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Admiralty v Bankruptcy

Admiralty v Bankruptcy

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Published by Bill Kay

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Published by: Bill Kay on Jun 12, 2011
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06/12/2011

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Presented:
2004AdmiraltyandMaritimeLawConferenceSeptember24,2004CrownePlazaHotelHouston,Texas
TheIntersectionofAdmiraltyandBankruptcy:MoreQuestionsThanAnswers:
PitfallsandOpportunitiesForTheAdmiraltyPractitionerWhoNavigatesIntoBankruptcyWatersCantheBankruptcyActandArticleIIIAdjudicationofAdmiraltyClaimsCruiseSmoothlyTogether?
By:JohnDuckPeterMcLauchlan
AuthorContactInformation:PeterA.McLauchlanAdamsandReese1221McKinney.Suite4400Houston.Texas77010Peter.McLauchlan@arlaw.com(713)652-5151ContinuingLegalEducation'512-475-6700www.utcle.org
 
Admiralty
&
Bankruptcy:MoreQuestionsThanAnswers
1.
THEJURISDICTIONALSCHEMEOFBANKRUPTCYCOURTS.Theallocationofjudicialpowersinbankruptcycourtshasbeenandremainsacontroversialissue.Abriefhistoryofthepriorstatutoryschemesishelpfulinunderstandingthepresentstatutoryschemegoverningthejurisdictionofbankruptcycourts.
A.BankruptcyActof1898
UntiltheenactmentofthepresentBankruptcyCode,thelawsofbankruptcywerecontainedintheBankruptcyActof1898.Pursuanttothe1898Act,bankruptcycourtshadlimitedjurisdiction,whichwastypicallyreferredtoas"summaryjurisdiction"whileothercourtshad"plenaryjurisdiction".Summaryproceedingsincludedadministrativemattersarisinginthecourseofabanlauptcyproceeding,suchastheallowanceanddisallowanceofclaims;disputesoverpropertyoftheestate;andotherrelatedmattersinwhichthepartieshadconsentedtothebankruptcycourts'jurisdiction.Plenaryactions,ontheotherhand,werethoseactionsmerelyaffectingthebankruptcyestatebutnotcentraltotheb_ankruptcycase.
1
However,uncertaintycontinuedoverwhichdisputeswerewithinthesummaryjurisdictionofthebankruptcycourts.Asaresult,bankruptcyproceedingswereoftenmiredinjurisdictionalcontestswhichcausedexpensivedelayin
1
See
RobertG.Skelton&DonaldF.Harris,
BankruptcyJurisdictionandJuryTrials:TheConstitutionalNightmareContinues,
18Bankr.Dev.
J.
469,473(1991).
 
therestructuring,liquidationanddistributionprocesscentraltothepurposeofabankruptcyproceeding.B.ReformActof1978Inordertocuretheconfusionthatdevelopedunderthe1898BankruptcyActanditssubsequentamendmentsin1938(theChandlerAct),theBankruptcyReformActof1978addressedthedichotomybetweentheso-calledsummaryandplenaryjurisdictionofthebankruptcycourt.Congresscreatedabankruptcycourtwithpervasivejurisdiction,yetdeclinedtheopportunitytomakebankruptcyjudgesArticleIIIappointeescompletewiththeprotectionsoflifetimeappointmentsforthejudgeswithnodiminutioninsalary
_2
However,Congressgrantedbankruptcycourtsamuchbroaderjurisdictionthanthatexercisedundertheformersystemandeliminatedthedistinctionbetween"summary"and"plenary"jurisdiction.'Indoingso,theActgrantedthenewlycreatedbankruptcycourtsjurisdictionoverall"civilproceedingsarisingundertitle11orarisinginorrelatedtocasesundertitle11.,,4CongressattemptedtoinvestbankruptcycourtswiththesamejurisdictionalpowerasthatgiventoArticleIIIcourts,yetbankruptcycourtsremainedcourtscreatedunderArticleIIIoftheU.S.Constitution/'However,thisflow-troughjurisdictiondidnotpassconstitutionalmuster.
C.
MarathonPipeline
DecisionThegrantofpervasivejurisdictiontoanon-ArticleIIIbankruptcycourtwas
-
ultimatelychallengedbeforetheSupremeCourtin
NorthernPipelineConstructionCo.v.
2
U.S.ConstitutionArticleIII,Section1provides"ThejudicialPoweroftheUnitedStates,shallbevestedinonesupremeCourt,andinsuchinferiorCourtsastheCongressmayfromtimetotimeordainandestablish.TheJudges,bothofthesupremeandinferiorCourts,shallholdtheirOfficesduringgoodBehaviour,andshall,atstatedTimes,receivefortheirServices,aCompensation,whichshallnotbediminishedduringtheirContinuanceinOffice."
3
NorthernPipelineCo.v.MarathonPipeLine,
458U.S.50,54(1982).
4
[d.
5
[d.

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