Page 4 - Corporate Restructuring & Bankruptcy

S4 | MONDAY, MARCH 3, 2014 | Corporate Restructuring & Bankruptcy
| NYLJ.COM

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SCOTUS to Rule on
Pipeline Constr. v. Marathon Pipe Line,5 the
Supreme Court held that state law claims

brought on behalf of a bankruptcy estate
Powers of Bankruptcy Judges
against a party that had not iled a proof of
claim could not be decided by a bankruptcy
court because a debtor’s right to recover
“damages to augment its estate is ‘one of
private right, that is, of the liability of one
individual to another under the law[.]’”6 How-
ever, the Supreme Court held that Congress
did have the power to assign cases to “leg- Court may also address powers of magistrate judges.
islative” courts, thus, creating the concept
of the “public rights” exception.7
The court in Northern Pipeline also held
that Congress had essentially conferred Marshall,1 the court heard arguments in Execu- on the district court, who, in turn, appointed
Article III powers to the bankruptcy courts tive Beneits Insurance Agency v. Arkison,yet bankruptcy referees to oversee the adminis-
BY JEFFREY A. WURST 2
through the Bankruptcy Code and, conse- AND JON H. RUISS JR.
another case that has the potential to again tration of bankruptcy cases. That methodol-
quently, judicial powers from the district S drastically change bankruptcy practice. This ogy remained in place for 80 years until the
courts.8 In the court’s plurality opinion, Jus- ince the enactment of the Bankruptcy article discusses the signiicance of the mat- Bankruptcy Reform Act of 19784 conferred
tice William J. Brennan noted that “the new Reform Act of 1978, the bankruptcy ters now being considered by the court and the district courts with original jurisdiction
bankruptcy judges cannot constitutionally process has been turned on its head a
highlights the effect should the court follow over bankruptcy matters while establishing
be vested with jurisdiction to decide this number of times following rulings by the U.S. the direction proposed by the appellant.
the bankruptcy courts as an adjunct to the
state-law contract claim against Marathon.”9
Supreme Court. On Jan. 14, 2014, only two-and U.S. Bankruptcy Judges are appointed by district courts. Bankruptcy judges were to be
In response to the decision in Northern a-half years following its decision in Stern v.
the 13 Circuit Courts of Appeals, while U.S. appointed by the president with the approval
Pipeline, Congress amended the judicial district court judges are appointed by the of the Senate but would serve for only 14
code to include the concept of “core” and president, with the advice and consent of Con- years unlike district court judges who were
“noncore” proceedings.10 Congress specii- JEFFREY A. WURST is a partner and JON H. RUISS JR. is gress. The National Bankruptcy Act of 18983 appointed with lifetime tenure.
cally created a non-exhaustive list of proceed-
an associate at Ruskin Moscou Faltischek.
conferred jurisdiction for bankruptcy matters
In its 1982 landmark ruling in Northern