Dynegy Danskammer v. Peabody COALTRADE Intl.

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Bankruptcy

New York Law Journal

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Judge Kenneth Karas

Dynegy contracted to buy coal from Peabody in 2008. It sought bankruptcy in 2011. Its breach complaint was filed in bankruptcy court in June 2012. Discussing the U.S. Supreme Court's ruling in Stern v. Marshall and the Second Circuit's decision in In re Orion Pictures, district court granted Peabody withdrawal. Deciding that the first Orion factor—the core/non-core distinction—should include the question of bankruptcy court's constitutional authority to enter a final decision under Stern, the court joined others in applying a modified analysis of the core/non-core factor under Orion to account for the Article III requirements and exceptions articulated in Stern. Considering the five Orion factors, as modified by Stern, the court found bankruptcy court's consideration of Dynegy's complaint would not prevent duplicative review. There was no claim the contract involved Dynegy's most important bankruptcy estate asset. Peabody's alleged breach will not be resolved by bankruptcy court's adjudication of Dynegy's Title 11 petition. Further, as no exceptions applied to Peabody's lack of consent to adjudication by bankruptcy court, Article III prohibits the bankruptcy court from issuing a final determination of Dynegy's contract claims.

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