In Re: Whittaker Clark & Daniels v.
Split Score
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Case Summary
Disposition
Affirmed
The panel rejected challenges to Whittaker Clark & Daniels’ Chapter 11 filing, holding that its board—despite a prior South Carolina receivership—had authority under New Jersey law to commence bankruptcy and that an improperly filed petition is not jurisdictional. It further ruled that successor-liability ‘product-line’ claims against Brenntag are general estate property under 11 U.S.C. § 541(a)(1) as interpreted by In re Emoral, and therefore may be pursued or settled by the debtors for the benefit of all creditors. Accordingly, the Third Circuit affirmed the District and Bankruptcy Courts’ orders.
Circuit Split Identified
Legal Issue
Whether federal bankruptcy courts must apply the forum state’s choice-of-law rules under Klaxon, or may instead apply a federal common-law choice-of-law rule.
Circuit Positions
Forum-state Klaxon rule governs in bankruptcy unless an overriding federal interest requires a special federal conflicts rule
Klaxon always governs in bankruptcy with no exceptions
Klaxon does not apply in bankruptcy; federal courts apply a federal common-law conflicts rule
Conflict Summary
The Ninth Circuit rejects Klaxon in bankruptcy and applies a federal common-law conflicts rule; the Eighth Circuit applies Klaxon categorically; the Second and Fourth Circuits apply Klaxon unless an overriding federal interest justifies a federal conflicts rule. In this opinion, the Third Circuit (through a concurrence) aligns with the Second/Fourth approach, endorsing Klaxon in bankruptcy but leaving room for rare federal-interest exceptions.