Celotex Corp. v. Edwards, 514 U.S. 300, 6 (1995)

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Cite as: 514 U. S. 300 (1995)

Opinion of the Court

Celotex appealed, and the Fifth Circuit affirmed. Edwards v. Armstrong World Industries, Inc., 6 F. 3d 312 (1993) (Edwards II). It first held that, because the appellate process for which the supersedeas bond was posted had been completed, Celotex no longer had a property interest in the bond and the automatic stay provisions of 11 U. S. C. 362 therefore did not prevent respondents from executing against Northbrook. 6 F. 3d, at 315-317. The court then acknowledged that "[t]he jurisdiction of bankruptcy courts has been extended to include stays on proceedings involving third parties under the auspices of 28 U. S. C. 1334(b)," id., at 318, and that the Bankruptcy Court itself had ruled that the Section 105 Injunction enjoined respondents' proceeding against Northbrook to execute on the supersedeas bond. Ibid. The Fifth Circuit nevertheless disagreed with the merits of the Bankruptcy Court's Section 105 Injunction, holding that "the integrity of the estate is not implicated in the present case because the debtor has no present or future interest in this supersedeas bond." Id., at 320. The court reasoned that the Section 105 Injunction was "manifestly unfair" and an "unjust result" because the supersedeas bond was posted "to cover precisely the type of eventuality which occurred in this case, insolvency of the judgment debtor." Id., at 319. In concluding that the Section 105 Injunction was improper, the Fifth Circuit expressly disagreed with the reasoning and result of Willis v. Celotex Corp., 978 F. 2d 146 (1992), cert. denied, 507 U. S. 1030 (1993), where the Court of Appeals for the Fourth Circuit, examining the same Section 105 Injunction, held that the Bankruptcy Court had the power under 11 U. S. C. 105(a) to stay proceedings against sureties on the supersedeas bonds. 6 F. 3d, at 320.

Celotex filed a petition for rehearing, arguing that the Fifth Circuit's decision allowed a collateral attack on an

contends that the punitive damages portions of the judgments can be voided or subordinated on other bankruptcy law grounds. See ibid. This adversary proceeding is currently pending in the Bankruptcy Court.

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