RDNJ Trowbridge v. Chesapeake

Case Type:
Case Status:
Reversed and Remanded
21-20323 (5th Circuit, Jun 08,2023) Published
The Court of Appeals held that the bankruptcy court’s handling of approval of the settlement of class claims, “predicated on 28 U.S.C. § 1334(a) or (b), rather than in the court where the actions originated, exceeded federal bankruptcy post-confirmation jurisdiction.” Accordingly, the Court of appeals vacated the bankruptcy and district court judgments and remanded the settlement proceedings with instructions to dismiss for lack of jurisdiction.
Procedural context:
The bankruptcy court preliminarily approved settlements of prepetition class actions concerning approximately 23,000 Pennsylvania oil and gas leases between the debtor and numerous other parties. The bankruptcy court, however, concluded that an Article III court should make all final determinations regarding class certification and settlement approval. The district court affirmed, ultimately granting final approval to the two class settlements.
Prior to filing its petition, Chesapeake Energy Corporation was facing multiple lawsuits based on oil and gas leases. During Chesapeake’s chapter 11 case, the bankruptcy court set a claims bar date for filing proofs of claim that had arisen before the petition date. The bar date order provided that unfiled or untimely proofs of claim would result in discharge of the claimant’s debt and the claimant will be “forever barred, estopped, and enjoined from asserting such claim . . . .” The bankruptcy court confirmed the chapter 11 plan. After the effective date of the plan (and many of the claims underlying the oil and gas leaseholder suits had been extinguished), the parties reached settlement. The debtor asked the bankruptcy court to approve the settlements.
Judge Edith H. Jones, Judge James C. Ho, and Judge Cory T. Wilson

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