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Stern Amendments to Bankruptcy Rules

September 19, 2016

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Stern Amendments to Bankruptcy Rules

September 19, 2016

Authored by: James Maloney

While it has taken five years of committee and court efforts, the “Stern Amendments” to the Federal Rules of Bankruptcy Procedure will become effective December 1, 2016.  These amendments will streamline litigant and court procedures in resolving subject matter jurisdiction matters as between district courts and bankruptcy courts.

The Bankruptcy Cave has followed many procedural issues since Stern v. Marshall.[1]/ Stern held certain claims designated by statute for final adjudication in bankruptcy court, are nonetheless required by the Constitution to proceed in an Article III district court (Stern post). Various Stern progeny has explored the role of parties’ consent to final adjudication in the bankruptcy court, the ability of the bankruptcy court to make findings of fact and conclusions of law for final determination by the district court, emerging local rule accommodations of jurisdictional uncertainty, and a special practitioner’s peril where a trial in district court is

Failure to Observe Bankruptcy Rule Deadline in An Adversary Proceeding Tried in District Court Costs Defendants Opportunity to Appeal $6,000,000 Verdict.

May 17, 2016

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A recent case from the 11th Circuit illustrates the procedural perils of litigation arising from a bankruptcy case but ultimately tried in the district court.  In Rosenberg v. DVI Receivables XIV, LLC,[1] the defendants lost their appeal not on the merits, but based upon the difference between civil rules and bankruptcy rules regarding what are timely post-trial motions.

BC has previously addressed procedural issues between bankruptcy courts and district courts arising from the Supreme Court’s ruling in Stern v. Marshall.[2]   As we have written when Stern was first decided, Stern held certain claims designated by statute for final adjudication in bankruptcy court, are nonetheless required by the Constitution to proceed in an Article III district court.  Relevant Stern progeny has explored the role of parties’ consent to bankruptcy court proceedings, the ability of the bankruptcy court to make findings of fact and conclusions of

The Stern Files: Evolving Jurisdiction by Consent, Wellness International Network Ltd. v. Sharif.

August 3, 2015

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Directional text on stone

In a previous post this blog addressed the Supreme Court’s 2011 ruling in Stern v. Marshall.[1] In Stern, the Court held that Article III of the Constitution limited bankruptcy courts from entering final orders on certain state law counterclaims despite such claims being designated as “core” proceedings by statute (now known as Stern Claims).

The Supreme Court left questions of great interest unanswered in Stern, but two emerged quickly: 1) can a bankruptcy court treat a “core” Stern Claim by the same procedures as “non-core” (disputes not significantly related to a bankruptcy case) under 28 U.S.C. Section 157, and thereby carry the dispute through proposed findings of fact and conclusions of law to forward to the district court; and 2) can a bankruptcy court enter a

The Stern Files: A Review of In re Fisher Island Investments, Inc.

March 9, 2015

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The latest in Stern analysis can be found in a fascinating story of mystery, money, and international intrigue. Last month, the Eleventh Circuit in In re Fisher Island Invs., Inc., No. 12-15595, 2015 WL 729689 (11th Cir. Feb. 20, 2015), upheld the bankruptcy court’s ruling as to the ownership of putative debtors, despite a party’s objection to the bankruptcy court’s constitutional authority to decide the putative debtors’ ownership under Stern v. Marshall.[1]

Fisher Island Investments is merely one part of the global litigation following the unexpected death of Arkadi Patarkatsishvili regarding the disputed ownership of three trusts—purportedly worth billions of dollars—between two competing groups: the Redmond Group and the Zeltser Group. Following litigation in the Republic of Georgia, the United Kingdom, Liechtenstein, the British territory in Gibraltar, and state litigation in the United States, a group of six entities (the “Petitioning Creditors”) filed three separate involuntary

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