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debtor to lapse . The committee argued that under Section 1109 ( b ) it had “ an absolute right to intervene regardless of the Trustee ’ s performance .” Marin Motor , 689 F . 2d at 447 . The bankruptcy court refused to grant intervention , finding 1109 ( b ) to be permissive , rather than mandatory . The district court held section 1109 ( b ) was mandatory and reversed , with the matter then being brought before the Third Circuit . Deciding first that the order appealed from was a final order under 28 U . S . C . § 1293 ( b ) and therefore properly before the circuit court , the court then analyzed the language and intent of Section 1109 ( b ). Noting first that Section 1109 ( b ) applies only in Chapter 11 cases , the Court explained that “ Congress intended a creditors ’ committee to have more extensive rights in a reorganization than in a liquidation .” Id . at 450 . As there was no dispute that Section 1109 ( b ) gave the committee the absolute right to be heard in the main Chapter 11 case , the only question was the committee ’ s right to intervene in the two adversary proceedings . The court noted : “ Neither the term ‘ case ’ nor the term ‘ adversary proceeding ’ is defined by the Bankruptcy Code ; indeed , the Code makes no explicit mention of ‘ adversary proceedings .’” Id . Rather , the Court explained that the term “ adversary proceeding ” is only defined at the end of what used to be Bankruptcy Rule 701 : “ Such a proceeding shall be known as an adversary proceeding .” Id . Consequently , the Court found , it was “ hardly surprising , given that Congress did not specifically mention adversary proceedings anywhere in the Bankruptcy Code ,” that this term was not found in Section 1109 ( b ). Id . at 451 . Recognizing that litigated matters in bankruptcy can take the form of contested matters or adversary proceedings while finding that “[ m ] ost litigated matters in a bankruptcy case are adversary proceedings ,” the Court felt reading Section 1109 ( b ) as other than an unconditional right to intervene “ would drastically restrict the rights of parties to appear and be heard .” Id . at 450 . Citing to the 1982 version of Collier on Bankruptcy , the Court describes a universal agreement that “ case ” is to be broadly defined . Id . at 450 – 51 . Further , the court focused on the fact that Section 1109 ( b ) is not limited to being heard in a “ case ,” but “ on any issue in a case .” Id . at 451 . Referring to this wording , the court stated : “ It is unlikely that Congress would have used such sweeping language if it had not meant ‘ case ’ to be a broadly inclusive term .” Id . Turning then to the legislative history , the Court explained that Section 1109 is derived from Section 206 of Chapter X of the Old Act ( 11 U . S . C . § 606 ), and stated that “ the derivation of section 1109 ( b ) from section 206 of Chapter X suggests that Congress had no intention of upsetting the long line of section 206 cases granting a broad , absolute right to appear and be heard .” Id . Section 206 allows for the “ right to be heard on all matters arising in a proceeding under this chapter ,” with Bankruptcy Rule 10-210 ( a ) stating that there was a “ right to be heard on all matters arising in a Chapter X case .” Id . As noted by the court , “ Congress ’ obvious borrowing in section 1109 ( b ) from the language of Rule 10210 ( a ) is further evidence that Congress intended for there to be no sharp break between section 206 and section 1109 ( b ).” Id .
Looking back on the history of section 206 , the court explained that section 206 was intended to broaden the rights of creditors to participate in reorganizations because continued on page 27
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