By: Joseph P. Donnelly IV
St. John’s Law Student
Adopting a narrow interpretation of the holding of Stern v. Marshall
the Bankruptcy Court for the District of Delaware, in In re DBSI
held that Stern
does not preclude a bankruptcy court from adjudicating avoidance claims.
In November 2008, DBSI Inc. and several of its affiliates (the “Debtors”) filed for Chapter 11 bankruptcy protection.
Following confirmation of the Debtors’ liquidating plan, a litigation trustee commenced several adversary proceedings relating to, inter alia
, preferential or fraudulent transfer claims.
Certain defendants (the “Movants”) sought to have these adversary proceedings dismissed, arguing that the bankruptcy court lacked jurisdiction under 28 U.S.C. § 157 and the United States Supreme Court’s decisions in Stern v. Marshall
and Granfinanciera, S.A. v. Nordberg
to adjudicate causes of action sounding in preference or fraudulent conveyance.