Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Supreme Court Clarifies Bankruptcy Court Powers
Authors: Joel R. Glucksman, Donald Scarinci
Date: June 19, 2014
Key Contacts
Donald Scarinci
Firm Managing Partner
201-896-4100 dscarinci@sh-law.comBack
The Supreme Court clarified a prior ruling on June 9 that put limits on bankruptcy judges’ powers, according to The Wall Street Journal. The unanimous ruling in the case of Executive Benefits Insurance Agency v. Peter H. Arkison clarifies a 2011 ruling as to on which claims the bankruptcy may give a final ruling and on which it may not.
The key issue at stake is the difference between bankruptcy judges and district judges, the news source explained. District judges are Article III judges – they are confirmed by the senate and serve for life – whereas bankruptcy judges are not. In 2011, the Supreme Court ruled that bankruptcy judges do not possess the authority to issue final rulings on certain claims because of this inferiority. Whether a bankruptcy court can make a ruling on the basis of litigant consent – in which both parties agree to let the court make a final judgment.
According to Forbes, the Supreme Court ruling on June 9 said narrowly that Executive Benefits Insurance Agency – allegedly funded with a debtor’s fraudulent conveyances – had gotten the benefit of an Article III judge’s review, despite disagreeing with the authority of the bankruptcy court in that case. However, the Court specifically and intentionally did not resolve the issue of litigant consent.
“The court specifically said it was not resolving the important issue the case presented, which is whether even with a party’s consent bankruptcy judges can enter final judgment,” Douglas Hallward-Driemeier of Ropes & Gray, lawyer for the losing party, EBIA, told the news source. “One of the reasons that is so important is it also calls into question the ability of magistrate judges to enter final judgments.”
If you have any questions about this post or would like to discuss your company’s creditors’ rights and bankruptcy matters , please contact me, Joel R. Glucksman at www.ScarinciHollenbeck.com.
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No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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