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  • Writer's pictureKirk Hartley

SCOTUS and Bankruptcy Court Jurisdiction Regarding Adjudication of Claims Related to Mass Tort Bankr

The Stern related opinions continue from SCOTUS. It will be interesting to see the impact for mass tort bankruptcies. A May 26, 2015 article from LAW360 explains:

Law360, New York (May 26, 2015, 10:33 AM ET) — The U.S. Supreme Court ruled Tuesday that bankruptcy courts have the authority to make final decisions on certain legal claims that help liquidate a debtor or adjudicate a bankruptcy proceeding, a decision that affirms the jurisdictional authority of bankruptcy courts.

Justices ruled 6-3 in favor of overturning the Seventh Circuit which ruled bankruptcy courts lack jurisdiction not expressly granted to it by an Article III court. The decision will likely clear up confusion in the restructuring community over which matters can be decided in Chapter 11 and which need an Article III court.

Writing for the majority, Justice Elana Kagan said that bankruptcy judge’s ability to decide these claims does not usurp the power of other courts because they are still subject to the control of Article III judges. The case is Wellness International Network Ltd. v. Sharif.

“Congress could choose to rest the full share of the Judi­ciary’s labor on the shoulders of Article III judges. But doing so would require a substantial increase in the num­ber of district judgeships,” Justice Kagan wrote. “Instead, Congress has supple­mented the capacity of district courts through the able  assistance of bankruptcy judges. So long as those judges are subject to control by the Article III courts, their workposes no threat to the separation of powers.”

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