by sorting out two confusable but different issues:

• Bankruptcy or not? Congress has power to mandate jurisdiction over "bankruptcy" cases, so there is a threshold question about whether a particular matter is "bankruptcy." Remarkably, the answer is usually "yes": A debtor in trouble can have any number of problems, and a great variety of problems can be related, one way or another, to the bankruptcy case.
• Which court? Once we have decided that a particular matter is within "bankruptcy jurisdiction," there remains the question of which court. Specifically, Congress reposed bankruptcy jurisdiction in "the district court" — the lifetime appointee empowered under the Constitution to exercise "the judicial power of the United States." Congress also created "the bankruptcy court" — the term appointee who, in the end, hears most bankruptcy matters.

"The bankruptcy court," however, has no lifeblood of its own. Bankruptcy cases fall under the jurisdiction of the district courts, which may then "refer" the cases to the bankruptcy courts. As a general matter, district courts automatically refer all bankruptcy matters to the bankruptcy courts; however, they may "withdraw the reference" from the bankruptcy court at will.

This "short-tether" reference is thought to be necessary to assure the constitutionality of the bankruptcy court.48 As a practical matter, you hardly notice it; the district judge routinely refers all matters to the district court, which does its day-to-day job as if it were its own to begin with.49

B. Jurisdiction

Against this background, we can consider what sort of jurisdiction Congress granted to the district court. There are two kinds [28 U.S.C. § 1334]:

1. The district court has original and exclusive jurisdiction of all cases under title 11.
2. The district court has original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.

Restated, the district court (or, by reference, the bankruptcy court) is the only court that can hear the bankruptcy case itself ("In re Debtor"), but there may be all sorts of cases within the case. For example, the debtor may own claims against third parties. Somebody may have to sue to collect these claims ("In re Debtor, Trustee v. Defendant").

The bankruptcy rules speak of "adversary proceedings" as being comprised of these cases within a case. The adversary proceeding gets its own file number (you have to pay a separate filing fee) and is commenced by filing and serving a complaint. An example of an adversary proceeding is one to determine the dischargeability of a debt. There may also be other residual disputes that require disposition in the main case, even though they do not rise to...

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