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In re GGC

September 26, 2006

IN RE: GGC, LLC,
GGC, LLC, PLAINTIFF,
v.
INDUSTRIAL RISK INSURERS, WESTPORT INSURANCE ORPORATION, GE INSURANCE SOLUTIONS, AS SUCCESSOR TO INDUSTRIAL RISK INSURERS, AND AON RISK SERVICES, INC., OF PENNSYLVANIA, DEFENDANTS.



The opinion of the court was delivered by: Ambrose, Chief District Judge.

CHAPTER 11

Bkcy. No. 05-21071 MBM

Adv. No. 06-02381 MBM

OPINION and ORDER OF COURT

Pending is a Motion to Withdraw the Reference filed by Defendants, Industrial Risk Insurers, Westport Insurance Corporation, and GE Insurance Solutions, named as successor to Industrial Risk Insurers (collectively referred to as "IRI Defendants"). (Docket No. 1). Plaintiff, GGC, LLC has filed a Brief in Opposition to the same. (Docket No. 4). The issue is now ripe for review.

In February of 2005, certain of Plaintiff's creditors filed an Involuntary Petition in the United States Bankruptcy Court for the Western District of Pennsylvania at No. 05-21071, against Plaintiff under Chapter 7 of the Bankruptcy Code. See, On March 14, 2005, the Bankruptcy Court issued an order converting the case from Chapter 7 to Chapter 11. On April 25, 2006, Plaintiff initiated an adversary proceeding, at No. 06-2381, to assert claims*fn1 against various insurers arising out of a storm that occurred on September 17, 2004. On June 30, 2006, IRI Defendants filed the Motion for Withdrawal of Reference in the bankruptcy court. The Motion was filed in this Court on July 5, 2006. (Docket No. 1).

IRI Defendants' Motion to Withdraw the Reference of Adversary Proceeding is made pursuant to 28 U.S.C. §157(d). (Docket No. 1, p. 1). Section 157(d) provides:

[t]he district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or own timely motion of a party, for cause shown... 28 U.S.C. §157(d). Normally, I would deny the motion as premature so that the bankruptcy court could determine, in the first instance, whether the proceeding should be characterized as a core or a non-core proceeding. 28 U.S.C. §157(b)(3). It is not necessary to do that in this case, however. IRI Defendants contend that "cause" exists, in part, because Plaintiff conceded in its Complaint that the action is a non-core proceeding and that Plaintiff does not consent to the entry of final orders for judgments by the bankruptcy court.*fn2 According to Plaintiff's Complaint, this is a true statement. See, Docket No. 1-2, ¶3. Thus, it appears to be undisputed that the adversary proceeding is properly characterized as a non-core proceeding. Therefore, I need not send the case back to the bankruptcy court to make a determination on whether the proceeding is a non-core proceeding, as such an exercise would be futile.

Noting that this is a non-core issue, I will continue with the analysis of whether to withdraw the reference. In determining whether "cause" exists to withdraw the reference, a district court should consider the following factors:

1. Promoting uniformity of bankruptc y administration;

2. Reducing forum shopping and confusion; 3. Fostering economical use of debtor/creditor resources;

4. Expediting the bankruptcy process; and

5. The timing of the request for withdrawal.

In re Pruitt, 910 F.2d 1160, 1168 (3d Cir. 1990). IRI Defendants argue that because this is a non-core proceeding and Plaintiff does not consent to a final determination of the issues by the bankruptcy court, the five factor Pruitt test "weighs dramatically in favor of ...


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