The Splits from page 27
statutory right to intervene .” Fuel Oil Supply , 763 F . 2d at 1286 . The court also looked at how Congress had distinguished between bankruptcy “ cases ” and “ proceedings ” related to cases and citing to the Advisory Committee Notes to Bankruptcy Rule 7024 , the court quoted the following : “ Intervention in a case and intervention in an adversary proceeding must be sought separately .” Id . at 1286 – 87 . Interpreting this comment to reinforce its conclusion that an absolute statutory right to intervene is rare , it explained that this statement “ makes no sense if intervention in the ‘ case ’ provided entrance to the adversary proceeding as well .” Id . at 1287 . The Fifth Circuit concluded that this interpretation does not limit the committee ’ s right to participate as it can still intervene as of right under Fed . R . Civ . P . 24 ( a )( 2 ) or by means of a permissive intervention under Fed . R . Civ . P . 24 ( b ) if the conditions of these sections are met . The court concluded that its interpretation furthers “ the expansive right to be heard created by Section 1109 ( b )” while at the same time “ the bankruptcy court is permitted to control the proceedings by restricting intervention to those persons whose interests in the outcome of the proceedings are not already adequately represented by existing parties .” Id . Finally , the court compared its conclusion with the analysis done , by using the Fed . R . Civ . P . 24 ( a ) ( 2 ) analysis , to permit creditors ’ committees to initiate adversary proceedings only if the “ debtor-in-possession has failed to act to protect the creditors ’ interests .” Id .
Seventeen years later , the Second Circuit in the Calder Corp . weighed in and reverted back to the position taken by the Third 28
Circuit . In this case , the committee moved to intervene in an adversary proceeding under Section 1109 ( b ) and Fed . R . Civ . P . 24 . After the motion to intervene was denied by both the bankruptcy court and the district court , the committee appealed to the Second Circuit . Finding that the “ plain text of the statute indicates Congress intended to grant [ an unconditional statutory ] right ” to intervene , the court reversed and remanded the case . Calder Corp ., 303 F . 3d at 163 . Interestingly , in reviewing the history of the circuit split on this issue , the Second Circuit highlighted the change in position on this issue by Collier on Bankruptcy with the “ treatise [ changing ] its position several times through its various revisions , from favoring a view that § 1109 ( b ) covered adversary proceedings to opposing such an view and then back again to favoring it .” Id . at 165 . While acknowledging that this “ flipflop . . . undermines its authoritativeness ,” the court also recognized that this is “ an indication of the closeness of the question .” Id . The Second Circuit noted that “[ a ] lthough no other circuit courts [ other than the Third and Fifth ] have directly addressed this issue , the First , Fourth , and Tenth Circuits have indicated in dicta that they favor the continued on page 29