39 B.R. 930

In re SUNSHINE BOOKS, LTD., Debtor.

Bankruptcy No. 84-00325G.

United States Bankruptcy Court, E.D. Pennsylvania.

June 8, 1984.

*931Nancy V. Alquist, Mary F. Walra.th, Clark, Ladner, Fortenbaugh & Young, Philadelphia, Pa., for petitioning creditors, Prentice-Hall, Inc., Little, Brown and Co., and D.C. Heath.

Roger F. Wood, Louis B. Kupperman, Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pa., for alleged debtor, Sunshine Books, Ltd.

OPINION

EMIL F. GOLDHABER, Bankruptcy Judge:

The issue at bench is whether we have jurisdiction to entertain the creditors’ involuntary petition and enter an order for relief under chapter 7 of the Bankruptcy Code (“the Code”), in light of the Supreme Court’s decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). For the reasons expressed herein, we conclude that we have jurisdiction and will grant the requested relief.

The facts of the case are as follows:1 The creditors, Prentice-Hall, Inc., Little, Brown and Co. and D.C. Heath (“the creditors”) filed an involuntary petition against the debtor, Sunshine Books, Ltd. (“the debtor”) under chapter 7 of the Code. The creditors charge the necessary prerequisites for both case commencement2 and entry of an order for relief3 under 11 U.S.C. § 303. The debtor admits the relevant averments, but requests an order dismissing the petition on the grounds that we lack subject matter jurisdiction over the case by reason of the Marathon decision and Congress’s failure to enact remedial legislation.

In response to the Marathon holding that the jurisdiction granted the bankruptcy courts under 28 U.S.C. § 1471 (1982) was unconstitutionally broad, Id. at 87, 102 S.Ct. at 2880, the United States district courts adopted an Emergency Rule for the administration of the bankruptcy system in December, 1982, and extended the time for its application in March, 1984. The rule provides for the operation of the bankruptcy system during the interim period until Congress enacts legislation superseding it.4 *932The United States Court of Appeals for the Third Circuit, in Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir.), cert. denied, — U.S. —, 104 S.Ct. 349, 78 L.Ed.2d 315 (1983), addressed the issue of the continued vitality of the district courts’ subject matter jurisdiction under 28 U.S.C. § 1471:

... despite Northern Pipeline the grant of district court subject matter jurisdiction in section 1471(b) survives. We find nothing in Northern Pipeline opinions suggesting otherwise. Indeed the Northern Pipeline holding that article III judges must exercise the related proceedings jurisdiction rests on the assumption that the jurisdictional grant is operative. Id. at 200.

Because, under Coastal, the district courts retain subject matter jurisdiction over bankruptcy proceedings pursuant to 28 U.S.C. § 1471(b), we are bound by the Emergency Rule adopted by the United States District Court for the Eastern District of Pennsylvania. We therefore conclude that our jurisdiction to handle bankruptcy matters remains intact under the Emergency Rule, and that we may entertain the instant involuntary petition. Further, since the debtor does not challenge the conclusion that the petitioning creditors have established a prima facie case for the entry of an order for relief under § 303, we will grant the creditors’ involuntary petition.

In re Sunshine Books, Ltd.
39 B.R. 930

Case Details

Name
In re Sunshine Books, Ltd.
Decision Date
Jun 8, 1984
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39 B.R. 930

Jurisdiction
United States

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