We note that the In re RBGSC Inv. Corp. decision has not received subsequent support among district courts in this circuit or others. See, e.g., Mirant Corp. v. Southern Co., 337 B.R. 107, 119 (N.D.Tex. 2006) (disagreeing with the bankruptcy court that "non-core claims were so inter-twined with the other claims in the complaint" that core bankruptcy jurisdiction lay); Davis, 282 B.R. at 193 (rejecting defendant's argument that the state court cause of action "is a core proceeding merely because it is `intertwined with' its indemnity claim"); In re Winstar Commc'n, Inc., 284 B.R. 40, 50 (Bankr.D.Del. 2002) (evaluating claims arising out of a contract between plaintiff and three sellers, two chapter 11 debtors and wholly-owned subsidiary non-debtor, and holding that "the mere fact that there may be common issues of fact between a civil proceeding and a controversy involving the bankruptcy estate does not bring the matter within the scope of section 1334(b)). Accepting the rule that Exide urges would turn virtually every claim contained in an action in which the debtor is one of the defendants and which is later removed to bankruptcy court into a core proceeding.
Id. at 4. Bendix Home Sys., Inc. v. Hurston Enters., 566 F.2d 1039, 1042 (5th Cir. 1978); In re Holywell Corp., 118 B.R. 876, 879 (S.D. Fla. 1990); In re Tower Automotive, Inc., 356 B.R. 598 (Bankr. S.D.N.Y. 2006); Equity Broad. Corp. v. Shubert (In re Winstar Commc'ns, Inc.), 284 B.R. 40, 51 (Bankr. D. Del. 2002). The cases cited by the Respondents involve corporations that were operating entities with boards of directors and management. Corporate formalities were being observed by these corporations.
Even though the 1978 Bankruptcy Code broadened the jurisdiction of this Court, bankruptcy jurisdiction is still limited, and there is no indication in the legislative history of the 1978 Code that the rule in Beck would be overruled. Since 1978 several courts in this circuit have expressly held that it was not. See Mego Intl., Inc. v. Packaging Assembly Mfg. Corp. (In re Mego Intl., Inc.), 30 B.R. 479 (S.D.N.Y. 1983); In re Stein Day, Inc., 113 B.R. 157, 162 (Bankr. S.D.N.Y. 1990) (" Beck is still good law even though decided under the old Bankruptcy Act."). Courts that have long been governed by the Pacor formulation have also held that a lawsuit that impacts only the value of a debtor's subsidiary is not within the "related to" jurisdiction of the bankruptcy court. See Equity Broadcasting Corp. v. Shubert (In re Winstar Communic., Inc.), 284 B.R. 40, 51 (Bankr. D. Del. 2002), where the Court stated that an action which may have an impact on the value of a debtor's subsidiary Just as the courts in this Circuit have continued to follow the Beck principle after adoption of the Bankruptcy Code, Judge Friendly's pre-Code formulation of jurisdiction in Turner ("significant impact") has continued to be good law.
An action is related to bankruptcy if the outcome could alter the debtor's rights, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.” In re e2 Communications, 2005 Bankr. LEXIS 3250, at *10 n.5; Equity Broad. Corp. v. Shubert (In re Winstar Communs. Inc.), 284 B.R. 40, 50 (Bankr.D.Del.2002) (citing Pacor v. Higgins, 743 F.2d 984 (3d Cir.1984)). The Fifth Circuit has said that,
EBC's action may have an effect on the ultimate value with [sic] the estate receives for the stock it owns, but it does not alter the estate's rights, liabilities, options or freedom of action. If the court were to find that this action was under the jurisdiction of the Bankruptcy Court, the decision would have the result of bringing every wholly owned subsidiary into every Bankruptcy case regardless of the circumstances and without the safeguards afforded by schedules, statements of financial affairs, notices to creditors, or meetings of creditors.Equity Broad. Corp. v. Shubert (In re Winstar Commc'ns, Inc.), 284 B.R. 40, 51 (Bankr. D. Del. 2002). When the Court originally raised the issue, it thought that the jurisdictional basis of this action was the indirect parent-subsidiary relationship between Ampal and MAG. It questioned its jurisdiction in light of the decisions in Beck and Tower. It has since become clear that the parent-subsidiary relationship does not provide a jurisdictional basis to decide this adversary proceeding because, inter alia, MAG is insolvent, its stock is worthless and the outcome of this lawsuit will not relieve its insolvency.
IT went on to add that an action is related to bankruptcy if "the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively), and which in any way impacts upon the handling and administration of the bankrupt estate." Equity Broad Corp. v. Shubert (In re Winstar Communs. Inc.), 284 B.R. 40, 50 (Bankr. D. Del.2002) (quoting Pacor v. Higgins, 743 F.2d 984 (3d Cir. 1984)). It is unfortunate that Pacor and its analysis have been applied without real analysis to broad arrays of circumstances far different from those that engendered the oft-repeated language in Pacor.
An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.'" Equity Broad Corp. v. Shubert (In re Winstar Communs. Inc.), 284 B.R. 40, 50 (Bankr. D. Del. 2002) (quoting Pacor v. Higgins, 743 F.2d 984 (3d Cir. 1984)). The only possible avenue for this court to exercise jurisdiction over the Wilkinsons' post-discharge, state law claim for an accounting is the "related to" prong of section 1334(b).
L.L.C. (In re Lahijani), 325 B.R. 282, 284 (B.A.P. 9th Cir. 2005) ("We now conclude that, when a cause of action is being sold to a present or potential defendant over the objection of creditors, a bankruptcy court must, in addition to treating it as a sale, independently evaluate the transactionas a settlement. . . ."); Valucci v. Glickman, Berkovitz, Levinson Weiner (In re Glickman, Berkovitz, Levinson Weiner), 204 B.R. 450, 455 (E.D. Pa. 1997) (reviewing a sale order that compromised claims and remanding ittothe bankruptcycourt so that the bankruptcycourt could make the determinations required under Rule 9019); In re World Health Alternatives, Inc., 344 B.R. 291, 294 (Bankr. D. Del. 2006) (noting the committee withdrew its objection to the sale hearing on the basis that it had reached a settlement of its dispute with a creditor's claims against the estate, and that the settlement was noticed separately from the sale hearing pursuant to Rule 9019); Equity Broad. Corp. v. Shubert (In Re Winstar Communs. Inc.), 284 B.R. 40, 46-47 (Bankr. D. Del. 2002) (noting that the sale and the compromise were bundled together as part of the same package). In this case, the APA between the Debtor and Vindexdoes notmentionany compromise of CDS's claims against the estate.
Conversely, the bankruptcy court has no jurisdiction over a matter that does not affect the debtor.'" CBI Eastchase, L.P. v. Farris (In re e2 Communs., Inc.), No. 05-3051-BJH, 2005 Bankr. LEXIS 3250, at *10 n.5 (Bankr. N.D. Tex. Mar. 24, 2005) (quoting Feld v. Zale Corp. (In re Zale), 62 F.3d 746, 753 (5th Cir. 1995)); Equity Broad Corp. v. Shubert (In re Winstar Communs. Inc.), 284 B.R. 40, 50 (Bankr. D. Del. 2002) (citing Pacor v. Higgins, 743 F.2d 984 (3d Cir. 1984)). Cases arising under or arising in a bankruptcy case are core proceedings, while cases related to a bankruptcy case are non-core proceedings.
(Defendants' Motion at 9; Supplemental Memorandum at 6). In support of their argument, the Defendants cite In re Winstar Commc'ns Inc., 284 B.R. 40, 51 (Bankr. D. Del. 2002) ; In re Mordini, 491 B.R. 567, 571 (Bankr. D. Colo. 2013) ; Tower Auto. Mex. v. Grupo Proeza, S.A., 356 B.R. 598, 602 (Bankr. S.D.N.Y. 2006). The flaw in the Defendants' arguments is that they are grounded in facts that are in dispute and not amenable to resolution in a Rule 12(b)(1) facial attack on the court's jurisdiction.