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CRIMINAL CONTEMPT IN BANKRUPTCY PROCEEDINGS
confines of bankruptcy courts’ powers have ever since remained a contentious yet
obviously important issue as even three US Supreme Court decisions has tried to
put an end to the debate though not specifically focusing on contempt powers.”
The new bankruptcy courts are ever since perceived as a special class of courts
having “powers of a court of equity, law, and admiralty”® and inherent contempt
powers as well.*? However, this is applied unreservedly only to their civil contempt
powers as express provision in the first, 1978 version of the statutory text restricted
their criminal contempt powers.** The 1984 amendments of the Code then repealed
the provision without substituting it by a new express ban ever since. As a result,
the positions of the Appellate Courts are divided though the majority position
is that bankruptcy courts have powers to issue civil but not criminal contempt
orders unless “committed in the presence of the judge of the court or warrantying
a punishment of imprisonment?
This formulation leaves some bankruptcy judges in limbo though “/i/f the
bankruptcy court concludes it is without power to punish or to impose the proper
punishment for conduct which constitutes contempt, subdivision (a)(3) [of Rule
9020] authorizes the bankruptcy court to certify the matter to the district court.”°®
In the case of In Re Finney,*’ for example, the bankruptcy court did conclude the
criminal contempt trial, found the defendant to be in criminal contempt, and then
referred the case to the district court for sentencing.
Some doubts surround also the question when may the bankruptcy court sua
sponte initiate contempt proceedings. Namely, Rule 9014 gives such powers only
Courts of Appeals, and subject to removal for cause. 28 U.S.C.A. § 152(a)(1), (e).” Wellness
International Network, Ltd. v. Sharif 135 S.Ct. 1932 (2015), paras 1 and 5, at 1933.
31 See Northern Pipeline Const. v. Marathon Pipe Line Co., 102 S.Ct. 2858 (1982), Stern v.
Marshall 131 S.Ct. 2594 (2011), and Wellness Intern. Network, Ltd. v. Sharif 135 S.Ct. 1932
(2015).
32 See 18 U.S.C. $401, which reads: “A court of the United States shall have power to punish
by fine or imprisonment, or both, at its discretion, such contempt of its authority, and none
other, as —
(1) Misbehavior of any person in its presence or so near thereto as to obstruct the administration
of justice;
(2) Misbehavior of any of its officers in their official transactions”.
33. For a thorough updated coverage of the topic see Williams, Proof of Motion.
34 28 U.S.C.A. $1481.
% Rule 9020. Contempt Proceedings, codified as 28 U.S.C.A. §1481. Subdivision (a) of
Rule 9020 reads: “(a) Contempt Committed in Presence of Bankruptcy Judge. Contempt
committed in the presence of a bankruptcy judge may be determined summarily by a
bankruptcy judge. The order of contempt shall recite the facts and shall be signed by the
bankruptcy judge and entered of record.” [Emphasis added.]
36 Rule 9020, Advisory Committee Notes to Subdivision (a).
37 167 B.R. 820 (E.D. Va. 1994).
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