Permissive Abstention Law and Legal Definition
Permissive abstention means a courts decision to abstain from hearing state law claims whenever appropriate in the interest of justice, or in the interest of comity with state courts or respect for state law. Bankruptcy court can take a permissive abstention in cases involving disputes that relates to the bankruptcy estate and which can be litigated or is being litigated in another forum. The bankruptcy court is free to consider a number of factors when determining whether permissive abstention is appropriate. The factors that the bankruptcy court considers include:
(1) the existence of two closely related proceedings based upon state law or a state law cause of action;
(2) the absence of any basis for jurisdiction;
(3) the likelihood that the proceeding can be timely adjudicated in a state forum;
(4) the extent to which state law issues predominate; and
(5) the degree of relatedness the proceeding has to the bankruptcy case.
In In re Fruit of the Loom, Inc. v. Magnetek, Inc. (In re Fruit of the Loom, Inc.), 407 B.R. 593 (Bankr. D. Del. 2009), the court observed that “Courts consider twelve factors in determining whether permissive abstention under 28 U.S.C.S. § 1334(c)(1) is appropriate: (1) the effect or lack thereof on the efficient administration of the estate; (2) the extent to which state law issues predominate over bankruptcy issues; (3) the difficulty or unsettled nature of applicable state law; (4) the presence of a related proceeding commenced in state court or other nonbankruptcy court; (5) the jurisdictional basis, if any, other than section 1334; (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; (7) the substance rather than the form of an asserted "core" proceeding; (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court; (9) the burden of the court's docket; (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties; (11) the existence of a right to a jury trial; and (12) the presence of non-debtor parties. The evaluation of these factors is not merely a mathematical exercise. Some factors are more substantial than others, such as the effect on the administration of the estate, whether the claim involves only state law issues, and whether the proceeding is core or non-core under 28 U.S.C.S. § 157.”
