Bankruptcy jurisdiction is a hot topic as of late, with the United States Supreme Court scaling back the types of issues that can be decided by a bankruptcy court. See Stern v. Marshall, 131 S.Ct. 2594 (2011). Recently, the United States Bankruptcy Court for the District of New Jersey decided a case that not only touched on the jurisdiction of the bankruptcy court, but enforcement of an arbitration clause in a case where the claims to be arbitrated included an alleged violation of the bankruptcy stay. In re Microbilt, 2012 Bankr. LEXIS 5731, ___ B.R. __ (Bankr. N.J. 2012). Although the bankruptcy court’s enforcement of the arbitration clause is of interest, the procedural wrangling between the parties offers an excellent insight into the many legal issues confronting bankruptcy litigators seeking to get their case into the most favorable forum (i.e., forum shopping).
In Mircobilt, the debtor is in the business of providing online consumer and commercial credit information to businesses (credit unions, auto dealerships, etc.) who use the information to make credit and other business decisions. Microbilt purchases financial data from a variety of companies and in turn resells the information to third parties. Relevant to this article is a certain resale agreement that governs the relationship between Microbilt and its one of its suppliers, Chex Systems, Inc. The resale agreement contains an arbitration clause that requires any controversy or claim arising out of or relating to the agreement to be settled by binding arbitration. When Microbilt and Chex found themselves in a dispute over alleged defaults, Microbilt filed a petition for bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey. The bankruptcy petition was filed before the resale agreement was terminated in order to preserve Microbilt’s right to assume the resale agreement and cure any alleged defaults.
