Supreme Court rules on bankruptcy courts’ authority
Supreme Court rules on bankruptcy courts’ authority

[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Tuesday in Wellness International Network Ltd. v. Sharif [SCOTUSblog materials] that bankruptcy judges have the power to make final judgments in certain legal disputes. In so ruling the Supreme Court reversed and remanded an appellate court decision finding that the bankruptcy court did not have the required constitutional authority to decide whether certain property belonged to the bankruptcy estate because the dispute also involved state laws. Justice Sonia Sotomayor delivered the majority opinion, which was joined by four justices, with Justice Samuel Alito joining in part, while Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas dissented. The 6-3 ruling declared that if all involved parties consent, then the country’s nearly 1,000 bankruptcy judges can make final decisions on legal issues that arise in bankruptcy cases.

The Supreme Court has issued several rulings on bankruptcy issues in recent years. Earlier this month the court ruled unanimously [JURIST report] that a debtor who converts to Chapter 7 is entitled to return any post-petition wages not yet distributed by the Chapter 13 trustee. In 2011 the Supreme Court held in Stern v. Marshall [opinion, PDF] that bankruptcy judges only have the power to make a final ruling on a dispute that “stems from the bankruptcy itself.” The court ruled that other issues must be decided by the district court.