District Court Overrides Arbitration on Disputes Regarding Defective Proofs of Claim
A debtor cannot be forced into individual arbitration after filing a class action suit in bankruptcy court alleging that a buyer of defaulted debt violated Bankruptcy Rule 3001, according to District Judge Elizabeth K. Dillon of Roanoke, Va. Judge Dillon upheld Bankruptcy Judge Rebecca B. Connelly of Harrisonburg, Va.
One of these days, the Supreme Court will set down what the limits are on a bankruptcy judge’s ability to override an arbitration agreement. If it turns out that bankruptcy cases are subject to the ordinary rules for commercial litigation, all manner of disputes over claims will end up in arbitration.
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