Most individual debtors file for bankruptcy relief with honest intentions. Nonetheless, there is also an underside to the American bankruptcy law system that often goes unreported and ignored in the scholarly literature, namely, the commission of fraud by debtors who seek protection under the Bankruptcy Code. One of the ways in which fraud upon the bankruptcy system occurs is when debtors intentionally conceal assets from the bankruptcy process. Indeed, reported bankruptcy court decisions are rife with examples of debtors attempting to hide or shield assets from their creditors. Debtors who are discovered concealing assets are subject to certain civil remedies, such as the dismissal of their bankruptcy case or the denial of the discharge of their preexisting indebtedness.… Read More
The Supreme Court’s ruling in Stern v. Marshall has signaled a need to alter the bankruptcy court’s jurisdictional structure. In Stern, the Supreme Court ruled that bankruptcy judges, who lack the life tenure and salary protection of Article III, cannot issue final rulings in bankruptcy proceedings previously believed to be within their core jurisdiction. In response to the constitutional challenge raised by Stern, and in recognition that bankruptcy court’s jurisdictional limits represent a long-standing problem, many argue for a long-term solution: the restructuring of the system to create specialized Article III bankruptcy courts.
This paper evaluates this proposal in light of classic principles of system restructuring, namely, that any proposed restructure should stem from the underlying goals or strategy for that system.… Read More
This Article considers the Supreme Court’s decision in Stern v. Marshall, which limited the power of a bankruptcy judge to decide a common law claim. Stern is best understood as a combination of three arguments drawn from the Court’s prior Article III cases. The first is an argument from history — the past division of labor between the Article III judiciary and non-Article III adjudicators. The second is an argument from expertise — the appropriate selection of disputes that benefit from a specialized non-Article III forum. The third is an argument from separation of powers — the limitations on when the political branches may assign disputes outside the tenured judiciary.… Read More
Congress regularly makes judgment calls of constitutional dimension. One important example of the interaction between the constitutional analysis of the Court and that of Congress involves disputes over the broad grant of jurisdiction exercised by untenured bankruptcy judges. The legislative history preceding the Supreme Court’s decisions in Northern Pipeline Co. v. Marathon Pipe Line Co. and Stern v. Marshall suggest that Congress’s constitutional interpretation is different in kind from that of the Supreme Court. Because Congress is a political, not a deliberative, body, its constitutional analysis is infused with political judgments. The political compromises reached in enacting the bankruptcy court provisions in 1978 and 1984 may well have contributed to the Court’s constitutional rulings.… Read More
This paper discusses the possible meaning and effect of the Supreme Court’s recent decision in Stern v. Marshall, in which the Court held that the bankruptcy courts’ statutory authority to enter final judgments on certain counterclaims against creditors violates Article III of the Constitution. It was prepared by the authors as a report to the fall 2011 annual meeting of the National Bankruptcy Conference.
The Stern decision is enigmatic. While stressing the narrowness of the issue decided, the Court’s opinion rests on a rationale that, carried to its logical conclusion, could have broad implications for the exercise of bankruptcy jurisdiction specifically and more generally for the authority of other non-Article III decision makers.… Read More
Starting from the case of Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272 (1855), this article looks at the roots of the recent decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). In Murray’s Lessee, the U.S. government obtained a lien against property purchased by a Customs Collector with funds embezzled from his position. This lien was obtained by statute through the solicitor of the Treasury, in what would likely now be considered a Article I court. A later lien-holder challenged this lien, but the Supreme Court upheld it as the Custom Collector was a “public debtor”. … Read More