On April 9, in the SemGroup bankruptcy proceeding, the United States Bankruptcy Court for the District of Delaware ruled in favor of Cleary Gottlieb client J. Aron & Company, the commodities trading affiliate of Goldman Sachs, by denying various motions to dismiss the declaratory judgment action brought by J. Aron against SemGroup and 60 or so of its oil suppliers (the “Producers”). J. Aron brought its suit so that it would be able to defend in a single action against multiple competing claims to a $430 million receivable res arising from J. Aron’s trading relationship with SemGroup. The Producers claimed in their motions to dismiss that the Court lacked subject matter jurisdiction to hear the case or in any event should abstain in favor of multiple local state fora because the Debtor had confirmed its reorganization plan and had emerged from Chapter 11. The SemGroup Bankruptcy Court – which had previously ruled in favor of J. Aron’s position with respect to certain initial threshold questions of law relating to the novel statutory trust and lien claims asserted by the Producers – will now continue to preside over the ultimate resolution of this dispute.
In denying the Producers’ arguments that it lacked subject matter jurisdiction to continue to hear the case, the Court relied on the “time-of-filing” rule for determining its “related-to” federal bankruptcy jurisdiction. In denying abstention requests in favor of multiple state fora in the Producers’ home States, the Bankruptcy Court cited to the transfer decisions of six federal judges in Texas and Oklahoma, who, largely in response to motions by J. Aron, transferred individually filed Producer cases to the Delaware Bankruptcy Court in order to permit the centralized administration of such cases.