U.S. Supreme Court Issues Ruling in In re Bellingham


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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