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Quick Poll Respondents Divided Over Bankruptcy Courts Authority After Supreme Courts Stern Decision

Alexandria, Va.— Respondents were divided in a recent ABI Quick Poll over whether bankruptcy courts have the constitutional authority to enter final judgments on fraudulent conveyance claims after the Supreme Court’s 2011 ruling in Stern v. Marshall. Forty-seven percent of respondents (29 percent “strongly” and 18 percent “somewhat”) thought that bankruptcy courts do have the constitutional authority to enter final judgments on fraudulent conveyance claims, while 42 percent did not (23 percent “strongly” and 19 percent “somewhat”). Eleven percent did not know/had no opinion on the poll. The Supreme Court ruled on June 23, 2011, 5-4 against the estate of Vickie Lynn Marshall (better known as Anna Nicole Smith), saying that a bankruptcy judge's decision giving millions to Smith from the estate of oil tycoon J. Howard Marshall was decided incorrectly because bankruptcy judges do not have the constitutional right to enter a final judgment on a state law counterclaim to a proof of claim. Since the Stern decision, there has been a great deal of debate among practitioners and the courts over the authority of bankruptcy courts to enter a final judgment on fraudulent conveyance claims. The U.S. Circuit Court of Appeals for the Ninth Circuit ruled in December 2012 that bankruptcy courts do not have authority to enter final judgments in fraudulent conveyance claims, while a recent opinion from the U.S. Bankruptcy Court for the Northern District of Illinois found that Stern v. Marshall does not preclude bankruptcy judges from entering final orders in fraudulent transfer cases. For further background on the Supreme Court’s decision in Stern v. Marshall, please click here. ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://news.abi.org/quick-polls/archive to access the results of previous ABI Quick Polls. ### ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.