Supreme Court Rules Bankruptcy Courts Can Adjudicate Stern Claims Subject To District Court Review
Wolfson Bolton Kochis
In Exec. Benefits Ins. Agency v. Arkison, Chapter 7 Tr. of Estate of Bellingham Ins. Agency, Inc., 573 U.S. ___, (2014), the United States Supreme Court held that claims designated for final adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding in that way as a constitutional matter (i.e., Stern claims), may be adjudicated by a bankruptcy court subject to district court review. Peter Arkison, the trustee for Bellingham Insurance Agency, filed a complaint against Executive Benefits Insurance Agency alleging fraudulent conveyance of assets from Bellingham to Executive Benefits. The parties agreed that this was a Stern claim, and the Court held this type of claim may be heard by a bankruptcy court issuing proposed findings of fact and conclusions of law subject to district court de novo review. The Court held that the fraudulent conveyance claims at issue in Bellingham were granted appropriate review by an Article III court when a district court reviewed the case de novo and entered a judgment separate from the bankruptcy court's order.