Gemini Int’l, Inc. v. BCL-Burr Ridge, LLC

The creditors of a Chapter 7 bankruptcy debtor filed an adversary complaint, arguing that assets held by the debtor’s wife and business (defendants) rightfully belonged to the estate under 11 U.S.C. 542(a). The bankruptcy court recommended, and the district court granted, judgment on the pleadings, saying that the defendants were alter egos of the debtor and the corporate veils should be pierced and the assets “brought into the Debtor’s bankruptcy estate.” Three weeks later, the defendants, having failed to timely appeal the bankruptcy court’s turnover order, appealed the district court’s order remanding the case to the bankruptcy court to implement the district court’s ruling requiring that the defendants’ assets be turned over to the debtor’s estate. The defendants cited 28 U.S.C. 157(c)(1), arguing that the turnover claim was not a “core proceeding,” so only the district court could enter a final order resolving the claim. The Seventh Circuit dismissed their appeal. Core proceedings involve bankruptcy law; non‐core proceedings are proceedings that relate to a bankruptcy but arise under some other body of law. The turnover of the defendants’ assets to the debtor’s estate and their liquidation for the benefit of the defendants is a core proceeding; the limitations on the bankruptcy court’s authority are irrelevant. View "Gemini Int'l, Inc. v. BCL-Burr Ridge, LLC" on Justia Law