Jury Trials in Bankruptcy

02 May Jury Trials in Bankruptcy

The recent case of Container Recycling Alliance v. Lassman, 359 B.R. 358 (D.Mass. 2007) addressed the issue of when a party (in this case a creditor) retains the right to a jury trial in an adversary proceeding in bankruptcy. The right to a jury trial often allows a creditor to remove a case to a court other than the bankruptcy court. A debtor, trustee, or debtor in possession may wish to avoid this result because they prefer the expeditious bankruptcy court forum. This case analyzed whether a creditor’s counterclaim was equivalent to the filing of a proof of claim. This was the central point in examining the jury trial right. As the court stated

“[I]f a creditor files a claim against the estate, it loses any right to insist on a jury, not only as to its claim, but also as to claims by the trustee against it; if the creditor has not filed a claim, it can insist on a jury for legal claims asserted against it by the trustee.” Id. at 361.
This issue is relevant for consumers who wish to bring consumer protection claims against third-parties (such as debt collectors) in the bankruptcy court forum.

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