Case Summary:
Debtor filed a voluntary Chapter 11 petition on September 12, 2016. He filed an adversary complaint on September 14, 2016, against Defendants David J. and Gale I. Groth, David J. and Judith A. Heinecke, James G. Pritchard, John W. and Patricia Tesch, and Barbara L. Wegner (collectively as the "State Court Plaintiffs") seeking a declaratory judgment that he is not liable to these individuals, that their claims be disallowed, and that any debt owed to them is dischargeable. The State Court Plaintiffs filed an Answer and Counterclaim to the Debtor's Complaint. They seek a determination that under 11 U.S.C. §§ 523(a)(2), (a)(6), and (a)(19) that certain debts are nondischargeable. The State Court Plaintiffs filed a motion requesting that the Court abstain from determining issues related to liability under 11 U.S.C. § 523(a)(19), or in the alternative that a non-bankruptcy tribunal must determine liability under 11 U.S.C. § 523(a)(19). The Court denied the State Court Plaintiffs' motion for permissive abstention. In addition, the Court sided with the growing number of bankruptcy courts that reason section 523(a)(19)'s plain language does not divest the Court from fully adjudicating liability, damages, and exception to discharge in a section 523(a)(19)-based adversary proceeding.

Statute/Rule References:
11 U.S.C. § 523(a)(19) -- Nondischargeability - Violation of Securities Laws
28 U.S.C. § 1334 -- Abstention

Key Terms:
Abstention