Trustee Blog

In re: Bellingham–Bankruptcy Judge’s Power

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July 19, 2014 Cdcbaa’s First Annual James T. King Bankruptcy Symposium


Last Saturday I attended a fascinating seminar hosted by the Los Angeles cdcbaa on

In re Bellingham: From the Insiders

Speakers were Hon. Richard Paez, Ninth Circuit Court of Appeals

Hon. Meredith Jury, USBC, Riverside Division

Prof. John Pottow, University of Michigan School of Law and the the discussion was lead by M. Jonathan Hayes, Esq., Simon Resnick Hayes ,LLC.

Lack of Jurisdiction of a Bankruptcy Judge that was raised in the United States Supreme Court in Executive Benefits Insurance Agency v. Arkinson (In re Bellingham Insurance Agency, Inc.) 573 U.S. _____(2014) after Stern V. Marshall, 131 S.Ct. 2594 (2011). The Supreme Court in In re Bellingham

JUSTICE THOMAS delivered the opinion of the Court.

In Stern v. Marshall, 564 U. S. ___ (2011), this Court held that even though bankruptcy courts are statutorily authorized to enter final judgment on a class of bankruptcy- related claims, Article III of the Constitution prohibits bankruptcy courts from finally adjudicating certain of those claims. Stern did not, however, decide how bank- ruptcy or district courts should proceed when a “Stern claim” is identified. We hold today that when, under Stern’s reasoning, the Constitution does not permit a bankruptcy court to enter final judgment on a bankruptcy- related claim, the relevant statute nevertheless permits a bankruptcy court to issue proposed findings of fact and conclusions of law to be reviewed de novo by the district court. Because the District Court in this case conducted the de novo review that petitioner demands, we affirm the judgment of the Court of Appeals upholding the District Court’s decision.

They received 12 amicus briefs in this case as the Ninth Circuit Issued an Order for anyone to file an amicus brief on the issue. One of the briefs filed was by Professor Pottow of University of Michigan School of Law. His brief was used to help the Trustee’s side. He ultimately argued the case in front of the US Supreme Court.

The Bellingham case was about about fraudulent transfer to a “stranger”. The “stranger” said that they could not be tried against in a non-Article III Judge, i.e. a Bankruptcy Judge. The US Supreme agreed and the “stranger” is allowed to go forward to an Article III to have the matter heard. This is the matter that says whether this is “core or non-core”.

Stay turned for the next post to see what else was said at the 2014 cdcbbaa Jim King event and the effect this US Supreme Court case may have on Bankruptcy Judges and their power.


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