When Does a Creditor Waive its Right to a Jury Trial in Bankruptcy?
When does a creditor waive its right to a jury trial in bankruptcy? The question has been answered, at a high level, by the United States Supreme Court in Granfinanciera v. Nordberg, 492 US 33 (1989) and Langenkamp v. Culp, 498 US 42 (1990).
In Granfinanciera, the Supreme Court considered whether a creditor who does not file a proof of claim has a right to a jury trial in a fraudulent transfer action. The Supreme Court ruled that “under the Seventh Amendment, a creditor’s right to a jury trial . . . depends upon whether the creditor has submitted a claim against the estate.” Id. at 58. Since the creditor had “not filed claims against the estate,” the fraudulent transfer claim did not arise “as part of the process of allowance and disallowance of claims.” Consequently, the creditor was entitled to a jury trial. Id. at 59.