Section 2.9 Withdrawal of Reference

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

3. (§2.9) Withdrawal of Reference

In a further effort to satisfy the reasoning of Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the 1984 Amendments authorize the district courts to “withdraw” any case or proceeding referred to the bankruptcy court “for cause.” 28 U.S.C. § 157(d). The United States Code does not define what constitutes “cause” to withdraw the reference.

Some courts have suggested that the district court consider the goals of promoting judicial economy, promoting uniformity in bankruptcy administration, reducing forum shopping and confusion, fostering the economical use of the debtor’s and creditors’ resources, and expediting the bankruptcy process, as well as the presence of a jury demand. See, e.g., Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992, 999 (5th Cir. 1985); accord In re Sevko, Inc., 143 B.R. 114, 117 (N.D. Ill. 1992) (noting that among factors to be considered are judicial economy, convenience, and the particular court’s knowledge of the facts). Other courts have stated that only a compelling cause warrants withdrawal from the bankruptcy court. See, e.g., Citicorp N. Am., Inc. v. Finley ( In re Washington Mfg. Co.), 133 B.R. 113, 116 (M.D. Tenn. 1991); see also Chrysler Credit Corp. v. Fifth Third Bank ( In re Onyx Motor Car Corp.), 116 B.R. 89, 91 (S.D. Ohio 1990) (recognizing that cause could be based on either one or a combination of the following factors: (1) judicial economy...