United States Supreme Court Expands Power of Bankruptcy Courts- Well...

Holding: Article III permits bankruptcy judges to adjudicate Stern claims with the parties’ knowing and voluntary consent.  Consent by parties also need not be in writing but can be determined through conduct.

In the recent United States Supreme Court decision of Wellness International Network v. Sharif, the High Court entered a very significant decision which expanded the powers of Bankruptcy Courts to hear so-called Stern claims – claims that are core but for which the Bankruptcy Court does not have jurisdiction to enter a final ruling.

In Sharif, the Court overturned the Seventh Circuit decision in a 6-3 opinion, holding that parties may consent to the Bankruptcy Court exercising jurisdiction over so-called Stern claims, and that such consent need not be express, but may be through the parties’ conduct.

This opinion is significant in that it gives power back to the Bankruptcy Courts by allowing parties to waive their right to present their case before an Article III Judge.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at [email protected].