Second Circuit Rejects Arbitration of Debtor’s Asserted Discharge Violation

A bankruptcy court properly denied a bank’s motion to compel arbitration of a debtor’s asserted violation of the court’s discharge injunction, held the U.S. Court of Appeals for the Second Circuit in In re Anderson. Finding a purported “inherent conflict between arbitration of [the debtor’s] claim and the Bankruptcy Code,” the Second Circuit reasoned that the bankruptcy court “properly considered the conflicting policies in accordance with law.” In this article, Michael Cook discusses the court’s decision and the consequences for parties in business reorganization cases.