Lawyers React To Justices' Ruling On Bankruptcy Court Power

Law360 (May 26, 2015) The Supreme Court overturned a Seventh Circuit decision and held that bankruptcy courts have the authority to make final decisions on certain legal claims that help liquidate a debtor or adjudicate a bankruptcy proceeding. Here, attorneys tell Law360 why the decision in Wellness International Network Ltd. v. Sharif is significant. “The Supreme Court's decision in Wellness Int'l ... supplements its decision in Stern v. Marshall, where it held that bankruptcy courts are forbidden from entering final judgments on non-bankruptcy claims that would otherwise 'exist without regard to any bankruptcy proceeding,’” said Joshua del Castillo of Allen Matkins. “While Stern limited the jurisdiction of bankruptcy courts to matters unique to the bankruptcy context, [Wellness] allows bankruptcy courts to adjudicate substantive, non-bankruptcy matters, so long as the parties consent. Consent will now be an area of substantial focus and will require, as the court notes, a detailed 'factbound analysis' to determine whether consent was knowingly given.”