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In re Whistler Energy II, LLC

United States District Court, E.D. Louisiana

October 11, 2018

IN RE WHISTLER ENERGY II, LLC

         SECTION: “H”

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE

         Before the Court is Baker Hughes Oilfield Operations, LLC's Motion to Withdraw the Reference for Adversary Number 18-01028 (Doc. 1). For the following reasons, the Motion is DENIED.

         BACKGROUND

         On March 24, 2016, an involuntary petition for Chapter 11 bankruptcy was filed against Whistler Energy II, LLC (“Whistler Energy”). On January 25, 2017, a plan of reorganization was confirmed. As part of the plan, certain causes of action were transferred and assigned to a litigation trust. Subsequently, the Trustee of the Whistler Energy II, LLC Litigation Trust filed a Complaint against Baker Hughes Oilfield Operations, LLC (“Baker Hughes”) in bankruptcy court seeking to avoid and recover an allegedly preferential transfer made to Baker Hughes by Whistler Energy. Baker Hughes did not submit a proof of claim against the bankruptcy estate. Baker Hughes now asks this Court to withdraw the reference of that adversary proceeding, which the Trustee opposes.

         LEGAL STANDARD

         This Court's decision in this matter is governed by 28 U.S.C. § 157(d), which provides for both permissive and mandatory withdrawal of the reference. It states that:

The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.

         This case presents an issue of permissive withdrawal. Although “cause shown” is not defined by statute, the Fifth Circuit has indicated that the district court should consider the following factors in articulating the foundation for its decision:

(1) whether the matter at issue is a core or a non-core proceeding,
(2) whether the proceedings involve a jury demand, and (3) whether withdrawal would further the goals of (a) promoting uniformity in bankruptcy administration, (b) reducing forum shopping and confusion, (c) fostering the economical use of the debtor's and creditors' resources, and (d) expediting the bankruptcy process.[1]

         This Court will consider these factors.

         LAW AND ANALYSIS

         “A proceeding is core under [28 U.S.C. §] 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case.”[2] The parties do not dispute that this action to avoid and recover a preferential ...


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