On January 31, 2012, Southern District of New York Chief Judge Loretta A. Preska issued an Amended Standing Order of Reference, providing that (i) bankruptcy judges may submit proposed findings of fact and conclusions of law with respect to “core” matters over which bankruptcy courts do not have constitutional authority to enter final judgments and (ii) the district court may treat any order of the bankruptcy court as proposed findings of fact and conclusions of law in the event that the district court determines that entry of a final order by the bankruptcy court would be inconsistent with Article III of the United States Constitution.
Without specific reference to the Supreme Court’s decision in Stern v. Marshall, the amended order resolves, at least in the Southern District of New York, the post-Stern debate as to whether Bankruptcy Code section 157(c), which authorizes a bankruptcy court to issue to the district court proposed findings of fact and conclusions of law with respect to non-core matters, permits the bankruptcy court to do so with respect to core matters that the bankruptcy court does not have constitutional authority to adjudicate (such as the state-law counterclaim at issue in Stern). As a result of the amended order, bankruptcy courts in the Southern District of New York may treat such core claims as non-core claims insofar as they may hear the claim and propose findings of fact and conclusions of law to the district court.
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