777 F.3d 594
2d Cir.2015Background
- Kirschenbaum, as Chapter 7 trustee for the two debtors, appeals a district court ruling that the bankruptcy court lacked jurisdiction to authorize compensation from a 401(k) plan under ERISA.
- The debtors filed Chapter 11, converted to Chapter 7, and Kirschenbaum was appointed as trustee and plan administrator under 11 U.S.C. § 704(a)(11).
- Kirschenbaum sought to retain professionals to assist in terminating the plan and to be paid from plan assets, with any shortfall sought from the bankruptcy estate.
- DOL objected, arguing the bankruptcy court lacked jurisdiction to approve compensation payments from plan assets.
- The Bankruptcy Court initially held jurisdiction and granted the fee applications; the District Court later reversed, concluding the bankruptcy court lacked jurisdiction, and the trustee appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court had jurisdiction to pay plan-related fees from ERISA Plan assets. | Kirschenbaum argued jurisdiction under ERISA-related authority. | DOL argued there is no ERISA-based or bankruptcy-based jurisdiction to pay from Plan assets. | No jurisdiction to pay from Plan assets. |
Key Cases Cited
- MBNA Am. Bank, N.A. v. Hill, 436 F.3d 104 (2d Cir. 2006) (defines core vs related-to concepts in bankruptcy)
- In re Turner, 724 F.2d 338 (2d Cir. 1983) (related-to jurisdiction standard)
- Baker v. Simpson, 613 F.3d 346 (2d Cir. 2010) (explains 'arising in' vs 'arising under' criteria)
- In re AB & C Grp., Inc., 411 B.R. 284 (Bankr. N.D. W. Va. 2009) (ERISA-related payments typically arise outside bankruptcy)
- In re U.S. Brass Corp., 110 F.3d 1261 (7th Cir. 1997) (procedural vehicle concept for ERISA rights in bankruptcy)