Emory Bankruptcy Developments Journal


Courts often apply the Burford abstention doctrine in cases involving a state insurance insolvency proceeding. This tendency for federal courts to remand cases in deference to state proceedings in the insurance insolvency context derives from a Congressional policy of allowing states to regulate the insurance industry under the McCarran-Ferguson Act and the exclusion of insurance companies from the Bankruptcy Code. The author examines the processes used by different courts to determine whether to invoke Burford abstention and proposes the adoption of a formula that builds upon a set of factors developed by the Tenth Circuit to address additional concerns. The proposed formula draws from case law and the policy goals underlying Burford abstention while emphasizing the role of avoiding the disruption of a state's efforts to establish insolvency proceedings for insurance companies. Through a six-part test, Courts can properly navigate the application of the 'troublesome and enigmatic' Burford abstention doctrine.