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Stern Consequences

posted by Stephen Lubben

The folks at the Weil bankruptcy blog do a great service in summarizing some of the initial consequences of the US Supreme Court's Stern v. Marshall decision. Suffice it to say, Mr. Chief Justice Robert's optomisim may have fallen. At the first hurdle.


I don't think these cases present much of a concern. I see 13 cases and in only 4 (Polaroid, Bearing Point, Mandel and Blixseth) do I see a court conclude a diminution of bankruptcy jurisdiction attributable to Stern. In 5 (ABFS, Salander, Graham, Turner and Okwonna Falls), the courts conclude they have jurisdiction anyway. In 2 (Roberts and Boricich), the courts say they lack core jurisdiction but I think they may have lacked it pre-Stern anyway (Roberts basically says so and says Stern makes it clear). In 1 (Matrix), Stern is mentioned in passing but does not affect the result. In the last, Gorilla, there is no decision, just setting for rehearing after final judgment was entered pre-Stern.

An upswing in parties raising the issue is to be expected in the aftermath of any decision but one would expect, and indeed the Polaroid court predicts, that a revised Standing Order of Reference will be issued to reduce the issue for future cases.

Also, we will see the district courts referring these cases to the bankruptcy courts for pretrial management, and since most cases settle before trial, I don't think the world is going to change very much.

Will Stern banish anti-successor liability injunctions against unsecured claims in non-plan sale orders?
Ie., can the bankruptcy court enjoin a case it has no jurisdiction to hear?

Also, will actions removed from bankruptcy court jurisdiction pursuant to Stern still command administrative fee priority?

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