REINSURANCE DISPUTE NOT CORE PROCEEDING IN BANKRUPTCY ACTION
The Delaware federal district court issued an order directing the district’s bankruptcy court to determine whether an adversary proceeding constituted a “core” proceeding. PRS Insurance Group commenced a chapter 11 bankruptcy proceedings in 2001. Thereafter, the trustee appointed filed suit in Ohio against Westchester Fire Insurance Company and ACE INA Holding for breach of two reinsurance agreements and bad faith refusal to pay claims. After the case was transferred to the Delaware federal district court, that court granted the trustee’s request to refer the case to bankruptcy court, but only to determine whether the adversary proceeding constituted a core proceeding. The bankruptcy court concluded that the trustee’s action was not a core proceeding because the case was not under the court’s jurisdiction “under” title 11 or “arising under” title 11. Rather, the reinsurance dispute was separate from the bankruptcy proceeding. Finally, the reinsurance action did not fall under the court’s “arising in” jurisdiction because it did not involve a suit that could arise only in the context of a bankruptcy case. In re PRS Insurance Group, Inc., Case No 00-4070 (Bankr. D. Del. Mar. 30, 2011).
This post written by John Black.
