Academic journal article The Review of Litigation

"All Writs" in Bankruptcy and District Courts: A Story of Differing Scope

Academic journal article The Review of Litigation

"All Writs" in Bankruptcy and District Courts: A Story of Differing Scope

Article excerpt

I. INTRODUCTION.........................................................................255

II. ALL WRITS IN DISTRICT COURTS..............................................257

A. Injunctive Relief...............................................................257

B. Removal Jurisdiction.......................................................260

C. Contempt and the All Writs Act.......................................261

III. ALL WRITS IN BANKRUPTCY COURT........................................263

A. Section 105 and the Rights of Third Parties...................264

B. Estate Releases................................................................267

C. Consensual Third-Party Releases...................................268

D. Nonconsensual Third-Party Releases.............................269

E. Treatment of Critical Vendors Under Sections 105 and 363.....................................................................274

F. Section 105 When No Other Remedy Exists....................275

G. Section 105 and the Partial Discharge of Student Loans..................................................................276

H. Section 105 and Contempt..............................................277

I. Limits on the Power of Bankruptcy Courts.....................279

IV. CONCLUSION: WHY THE DISCREPANCY?.................................281

I. Introduction

Since the enactment of the Judiciary Act of 1789, United States federal courts have had the authority to "issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law."* 1 This authority is expressly included in what is known as the "All Writs Act" (the Act).2 The Act was first passed in 1911 and has been amended several times thereafter.3 Section 1651 of the Act provides, in its current form, that "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law."4 Traditionally, federal circuit courts of appeal and the Supreme Court have used the Act as statutory authority for appellate review, and federal district courts have used it to aid in the establishment of original jurisdiction.5 The Act has also been used as a basis for issuing a myriad of injunctions and to remove cases from state court to federal court when removal was not proper under any other statutory authority.6

Section 105 of the Bankruptcy Code (the Code) grants bankruptcy courts, traditionally viewed as courts of equity, "broad authority" to accomplish the overriding goals of bankruptcy law and oversee the proper functioning of the Code, which "includ[es] the ability to modify the relationships between debtors and creditors."7 Courts have noted that Section 105 can fill in gaps and ambiguities in the Code.8 Bankruptcy courts, unlike federal courts in civil cases, have relied on this authority to craft an "enormous array of orders."9 Parties to a bankruptcy proceeding often rely on Section 105(a) of the Code "as a means of enlisting the aid of judicial authority whenever the Bankruptcy Code does not expressly address a particular situation."10

Perhaps the most widespread use of [Section] 105 has been in the area of injunctive relief in situations such as an extension of the automatic stay to nondebtor parties, the substantive consolidation of separate business entities, and the direction for third parties to either affirmatively act or refrain from taking a prescribed course of action."

Some criticize the bankruptcy courts' willing use of Section 105 as a means of resolving conflict when the Code provides no solution on an issue before the court or a solution under the principles of equity and bankruptcy law.12 That criticism, however, is not the focus of this Article.

This Article compares and contrasts the differences in the use of the "all writs" authority that is granted to federal district courts and bankruptcy courts by the two respective statutes. …

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