Delaware Business Bankruptcy Report: Morris James LLP Lawyers and Attorneys

The United States District of Delaware denied the motion of defendants Discovery Re and United States Fidelity & Guaranty Company to withdraw the reference in this adversary proceeding commenced by the OHC Liquidation Trust. Pursuant to an order of then District Court Chief Judge Sue L. Robinson, effective October 6, 2001, under 28 U.S.C. §  157(a), all cases in the District of Delaware under Chapter 11 of the Bankruptcy Code are automatically referred to the Bankruptcy Court. However, under 28 U.S.C. § 157 a party may seek mandatory or permissive withdrawal of the reference so that the case or proceeding may be heard in the District Court. The defendants in this matter sought withdrawal of the reference on mandatory withdrawal grounds, or, in the alternative, on permissive grounds. The District Court found that mandatory withdrawal was not applicable where, as here, only state law claims were in play, and further found that the factors favoring permissive withdrawal were not satisfied.