Fairchild Liquidating Trust v. New York (In Re Fairchild Corp.)
452 B.R. 525
Bankr. D. Del.2011Background
- Debtors filed Chapter 11; assets and liabilities transferred to the Fairchild Liquidating Trust after plan confirmation.
- 56-acre property had NYSDOT agreements requiring sale for $4.5 million upon satisfying modifications; maps to vest title in NYSDOT but were not filed.
- 19-acre property development faced permit denials by NYSDOT; Suffolk County and FAA approvals obtained before NYSDOT denial.
- Post-confirmation, the Trust filed adversaries for breach of contract and takings, seeking damages and asset distribution effects.
- The NYSDOT moved to dismiss for lack of jurisdiction (Eleventh Amendment immunity) or abstention; court sua sponte raised lack of subject matter jurisdiction due to post-confirmation timing.
- Court ultimately grants dismissal for lack of subject matter jurisdiction, noting no retained post-confirmation related-to jurisdiction in the plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court has post-confirmation jurisdiction over the claims. | Trust contends related-to jurisdiction persists. | State argues lack of jurisdiction post-confirmation. | Lacks subject matter jurisdiction post-confirmation. |
| Whether Pacor-related criteria support jurisdiction after plan confirmation. | Potential to increase estate assets supports nexus. | Close nexus not proven by asset-enhancement alone. | Pacor nexus not satisfied; no jurisdiction. |
| Whether the plan's retention-of-jurisdiction clause preserves post-confirmation jurisdiction. | Trust relied on plan retention of jurisdiction. | General retention clause insufficient. | General retention provision is insufficient to retain related-to jurisdiction. |
| Whether pre-petition conduct can sustain post-confirmation jurisdiction. | Claims rest on pre-petition conduct. | Post-confirmation claims require nexus via plan. | Pre-petition conduct with post-confirmation filing lacks nexus. |
| Whether sovereign immunity or abstention arguments affect the outcome, given jurisdiction absence. | Not reached; court dismisses for lack of jurisdiction without addressing immunity or abstention. |
Key Cases Cited
- Resorts Int'l, Inc. v. Jones, 372 F.3d 154 (3d Cir. 2004) (defines core vs non-core and Pacor-related test for related-to jurisdiction)
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (establishes the Pacor test for related-to jurisdiction)
- Craig's Stores of Texas, Inc., 247 B.R. 652 (S.D. Texas 2000) (post-confirmation jurisdiction limits; plan scope matters)
- BWI Liquidating Corp., 437 B.R. 160 (Bankr.D. Del. 2010) (post-confirmation jurisdiction in liquidation context; limits on asset-based nexus)
- In re AstroPower Liquidating Trust, 335 B.R. 309 (Bankr. Del. 2005) (retention provisions and nexus considerations for post-confirmation matters)
- Valley Historic Ltd. P'ship. v. Bank of New York, 486 F.3d 831 (4th Cir. 2007) (limits of general retention provisions; jurisdiction testing)