Opinion of the Court
Celotex agreed to allow Northbrook to retain the proceeds of a settlement resolving insurance coverage disputes between Northbrook and Celotex. The Bankruptcy Court found that allowing respondents—and 227 other bonded judgment creditors—to execute immediately on the bonds would have a direct and substantial adverse effect on Celotex's ability to undergo a successful reorganization. It stated:
"[I]f the Section 105 stay were lifted to enable the judgment creditors to reach the sureties, the sureties in turn would seek to lift the Section 105 stay to reach Debtor's collateral, with corresponding actions by Debtor to preserve its rights under the settlement agreements. Such a scenario could completely destroy any chance of resolving the prolonged insurance coverage disputes currently being adjudicated in this Court. The settlement of the insurance coverage disputes with all of Debtor's insurers may well be the linchpin of Debtor's formulation of a feasible plan. Absent the confirmation of a feasible plan, Debtor may be liquidated or cease to exist after a carrion feast by the victors in a race to the courthouse." In re Celotex, 140 B. R. 912, 915 (1992) (Celotex II).
In light of these findings by the Bankruptcy Court, it is relevant to note that we are dealing here with a reorganization under Chapter 11, rather than a liquidation under Chapter 7. The jurisdiction of bankruptcy courts may extend more broadly in the former case than in the latter. Cf. Continental Ill. Nat. Bank & Trust Co. v. Chicago, R. I. & P. R. Co., 294 U. S. 648, 676 (1935). And we think our holding— that respondents' immediate execution on the supersedeas bond is at least "related to" the Celotex bankruptcy—is in accord with representative recent decisions of the Courts of Appeals. See, e. g., American Hardwoods, Inc. v. Deutsche Credit Corp., 885 F. 2d 621, 623 (CA9 1989) (finding "related to" jurisdiction where enforcement of state-court judgmentPage: Index Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: October 4, 2007