In re Debtor Cachet Financial Services, 2:21-cv-08778

Cachet Financial Services was an ACH processor that contracted with payroll "Remarketers"; The Bancorp Bank acted as Cachet’s ODFI under an ODFI Agreement.
In 2019 Cachet alleges two major frauds (MPHR ~ $26M; DD Care ~ $21M) involving Cachet clients which led Bancorp to freeze funds and unilaterally terminate the ODFI Agreement under a safety-and-soundness clause.
Bancorp filed an interpleader in Delaware and later filed proofs of claim in Cachet’s Chapter 11 case; Cachet filed bankruptcy in Jan 2020 and confirmed a plan in 2021.
Cachet sued Bancorp in an adversary proceeding asserting state-law claims (breach, negligence, conversion, indemnity, accounting) and an objection to Bancorp’s proofs of claim.
Bancorp moved to withdraw the adversary reference to the district court, arguing mandatory or permissive withdrawal was warranted based on federal banking/regulatory issues and jury-trial concerns.
The district court denied withdrawal in full: mandatory withdrawal was not shown; permissive withdrawal would be inefficient and would disrupt bankruptcy administration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Mandatory withdrawal under 28 U.S.C. § 157(d)	Cachet does not assert non-title 11 federal claims requiring interpretation	Bancorp says defense requires interpretation of banking regs, FDIC/safety-and-soundness law	Denied — Bancorp failed to show substantial interpretation of non-title 11 law was required
Whether claims are core or non-core / Stern implications	Cachet: claims are counterclaims by estate and core (objection to claims is core)	Bancorp: many claims are Stern/non-core and exceed scope of its proof of claim	Held: Objection to proof of claim is core; non-core (Stern) issues do not predominate
Judicial efficiency and jury-trial concern	Bankruptcy court is most familiar; pretrial work can proceed there without waiving jury right	Bancorp: bankruptcy court cannot finally resolve Stern claims or conduct jury trial — wasteful to have bankruptcy do pretrial	Held: Efficiency favors keeping reference; bankruptcy court should handle pretrial matters and reduce duplication
Uniformity of bankruptcy administration and forum shopping	Cachet: keeping reference preserves uniform claims administration; denial prevents gamesmanship	Bancorp: withdrawal won't impair administration and it may seek Delaware transfer	Held: Uniformity weighs against withdrawal; forum-shopping factor is neutral

Sec. Farms v. Int'l Bhd. of Teamsters, 124 F.3d 999 (9th Cir. 1997) (factors for permissive withdrawal)
Stern v. Marshall, 564 U.S. 462 (2011) (bankruptcy courts may be constitutionally barred from finally adjudicating certain claims)
Executive Benefits Ins. Agency v. Arkison, 573 U.S. 25 (2014) (treatment of Stern claims as non-core; bankruptcy court issues proposed findings)
In re Tamalpais Bancorp, 451 B.R. 6 (N.D. Cal. 2011) (mandatory-withdrawal standard: interpretation vs application of non-bankruptcy law)
One Longhorn Land I, L.P. v. Presley, 529 B.R. 755 (C.D. Cal. 2015) (burden on movant and core/non-core analysis)
In re Healthcentral.com, 504 F.3d 775 (9th Cir. 2007) (bankruptcy court may retain pretrial jurisdiction; jury rights preserved)
In re Cedar Funding, Inc., 419 B.R. 807 (B.A.P. 9th Cir. 2009) (bankruptcy court not divested of pretrial jurisdiction)
In re Canter, 299 F.3d 1150 (9th Cir. 2002) (bankruptcy-court familiarity supports denying withdrawal)