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Supreme Court hears bankruptcy court jurisdiction case

[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [day call, PDF; briefs] Monday in Travelers Indemnity v. Bailey [oral arguments transcript, PDF; JURIST report], where the Court will consider whether a bankruptcy court has jurisdiction to approve a third-party injunction provision in a plan of reorganization or related confirmation order. The cases arise from the bankruptcy of asbestos manufacturer Johns-Manville Corp. [corporate website]. The US Court of Appeals for the Second Circuit in 2004 held [opinion, PDF] that a bankruptcy court lacked that jurisdiction. Petitioners in the case argue that the court did have the authority under federal law [11 USC § 524 text], and that the Second Circuit itself had upheld that authority in an earlier 1986 ruling.

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