Rural Connect, LLC
On September 20, 2024, Educational Broadband Corporation (“EBC“) filed a complaint against Rural Connect, LLC (“RC“), in the United States District Court for the Western District of Tennessee (Case No. 1:24-cv-1206) (“District Court Action“). EBC filed its complaint as a federal diversity action and sought recovery for breach of contract and unjust enrichment, appointment of a receiver, specific performance, and injunctive relief.
On January 12, 2026, RC‘s attorneys filed a motion for leave to withdraw as counsel in the District Court Action. The District Court entered an order granting that motion on January 13, 2026, and gave RC twenty-eight days to inform the court of new counsel. RC did not comply with that order and on February
RC filed a chapter 11 bankruptcy petition on March 5, 2026. On April 28, 2026, RC filed a Notice of Removal of the District Court Action with this Court. (ECF No. 1.) Due to technical issues with how the notice was filed, the bankruptcy court clerk‘s office requested RC file an amended notice, which RC did on April 30, 2026. (ECF No. 3.) RC did not cite a statutory basis for the removal, but instead stated it was filing its Notice of Removal pursuant to
EBC filed a Statement of Nonconsent to Removal and to the Entry of Final Orders or Judgment by the Bankruptcy Court on May 13, 2026. (ECF No. 5.) EBC filed a Motion to Remand on May 19, 2026. (ECF No. 6.)
The Court conducted a hearing on the Amended Notice of Removal and EBC‘s response thereto on July 9, 2026. At the conclusion of the hearing, the Court took the matters under advisement.
There are two removal statutes available to parties in bankruptcy cases: (1) the general removal statute found in
Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
(a) A party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit‘s police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title [28 USCS § 1334].
The vast majority of courts “have concluded that
“The plain language of
Numerous cases have held, correctly, that a reading of
28 U.S.C. § 1452 that would permit a matter to be removed from a district court to a bankruptcy court would impermissibly undermine the district court‘s power to refer matters to the bankruptcy court (or to withdraw the reference). That referral power reflects “the Article III supervision that Congress intended as a remedy for the defects found by the Supreme Court in [N. Pipeline Const. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 53, 102 S. Ct. 2858, 2862 (1982)].” Thomas Steel Corp., 101 B.R. at 19-20. Moreover, the Debtors’ interpretation would permit the bankruptcy court unreviewable discretion under § 1452(b) to remand a claim or cause of action to the district court. Id. See also In re Sharif, 407 B.R. at 320 (noting that permitting removal from federal district court to bankruptcy court would jeopardize the district courts’ referral authority as well as their power of appellate review of judgments, orders, and decrees of bankruptcy courts under28 U.S.C. § 158 ).But we pause here to emphasize a fundamental and crucial point. The determination of the issues raised by Debtors’ attempt to remove a matter from district court to bankruptcy court implicates more than a question of statutory interpretation. Similarly, the requirement that district courts refer cases and proceedings to bankruptcy courts before those courts may adjudicate them does not merely designate the district courts as “Article III traffic police” for bankruptcy matters. Rather, the statutory structure implicates issues of the highest constitutional import. The predicate for the referral power is the bedrock principle that the district courts have jurisdiction over bankruptcy cases and proceedings; the bankruptcy court‘s jurisdiction over such matters is purely and solely derivative of the district court‘s jurisdiction. And the bankruptcy court‘s power to hear, or to hear and determine, as the case may be, bankruptcy cases and proceedings is entirely dependent upon the referral by the district court. Any interpretation of a statute that would imply that the bankruptcy courts had jurisdiction of bankruptcy cases and proceedings separate and independent from, or even co-equal to, the jurisdiction granted the Article III courts, or that would interfere with the Article III courts’ exercise of that jurisdiction and judicial power through the system of referral to the bankruptcy courts, or that, as here, would permit bankruptcy courts to dispose of matters originating in the district courts in apparent derogation of the power of those courts to control their own proceedings, would be, for the reasons described above, a constitutional non-starter.
In re Curtis, 571 B.R. at 447-48.
A notice of removal that purports to remove a district court action to bankruptcy court pursuant to § 1452(a) is void and of no effect. Mikhov, 645 B.R. at 616. “[T]he proper procedure for a party to use to request a district court to transfer a lawsuit pending in that district court to a bankruptcy judge of the same district is for the party seeking the transfer to move the district court to refer that lawsuit to the bankruptcy court for further handling, if there is some reason why it would make sense to have the bankruptcy court take over further handling of the lawsuit from the district court.” In re Mitchell, 206 B.R. 204, 210 (citations omitted); In re Curtis, 571 B.R. at 449 (citing Thomas Steel, 101 B.R. at 22;
Mailing List
Thomas H. Strawn, attorney for Debtor
Charles Exum, attorney for Educational Broadband, LLC
United States Attorney
Wendy Oliver, Clerk, United States District Court, Western District of Tennessee, Odell Horton Federal Building, 167 North Main Street, Memphis, TN 38103
Jimmy L. Croom
UNITED STATES BANKRUPTCY JUDGE
For the reasons and authorities set forth in the court‘s Memorandum Opinion re: the Notice of Removal, the Court hereby declares the Amended Notice of Removal filed on April 30, 2026 (ECF No. 3), VOID. The Court further orders that this Adversary Proceeding be closed without prejudice.
Mailing List
Thomas H. Strawn, attorney for Debtor
Charles Exum, attorney for Educational Broadband, LLC
United States Attorney
Wendy Oliver, Clerk, United States District Court, Western District of Tennessee, Odell Horton Federal Building, 167 North Main Street, Memphis, TN 38103
Jimmy L. Croom
UNITED STATES BANKRUPTCY JUDGE