On June 9, 2014, the United States Supreme Court issued a unanimous opinion in Exec. Benefits Ins. Agency, Inc. v. Arkison (In re Bellingham Ins. Agency, Inc.), 573 U.S. ___ (2014), affirming the Ninth Circuit and holding that, while the Constitution does not permit a bankruptcy court to issue a final ruling in certain circumstances, it is permitted to issue proposed findings of fact and conclusions of law to be reviewed de novo by the district court.

This case arose out of uncertainty after the Court's prior ruling in Stern v. Marshall, 131 S.Ct. 2594 (2011). In Stern, the Supreme Court held that Article III of the Constitution prohibits a bankruptcy court from entering a final adjudication on certain claims. The Court did not, however, offer direction on how bankruptcy courts should proceed when faced with "Stern claims" (i.e., claims in which a bankruptcy court is statutorily authorized to issue a final ruling, but is constitutionally prohibited from doing so).

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Topics:  Article III, Chapter 7, Commercial Bankruptcy, EBIA v Arkison, Executive Benefits Insurance Agency, Fraudulent Conveyance, SCOTUS, Stern v Marshall, Tortious Interference

Published In: Bankruptcy Updates, Civil Procedure Updates, Constitutional Law Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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