United States District Court, E.D. Louisiana
ORDER AND REASONS
TRICHE MILAZZO UNITED STATES DISTRICT JUDGE
the Court is Baker Hughes Oilfield Operations, LLC's
Motion for Reconsideration (Doc. 15) and Second Motion to
Withdraw the Reference for Adversary Number 18-01028 (Doc.
20). For the following reasons, the Motions are DENIED.
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.
April 24, 2018, Baker Hughes asked this Court to withdraw the
reference of the adversary proceeding. This Court denied its
request, holding that this is a core proceeding, a jury trial
is not yet certain, and the bankruptcy court has the
authority to at a minimum issue a findings of fact and
conclusions of law for this Court's review. The Court
noted that “[o]nce it becomes clear that a jury trial
must be conducted, Defendant may re-urge its
Motion.”Thereafter, Baker Hughes filed a Motion for
Reconsideration of that decision, which the Trustee opposed.
the Motion for Reconsideration was pending before this Court,
the case progressed before the Bankruptcy Court. On November
15, 2018, the Trustee filed a Motion for Summary Judgment,
which is currently under advisement before the Bankruptcy
Court. On November 28, 2018, the Bankruptcy Court set a
hearing on the sole issue of the debtor's insolvency
(“Insolvency Hearing”). This hearing is to be
held on January 22, 2019 in conjunction with two other
preference actions commenced by the Trustee to address the
common issue of the debtor's insolvency more efficiently
and to prevent the possibility of different outcomes in each
case. Briefs and expert reports in connection with the
Insolvency Hearing are due to the bankruptcy court on January
December 31, 2018, Baker Hughes filed a Second Motion to
Withdraw the Reference and requested expedited consideration.
It argues that because the Insolvency Hearing has been set,
it is now clear that a jury trial must be conducted and
withdrawal of the reference is warranted.
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:
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.
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
(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 ...