Keene Corp. v. Williams Bailey & Wesner, L.L.P. (In Re Keene Corp.)
Keene Corporation, in Chapter 11 bankruptcy, filed an adversary proceeding against 27 law firms, alleging they forced Keene into bankruptcy through fraudulent asbestos-related tort claims. The defendant law firms moved to withdraw the reference of this proceeding from the bankruptcy court to the district court, citing complex federal statutes (Antitrust and RICO) and a jury trial right. Defendant Levy Phillips & Konigsberg also appealed an interlocutory order denying its motion to dismiss a civil contempt proceeding. The District Court, presided over by Judge Kevin Thomas Duffy, denied the defendants' motion to withdraw the reference, deeming it premature, and dismissed LPK's interlocutory appeal, affirming the bankruptcy court's ruling on contempt. The court determined the adversary proceeding was non-core and did not warrant mandatory or discretionary withdrawal at this early stage.