United States District Court, N.D. Alabama, Northwestern Division
J LESTER ALEXANDER, III IN HIS CAPACITY AS LIQUIDATING TRUSTEE OF FRANKLIN PHARMACY, LLC, Plaintiff,
TIMOTHY AARON, ET AL, Defendants.
MEMORANDUM OPINION AND ORDER
K. KALLON UNITED STATES DISTRICT JUDGE
court has for consideration J. Lester Alexander's Motion
to Withdraw Reference, doc. 318, and the Post-Confirmation
Creditors Committee's objection to the motion, docs. 320
& 329. The motion arises out of a long-running dispute.
Alexander, the Liquidating Trustee of Franklin Pharmacy, LLC
(“the Trustee”), filed suit against multiple
defendants, alleging that they fraudulently conveyed funds
and assets from Franklin to another entity called Florida
Pharmacy Solutions, Inc. (FPS). See generally doc.
1. The Trustee has informed the court that he has reached a
settlement agreement with all remaining defendants,
see docs. 321 & 328, and argues that withdrawal
of the reference is necessary to preserve the limited assets
of the estate. After reading the briefs and considering the
relevant law, and with the benefit of oral argument, the
court denies the motion.
courts have original and exclusive jurisdiction of all cases
under Title 11 of the Bankruptcy Code, 28 U.S.C. §
1334(a), but may refer “any or all proceedings arising
under title 11 or arising in or related to a case under title
11” to the Bankruptcy Court. 28 U.S.C. § 157(a).
Relevant here, district courts may withdraw the reference,
however, in certain circumstances:
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
district court shall, on timely motion of a party, so
withdraw a proceeding if the court determines that resolution
of the proceeding requires consideration of both title 11 and
other laws of the United States regulating organizations or
activities affecting interstate commerce.
28 U.S.C. § 157(d). The first sentence of this section,
which allows for permissive withdrawal “for cause
shown, ” id., is the one in contention here.
See doc. 318-1 at 7. As such, the court must
determine whether the Trustee has met his burden of
demonstrating adequate cause for withdrawal. 28 U.S.C. §
which is not defined in the statute, “is not an empty
requirement.” In re Simmons, 200 F.3d
738, 741 (11th Cir. 2000). In addressing similar motions,
district courts in this circuit have cited to a footnote in
In re Parklane/Atlanta Joint Venture, 927
F.2d 532, 536 n.5 (11th Cir. 1991), as evidence that the
circuit has endorsed the use of the following factors
outlined by the Fifth Circuit: 1) advancing uniformity in
bankruptcy administration; 2) decreasing forum shopping and
confusion; 3) promoting the economical use of the
parties' resources; 4) and facilitating the bankruptcy
process. Id.; see McGregor v. Asset Acceptance, LLC,
No. 1:15-MC-00143-RDP, 2015 WL 3751986, at *3 (N.D. Ala. June
16, 2015); Ogier v. Johnson, No. 1:13-CV-01490-WSD,
2013 WL 6843476, at *2 (N.D.Ga. Dec. 27, 2013); In re
Palm Beach Fin. Partners, L.P., No. 09-36379-PGH, 2013
WL 3490652, at *1 (S.D. Fla. July 8, 2013). Indeed, the
Trustee cites to these factors in his brief. Doc. 318-1 at 8.
Similarly, the Committee cites to these factors, but adds
four additional ones for the court to consider: 1) whether
the claim is core or non-core; 2) efficient use of judicial
resources; 3) a jury demand; and 4) prevention of delay. Doc.
320 at 15-16 (citing In re Childs, 342 B.R. 823, 827
(M.D. Ala. 2006)). With the exception of the concern about
forum shopping, all the factors the parties cite effectively
ask whether withdrawing the reference promotes judicial
these factors as guidance, the court turns now to the
specific contentions here. Basically, the Trustee argues that
efficiency and the fact that the estate's only asset is
this litigation favors withdrawal of the reference. As the
Trustee puts it, (1) “administration of the estate is
largely complete and the last unliquidated asset of the
estate” is this litigation; (2) the “withdrawal
of the reference will . . . . reduc[e] the number of Courts
to which the Liquidating Trustee is required to report, and,
thereby preserve the estate's limited
assets;” and (3) streamlining the entire case into
this court will “decrease confusion.” Doc. 318-1
at 1-2, 8-9.
the Trustee's arguments are well taken, the existence of
several core bankruptcy matters leads the court to conclude
that withdrawal of the reference is inappropriate in this
case. As the Committee notes, judicial efficiency is better
promoted by allowing “bankruptcy judges, [who] handle
these matters on a day-to-day basis” to continue to
oversee this matter. Doc. 320 at 17-18. This finding is
consistent with the Trustee's contentions that his
“only remaining responsibilities are to (i) conclude
this litigation (the estate's sole remaining unliquidated
asset); (ii) determine and pay administrative expenses; (iii)
distribute any remaining proceeds; and, (iv) provide a final
accounting to close out the estate.” Doc. 318-1 at 6.
As this court sees it, these are precisely the types of
issues that bankruptcy courts were created to oversee.
See 28 U.S.C. § 157(b)(2) (defining “core
proceedings” to include “matters concerning the
administration of the estate” and “other
proceedings affecting the liquidation of the assets of the
estate or the adjustment of the debtor-creditor or the equity
security holder relationship”).
the Trustee has the burden to show that withdrawal would
primarily benefit the court, not merely some of the parties.
See In re Parklane/Atlanta Joint Venture, 927 F.2d
at 536 n.5. The Trustee has failed to do so here because,
notwithstanding this court's familiarity with the
proceedings for which the Trustee seeks compensation, the
bankruptcy court is equally competent to resolve the issue of
administrative fees. Therefore, because the remaining matters
involve core bankruptcy proceedings, the court declines to
withdraw the reference, and the Trustee's motion, doc.
318, is DENIED.
 Basically, the Trustee maintains that
he can reduce the estate's legal fees if the court
withdraws the reference: “Legal fees and other
administrative expenses in the bankruptcy case are
significant, ” and “the ultimate distribution to
creditors will be materially increased if he is only required
to appear in a single court and that ...