Bankruptcy Court Lacks Jurisdiction to Decide Motion to Stay Pending Appeal
In Carickhoff, Chapter 7 Trustee v. Goodwin (In re Decade S.A.C.), Chief Bankruptcy Judge Christopher Sontchi refused to grant a motion to stay bankruptcy proceedings pending an appeal to the district court on the grounds that the appeal had divested the bankruptcy court of jurisdiction.
April 01, 2020 at 09:00 AM
6 minute read
In Carickhoff, Chapter 7 Trustee v. Goodwin (In re Decade S.A.C.), Adv. Proc. No. 19-50095 (CSS) (Del. Bankr. March 19, 2020), U.S. Chief Bankruptcy Judge Christopher Sontchi of the District of Delaware refused to grant a motion to stay bankruptcy proceedings pending an appeal to the district court on the grounds that the appeal had divested the bankruptcy court of jurisdiction. In so doing, he adopted the divestment doctrine, whereby the filing of a notice of appeal divests the court of origin of its control over those aspects of the case involved in the appeal, but does not divest the origin court of jurisdiction to decide issues and proceedings different from and collateral to those involved in the appeal.
In Carickhoff, the Chapter 7 trustee filed a complaint to determine the property of the debtors' estate against the defendants in connection with a dispute concerning a share purchase agreement. The multicount complaint sought a declaratory judgment regarding the enforceability of the agreement between the debtors and the defendants. In response to the complaint, the defendants asserted four counterclaims.
The trustee filed a motion for summary judgment on count one of the complaint and seeking dismissal of all of the counterclaims. After briefing and argument, Sontchi held that the trustee was entitled to summary judgment on three of the defendants' four counterclaims, granted in part the trustee's motion for summary judgment on the fourth counterclaim, and denied the trustee's motion for summary judgment on count one of the trustee's complaint. In the order deciding the motion, Sontchi directed the parties to meet and confer on the issues for trial and schedule a status conference with the court within thirty days.
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