Supreme Court Empowers Bankruptcy Courts

supreme courtIn Wellness International Network, Ltd., et al. v. Sharif, the United States Supreme Court ruled that bankruptcy judges have the power to adjudicate certain claims if all parties knowingly and voluntarily consent.  In a 6-3 ruling, the Supreme Court reversed a Seventh Circuit holding that the bankruptcy court did not have constitutional authority to decide whether certain property belonged to the bankruptcy estate because the dispute also involved state law issues.  The Supreme Court found that Article III of the Constitution permits bankruptcy judges to make final judgments so long as those involved consent.  Justice Sotomayor, writing for the Court, said “Adjudication based on litigant consent has been a consistent feature of the federal court system since its inception.”  The Wellness decision marks the third time in the last four years that the Supreme Court has decided questions relating to the power of the bankruptcy court.

For more information on debtor-creditor issues and bankruptcy law, please contact Charles Smith or Nicole Hughes at 712-325-9000.

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