Recent Supreme Court Decision May Spark More Litigation

Summary: On June 23, 2011, the Supreme Court of the United States decided the most significant bankruptcy court jurisdiction case in almost 30 years. In Stern v. Marshall, the Supreme Court held that bankruptcy court judges, as non-Article III judges, lack constitutional authority to enter a final judgment on counterclaims asserted by a debtor where the counterclaim involves issues not essential to the allowance or disallowance of the underlying claim or is otherwise not subject to the “public rights” exception. The attached Client Alert reviews the Supreme Court’s decision and its possible impact on bankruptcy case administration.