It has been more than two years since the U.S. Supreme Court’s decision in Stern v. Marshall,1 and the New York courts and litigants are still struggling with the extent of Stern‘s application to the bankruptcy court’s jurisdiction and constitutional authority to render final orders in adversary proceedings. In fact, “Stern v. Marshall has become the mantra of every litigant who, for strategic or tactical reasons, would rather litigate somewhere other than the bankruptcy court.” In re Ambac Financial Group, 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011) (J. Chapman); see also In re Extended Stay, 466 B.R. 188, 202 (S.D.N.Y. 2011) (J. Scheindlin); In re Pali Holdings, 488 B.R. 841, 848 (Bkrtcy. S.D.N.Y. 2013) (J. Gerber).

In response to litigants’ attempts to remove almost every litigation from the bankruptcy court, the U.S. District Court for the Southern District of New York issued a standing order that has made it clear that Stern is not jurisdictional, but, instead, determines the bankruptcy court’s constitutional authority to issue a final judgment. See Jan. 31, 2012 Amended Standing Order of Reference (discouraging litigants from moving to withdraw the reference in core proceedings and suggesting that in cases where the bankruptcy court lacks constitutional authority to issue the final decision, it shall, nevertheless, hear the proceeding and submit proposed findings of fact and conclusions of law to the district court). Other district courts have issued similar orders.

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