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Showing posts in Constitutional Adjudicatory Authority

Delaware Bankruptcy Court Finds It Has Constitutional Adjudicatory Authority to Enter a Final Confirmation Order Containing Nonconsensual Third Party Releases

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2017 WL 4417562 (Bankr. D. Del. Oct. 3, 2017)

Following the United States Supreme Court’s ruling six years ago in Stern v. Marshall, 131 S. Ct. 2594 (2011), the constitutional adjudicatory authority of bankruptcy courts to enter final orders has been challenged in a variety of proceedings, leading to varied interpretations of the reach of the Stern decision.  In Millennium, the Delaware Bankruptcy Court was asked on remand from the Delaware District Court whether it had the constitutional authority to enter a final order confirming a plan that contained nonconsensual third party releases, i.e. releases… Read More

Stern Requires More Than Subject Matter Jurisdiction, Bankruptcy Court Must Also Have Constitutional Adjudicatory Authority to Approve Nonconsensual Third-Party Releases in a Plan

Opt-Out Lenders v. Millennium Lab Holdings II, LLC, No. 16-110-LPS, — F.Supp.3d —, 2017 WL 1032992 (D. Del. Mar. 17, 2017) corrected and superseded by 2017 WL 1064997 (D. Del. Mar. 20, 2017)

In this Opinion, the United States District Court for the District of Delaware (the “District Court”) examines the bankruptcy court’s authority post-Stern v. Marshall, 131 S. Ct. 2594 (2011), to enter a final order releasing and permanently enjoining a non-debtor’s state law fraud and federal RICO claims against non-debtors absent consent.  Following two recent United States Supreme Court cases—Stern and Wellness Int’l Network, Ltd. v…. Read More

Non-Consensual Third Party Releases Certified Directly to the Third Circuit

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2016 WL 155500 (Bankr. D. Del. Jan. 12, 2016)

The Delaware Bankruptcy Court has granted direct certification of a hot-button issue surrounding confirmation of plans in bankruptcy to the Third Circuit Court of Appeals—namely, whether a bankruptcy court has the authority to release a non-debtor’s direct clams against other non-debtors without the consent of… Read More

Stern Dissent Takes Majority in Wellness, Holds Parties Can Consent To Bankruptcy Court Final Adjudication of Stern Claims

Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. —- (2015)

On May 26, 2015, the Supreme Court closed the loop on an issue left open by the High Court’s previous decisions in Stern v. Marshall, 564 U.S. ____ (2011) (holding that Article III prevents bankruptcy courts from entering final judgments on Stern claims (i.e., proceedings that are defined as core under 28 U.S.C. § 157(b) but that may not, as a constitutional matter, be adjudicated as such)) and Executive Benefits Insurance Agency v. Arkison, 573 U.S. ___ (2014) (permitting bankruptcy courts to submit proposed findings of fact and conclusions of… Read More