Tag Archives: Marshall

Ortiz v. Aurora Health Care, Inc. (In re Ortiz), No. 10-3465 (7th Cir. Dec. 30, 2011)

The Seventh Circuit Court of Appeals dismissed the debtors’ appeal of the bankruptcy court’s dismissal of the debtors’ state law counterclaims because the bankruptcy court lacked authority to enter a final judgment on the debtors’ counterclaims, and without a final judgment, there was no basis for appellate jurisdiction. Continue reading

Coudert Brothers Trust v. Baker & McKenzie, et al., No. 11-2785, 2011 U.S. Dist. LEXIS 110425 (S.D.N.Y. Sept. 23, 2011)

In Coudert Brothers, the Southern District of New York considered whether the parties impliedly consented to the bankruptcy court’s entry of a final order determining non-core claims it otherwise lacked constitutional authority to adjudicate under Stern v. Marshall.[i] Because the parties did not consent, the district court treated the bankruptcy court’s opinion as proposed findings of fact and conclusions of law, which the district court would review de novo. Continue reading

Development Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, No. 11 Civ 5994, 2011 WL 5244463 (S.D.N.Y Nov. 2, 2011)

The plan administrator for the estate of Coudert Brothers, LLP filed with the bankruptcy court thirteen separate adversary proceedings against ten law firms alleging that the law firms were liable to Coudert for “unfinished business” that several of Coudert’s former partners took with them to their new firms. After the Supreme Court issued its decision in Stern v. Marshall, the law firms moved the Southern District of New York to withdraw the bankruptcy reference and abstain from hearing the claims in favor of New York state courts or review the merits of the bankruptcy court’s denial of the firms’ motion to dismiss de novo. The court granted the motion to withdraw the reference, but denied the motion to abstain. Continue reading

Special Features – Stern v. Marshall

On June 23, 2011, the Supreme Court issued an opinion in Stern v. Marshall, the well-known case involving the estate of former model Vickie Lynn Marshall (more famously known as Anna Nicole Smith) and the estate of her late husband, wealthy oil magnate J. Howard Marshall. The decision, which was written by Chief Justice Roberts, held that a bankruptcy court, as a non-Article III court, lacked constitutional authority to issue a final judgment on state law counterclaims by a debtor against a claimant notwithstanding that the Bankruptcy Code specified that all counterclaims of a debtor were within the “core” jurisdiction of the bankruptcy court. For an in depth analysis of the decision, please refer to Cadwalader, Wickersham & Taft LLP’s Client & Friends Memo “Stern v. Marshall: How Big Is It?” published July 14, 2011.

Although the decision may have wide-ranging implications on bankruptcy jurisdiction, the nature and extent of its impact are not yet clear. Chief Justice Roberts’ opinion notes that the question it addresses is “a ‘narrow’ one,” and it will be interesting to see how lower courts apply the ruling to the facts of various cases as they arise. As a service to our readers, Cadwalader’s Restructuring Review Blog will examine how courts interpret and apply Stern v. Marshall and the resulting impact on the jurisdiction of bankruptcy courts across the country.

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Stern v. Marshall: How Big Is It?

On June 23, 2011, the Supreme Court ruled 5-4, in an opinion by Chief Justice Roberts, that a Bankruptcy Judge lacked constitutional authority to issue a final ruling on state law counterclaims by a debtor against a claimant. Continue reading

In re Blixseth, No. 10-00088, 2011 WL 3274042 (Bankr. D. Mont. Aug. 1, 2011)

In Samson v. Blixseth, the Bankruptcy Court for the District of Montana determined sua sponte that it did not have constitutional authority to hear a core adversary proceeding to set aside certain transfers as fraudulent conveyances. The adversary proceeding in Blixseth involved a dispute between the bankruptcy trustee and the former spouse of the debtor over property conveyed to the debtor under a marital settlement agreement. The trustee sought to set aside the agreement, recover the allegedly fraudulent and preferential transfers of property, and equitably subordinate the claims of the debtor’s former spouse. Continue reading

In re Salander O’Reilly Galleries 453 B.R. 106, (S.D.N.Y. Jul. 18, 2011)

The debtor in Salander was a Manhattan art gallery that had obtained financing from a bank, allegedly secured by a blanket lien on all of the debtor’s assets. Approximately a year and a half before the commencement of the bankruptcy case, Kraken Investment, Ltd. and the debtor entered into a consignment agreement which provided for Kraken’s consignment of a Sandro Botticelli painting titled “Madonna and Child” to the debtor. Kraken had commenced a prepetition lawsuit in New York Supreme Court to recover the painting which was stayed by the bankruptcy filing. During the case, Kraken asserted a claim for the Botticelli pursuant to a court-approved art claims protocol, a liquidation trust was then formed pursuant to a confirmed plan of liquidation, and the bank assigned its interest in the Botticelli to the trust. Continue reading

Sanders v. Muhs (In re Muhs), No. 10-01008, 2011 WL 3421546 (Bankr. S.D. Tex, Aug. 2, 2011)

In Sanders v. Muhs (In re Muhs),[ii] the United States Bankruptcy Court for the Southern District of Texas held that a debtor’s right to discharge its debt and the amount of debt that is excepted from discharge are necessarily public rights that may be adjudicated by bankruptcy courts. In light of Stern v. Marshall, the Muhs court considered, sua sponte, its authority to hear an adversary proceeding which alleged that the debtors’ debt was non-dischargeable because the debtor intentionally made false representations that the creditor relied upon in providing a loan. Continue reading