Bankruptcy Court Jurisdiction Limited, Appeals Court Rules

A U.S. court of appeals has upheld a finding that bankruptcy courts do not have jurisdiction over the use of Employee Retirement Income Security Act -governed 401 plan assets to pay for a Chapter 7 bankruptcy trustee and professionals retained by the trustee. In rendering its opinion, the 2nd U.S. Circuit Court of Appeals in New York said that the U.S. Bankruptcy Code, which the Bankruptcy Court used to set its jurisdiction, "merely dictates" that an ERISA plan administrator perform his or her duties in connection with being appointed to manage the plan.



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