Stern v. Marshall Affirmed and Clarified

June 9, 2014

For the uninitiated, Stern v. Marshall is the Anna Nicole Smith (aka Vickie Lynn Marshall) matter …

In a unanimous decision this morning, in Executive Benefits Insurance Agency v. Arkison, the Supreme Court of the United States affirmed and clarified its prior decision in Stern v. Marshall.  More specifically, in this opinion, the Supreme Court clarified how bankruptcy courts should proceed when faced with claims labeled by Congress as “core” but determined to be “non-core” under Sterni.e., claims set forth in the so-called statutory gap.  In clarifying how bankruptcy courts should proceed, the Supreme Court found that 28 U.S.C. § 157(c) permits Stern claims to proceed as non-core claims.  The Supreme Court explained:

With the “core” category no longer available for the Stern claim at issue, we look to section 157(c)(1) to determine whether the claim may be adjudicated as a non-core claim – specifically, whether it is “not a core proceeding” but is “otherwise related to a case under title 11.”

Accordingly, when faced with a Stern claim, bankruptcy courts now have clarification that the proper course of action is to determine whether the claim(s) satisfy 28 U.S.C. § 157(c)(1) and, if so, “[t]he bankruptcy court should hear the proceeding and submit proposed findings of fact and conclusions of law to the district court for de novo review and entry of judgment.”

(For a lighter-hearted review of the original proceedings, read the Marshall v Marshall coverage at Above The Law.)

thanks to Blake Roth [Blake.Roth@wallerlaw.com] for sharing the update –

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