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In re Northeast Industrial Development Corp.

United States District Court, S.D. New York

May 28, 2014

In re: NORTHEAST INDUSTRIAL DEVELOPMENT CORP., Debtor, In re: NORTHEAST INDUSTRIAL DEVELOPMENT CORP., Plaintiff, against PARKSTONE CAPITAL PARTNERS, LLC, PARKSTONE CAPITAL PARTNERS II, LLC, VINCENT RIPPA, ESQ., JONATHAN CHILDS, Defendants

For Northeast Industrial Development Corp., Plaintiff: Andrea B. Malin, Genova & Malin, Wappingers Falls, NY.

For ParkStone Capital Partners, LLC, Jonathan Childs, Defendants: Jason A. Little, Deily & Glastetter, LLP, Albany, NY.

For Vincent Rippa, Defendant: Stuart Evan Kahan, Oxman Tulis Kirkpatrick Whyatt & Geiger, LLP, White Plains, NY.

OPINION

Page 52

OPINION AND ORDER

NELSON S. ROMÁN, United States District Judge.

Plaintiff Northeast Industrial Development Corp. (" Plaintiff" ) filed a Petition under Chapter 11 of the United States Bankruptcy Code (the " Code" ), 11 U.S.C. § § 1101 et seq., on December 2, 2013.

On January 29, 2014, Plaintiff commenced an adversary proceeding against Parkstone Capital Partners, Rippa, and Jonathan Childs (collectively, " Defendants" ) pursuant to 11 U.S.C. § § 542 and

Page 53

548 and Federal Rules of Bankruptcy Procedure 4007 and 7001.

Defendant Vincent Rippa, Esq. (" Rippa" ) now moves pursuant to 28 U.S.C. § 157(d) for withdrawal of the reference of this action to the Bankruptcy Court. Rippa filed the present motion to withdraw the reference to the Bankruptcy Court on April 16, 2014. Plaintiff opposed the motion on April 28, 2014. For the reasons that follow, Rippa's motion is denied.

I. MOTION TO WITHDRAW STANDARD

In relevant part, 28 U.S.C. § 157(d) provides: " 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 statute does not define the phrase " for cause," but courts have focused on considerations of judicial economy and uniformity in the administration of bankruptcy law. See, e.g., Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp .), 4 F.3d 1095, 1101 (2d Cir. 1993). The Court of Appeals for the Second Circuit established the framework whereby the threshold question is whether the case involves a core or non-core proceeding, " since it is upon this issue that questions of efficiency and uniformity will turn." Id . After the District Court " makes the core/non-core determination, it should weigh questions of efficient use of judicial resources, delay and costs to the parties, uniformity of bankruptcy administration, the prevention of forum shopping, and other related factors," such as the presence of a jury demand. Id .; see also Schneider v. Riddick (In re Formica Corp .), 305 B.R. 147, 149-50 (S.D.N.Y. 2004). The moving party bears the burden of demonstrating that permissive withdrawal of the reference is warranted. Nisselson v. Salim (In re Big Apple Volkswagen, LLC) , No. 12 Civ. 92, 2013 WL 1245548, at *3 (S.D.N.Y. Mar. 25, 2013).

Stern held that a Bankruptcy Court could not enter final judgment on some claims otherwise characterized as core. See 131 S.Ct. at 2605, 2611-18, 2620. While the core/non-core determination is an important factor, courts have repeatedly emphasized that this factor is not dispositive of a motion to withdraw a reference. See, e.g., Amended Order, Lehman Bros. Special Fin. Inc. v. Fed. Home Loan Bank of Cincinnati (In re Lehman Bros. Holdings Inc.) , No. 13 Civ. 4121, at 3-4 (S.D.N.Y. Mar. 27, 2014); Lehman Bros. Holdings Inc. v. JPMorgan Chase Bank, N.A. (In re Lehman Bros. Holdings Inc.) , 480 B.R. 179, 195 (S.D.N.Y. 2012); Schneider , 305 B.R. at 150-51; Enron Power Mktg., Inc. v. City of Santa Clara (In re Enron Power Mktg., Inc.) , No. 01 Civ. 7964, 2003 WL 68036, at *10-11 (S.D.N.Y. Jan. 8, 2003). In this case, the Court need not decide the effect of the Supreme ...


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