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Showing posts in Core & Non-Core Proceedings

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), aff’d by Opt-Out Lenders v. Millennium Lab Holdings II, LLC (In re Millennium Lab Holdings II, LLC), No. 17-1461 (LPS), 2018 WL 4521941 (Bankr. D. Del. Sept. 21, 2018)

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 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 Mar. 17, 2017) corrected and superseded by 2017 WL 1064997 (D. Del.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

Merely Labeling A Claim “Turnover” Under Bankruptcy Code Section 542 Does Not Always Yield A “Core” Claim

IPC Int’l Corp. v. Milwaukee Golf Shopping Center LLC (In re IPC Int’l Corp.), Adv. No. 14-50333 (MFW), 2014 WL 5544692 (Bankr. D. Del. Nov. 3, 2014)

In this adversary proceeding, Judge Walrath granted a motion to transfer venue, holding that all alleged claims (including a claim for turnover under Bankruptcy Code section 542) were non-core and that the interests of justice and convenience of the parties weighed in favor of transfer.

The IPC proceeding was commenced by the debtor, alleging turnover, breach of contract, and unjust enrichment to recover certain accounts receivable incurred mostly post-petition under a pre-petition services agreement (the… Read More

In Determining Whether a Claim is Core, the Focus Should Be on the Nature of the Dispute, Not Its Significance (Economic or Otherwise) to the Debtors and Their Estates

Longview Power, LLC v. First Am. Title Ins. Co. (In re Longview Power, LLC), Adv. No. 14-50369 (BLS), Memorandum Order, Adv. Docket No. 57 (Bankr. D. Del. Aug. 12, 2014)

In the Longview Power bankruptcy proceedings, the debtors (the “Debtors”) have proposed a chapter 11 plan of reorganization that contemplates satisfying, if ultimately allowed, certain mechanics’ lien claims asserted in the aggregate amount of over $335 million from the proceeds of a title insurance policy (the “Title Insurance Policy”) issued by First American Title Insurance Co. (“First American”).  The policy was issued in the amount… Read More

Stern Claims Should be Treated as Non-Core Under Section 157(c)(1); Ability to Consent Under Section 157(c)(2) Reserved For Another Day

Executive Benefits Insurance Agency v. Arkison, Chapter 7 Trustee of the Estate of Bellingham Insurance Agency, Inc., 573 U.S. ___ (2014)

Writing for a unanimous Court, Justice Thomas explained in Executive Benefits Insurance Agency v. Arkison, 573 U.S. ___ (2014) that a Stern claim (i.e. a proceeding that is defined as core under 28 U.S.C. § 157(b) but that may not, as a constitutional matter, be adjudicated as such) should proceed as non-core within the meaning of section 157(c)(1) so long as it otherwise satisfies the criteria of such section (i.e. “is not a core proceeding but . . . is… Read More