Jeffrey R. Manning on Stern v. Marshall
As Blawgletter gets ready for a trial that starts Monday, with a glad and grateful
heart we welcome our friend, former team-mate, and world class i-banker (at BDO
Capital) Jeffrey R. Manning
as guest poster. Jeff always has something well worth hearing to say. He also has,
in the realm of humor, what the French call "I don't know what".
Today, Jeff regales us with his take on Stern v. Marshall and wonders What It All Means.
Here you go:
Disclosure: While not an attorney, twice in 30 years as an investment banker I received
the "I’m not an attorney BUT… Award" at the closing
dinner, and it is my distinct pleasure to regularly spend many waking hours around
members of the bankruptcy bar.
For decades, bankruptcy judges have steadily labored on in relative obscurity pulling
and pushing debtors through the process of the U.S. Bankruptcy Code, and these men
and women deserve much credit for enhancing capital markets with a relatively efficient
process to deal with default and disappointment; especially compared to "debtor’s
prison" approaches around the globe. I have witnessed "final" sale
orders resolving troubling environmental and product liability issues, complicated
tax matters, and labor strife with the power of the judge’s signature, as
assets were released "free and clear of liens, claims and encumbrances"
to a good faith buyer. Despite the relative obscurity, in this court of equity bankruptcy
judges wielded enormous power.
Perhaps no longer, after the U.S. Supreme Court’s groundbreaker in Stern v.
Marshall, Case No. 10-179 2011 WL 2472792 (June 23, 2011). In a 5-4 opinion
written by Chief Justice John Roberts, the court affirmed the 2010 ruling by the
U.S. Court of Appeals for the Ninth Circuit and held that the bankruptcy court did
not have constitutional authority to decide a state law claim brought by a debtor
against a creditor, even though the matter was part of the "core" statutory
jurisdiction of the bankruptcy court.
The case was highly visible, so to speak, as Ms. Vickie Lynn Marshall is best known
as the 1993 Playmate of the Year, Anna Nicole Smith, and she brought suit against
her late husband’s son, Pierce Marshall – salacious stuff, this.
However unknown, the impact on the daily grinding work of the bankruptcy bar has
been jolted by this Constitutional challenge. As an adjunct of the U.S. District
Court, can a bankruptcy court issue such a thing as a "final" order? Since
Stern was decided, courts have issued more than 70 published and unpublished rulings
that cite to it. Where do we go from here, as judges evaluate this new challenge
to their authority? It will take many billable hours to sort out.
