VI. ABSTENTION
If there is any dispute or question as to the classification of a proceeding as core or non-core or as to the question of jurisdiction of the bankruptcy court, abstention by the bankruptcy court is authorized by 28 U.S.C. § 1334(c) and by Section 305 of the Bankruptcy Code and may be discretionary or mandatory in all cases, except a case for relief brought under Chapter 15 of the Bankruptcy Code.
A. Discretionary Abstention
There are certain cases under which it may be in the best interest of the parties for the bankruptcy court to decline jurisdiction over a case even though it has a sufficient basis for jurisdiction to hear the case. In such a case, abstention by the bankruptcy court is discretionary and is authorized by two statutory provisions.
1. 11 U.S.C. § 305 Abstention
Pursuant to Section 305 of the Bankruptcy Code, the bankruptcy court, after notice and hearing, may dismiss a case or suspend all proceedings in a case, at any time, if the interests of the creditors and the debtor would be better served by such dismissal or suspension. The power to abstain as provided by Section 305 applies to both voluntary and involuntary cases, and the court's decision to dismiss a case or suspend all proceedings in a case or not to dismiss or suspend is not reviewable on appeal. See In re Remember Enters., 425 B.R. 757, 761 (Bankr. M.D.N.C. 2010); In re Scott, 2010 Bankr. LEXIS 2604, No. 10-00794-8-SWH (Bankr. E.D.N.C. Aug. 6, 2010). The Middle District has considered the following factors in determining whether to voluntarily abstain and dismiss a Chapter 7 case under Section 305, stating:
In determining whether the interests of creditors and the debtor would be better served by dismissal, courts have considered factors such as "fairness, priorities in distribution, capacity for dealing with frauds and preferences, speed, economy, freedom from litigation, the importance of a discharge to the debtor, a pending state proceeding, the small number of remaining creditors, the necessary complexity of the bankruptcy process, efficiency and economy of administration."
In re Remember Enters., 425 B.R. 757, 761 (Bankr. M.D.N.C. 2010) (citing In re Golf Course Mktg. Corp., No. 95-76646, slip op. at 4 (Bankr. D.S.C. 1996) (1996 WL 33340787)).
2. 28 U.S.C. § 1334(c)(1) Abstention
In addition to the discretionary abstention authorized by Section 305 of the Bankruptcy Code, 28 U.S.C. § 1334(c)(1) provides that "except with respect to a case of Chapter 15 of Title 11, nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under Title 11 or arising in or related to a case under Title 11." Section 1334(c) (1) applies to core matters as defined by 28 U.S.C. § 157(b)(2) as well as "related to" matters. The only exception to the abstention power was added to 28 U.S.C. § 1334(c)(1) by BAPCPA. Under the 2005 amendment, the court may not abstain from hearing a case or proceeding under Chapter 15 which addresses cross-border insolvency proceedings.
Courts within the Fourth Circuit have enumerated a 12-factor formulation for use in determining whether to exercise discretionary abstention. These factors include:
(1) the court's duty to resolve matters properly before it;...
(2) the predominance of state law issues and non-debtor parties;
(3) the economical use of judicial resources;
(4) the effect of remand on the administration of the bankruptcy estate;
(5) the relatedness or remoteness of the action to the bankruptcy case;
(6) whether the case involves
