The Ninth Circuit held that a bankruptcy court properly denied a motion to compel arbitration against a debtor, notwithstanding the existence of a valid arbitration agreement covering the dispute, and held that the bankruptcy court properly exercised its discretion to adjudicate the claim in the bankruptcy proceedings.  In re Thorpe Insulation Co., 671 F.3d 1011 (9th Cir. 2012) (No. 10-55744).  The bankruptcy court determined that the dispute, a breach of contract claim by an insurer against the debtor, was a core proceeding and that Congress intended that the bankruptcy court oversee all aspects of the reorganization, including whether the debtor’s conduct gave rise to a claim for breach of contract.  Accordingly, the court concluded that arbitration would have conflicted with Congressional intent, and therefore overrode the FAA’s mandate in favor of arbitration.