The United States Supreme Court has determined that bankruptcy judges may decide non-bankruptcy matters if the parties consent. The issues presented do need to be connected to the underlying bankruptcy.
In many cases, bankruptcy lawyers representing the bankruptcy Trustee file litigation actions called adversary proceedings to recover money order property transferred away from the debtor’s estate. Sometimes, the court will be presented issues by the bankruptcy attorneys that require a determination under state law. In those cases, the bankruptcy courts are now authorized to make determinations that they would not otherwise make.
Bankruptcy courts had previously had authority to hear non-bankruptcy matters removed in the case of Stern v Marshall. Now, bankruptcy attorneys, representing bankruptcy debtors, can authorize the court to hear these separate issues.
For more information on the change, please see the Reuters story.
May 26 The U.S. Supreme Court ruled on Tuesday that bankruptcy judges can resolve disputes that otherwise would have to be decided in a federal court, in an opinion tied to the legal legacy of the late Anna Nicole Smith.
The 6-3 ruling, which stemmed from the Chapter 7 bankruptcy of Richard Sharif of Chicago, recognized the authority of U.S. bankruptcy judges to decide nonbankruptcy disputes, such as breaches of contract, with the consent of the parties.
Bankruptcy judges, like magistrate judges, are appointed by federal judges for set terms. They are not judges under Article III of the U.S. Constitution, which provides lifetime tenure and salary protections to ensure independence.
Reuters: http://www.reuters.com/article/2015/05/26/usa-bankruptcy-judges-idUSL1N0YH1DH20150526
