Supreme Court Provides Further Guidance on Bankruptcy Court Jurisdiction over Avoidance Actions

On June 9, 2014, in Exec. Benefits Ins. Agency v. Arkison, No. 12-1200, 2014 WL 2560461 (U.S. June 9, 2014) (the “Opinion”), the Supreme Court of the United States held unanimously that (1) if a bankruptcy court is presented with a claim that is designated for final adjudication as a “core proceeding” by 28 U.S.C. § 157(b)(1) but Constitutionally outside the scope of the bankruptcy court’s jurisdiction to render a final judgment following Stern v. Marshall, 131 S.Ct. 2594 (2011) (“Stern”), a bankruptcy court may properly rely on its powers over non-core proceedings under 28 U.S.C. § 157(c)(1) to submit proposed findings of fact and conclusions of law to the district court for de novo review. The Opinion provides jurisdictional and procedural guidance for bankruptcy courts and litigants, and is significant because the Supreme Court provides an important clarification concerning Stern’s scope and meaning.