Litigation: A Stern gift that keeps on giving
In Stern v. Marshall, the Supreme Court held that a non-Article III court, such as a bankruptcy court, may only constitutionally determine public rights, such as the resolution of a proof of claim filed in a bankruptcy, and not private rights, such as those to augment the estate.
December 29, 2011 at 04:00 AM
6 minute read
The original version of this story was published on Law.com
In Stern v. Marshall, the Supreme Court held that a non-Article III court, such as a bankruptcy court, may only constitutionally determine “public rights,” such as the resolution of a proof of claim filed in a bankruptcy, and not private rights, such as those to augment the estate.
Stern clarifies that private rights may be adjudicated only to the extent that they are “necessarily resolvable” in the context of determining the public rights. Supplementing prior case law, Stern held that a federal bankruptcy court cannot enter final findings of fact with respect to a debtor's state law counterclaim against a creditor despite the creditor having filed a proof of claim in the bankruptcy estate.
Since Stern, many litigants have asserted and numerous courts have analyzed whether bankruptcy courts may enter final judgments in fraudulent conveyance and preferential transfer actions. The rulings in the following cases run the gamut of interpretations.
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