The U.S. Supreme Court overturned a Seventh Circuit decision in Wellness International Network Ltd. v. Sharif, holding that bankruptcy courts have the authority to make final decisions on certain legal claims that help liquidate a debtor or adjudicate a bankruptcy proceeding.
“The Supreme Court’s Wellness opinion is based on the long-acknowledged principal in bankruptcy of consent, in this case consent to the exercise of judicial power by an Article I Judge,” said Grant Stein, partner in Alston & Bird’s Bankruptcy & Financial Restructuring Group. “The case was remanded to determine whether the consent was ‘knowing and voluntary’ or whether Sharif waived his Stern arguments by not raising them in the case’s earlier stages.
“The consent contemplated in Wellness can be express, or implied. Justice Alito’s concurring opinion also notes the practical effects of Arkison on the consent question implicated by having otherwise core matters be deemed to be non-core if they present Stern issues.”