In a case that could have upended the bankruptcy and magistrate court systems, the Supreme Court took a pragmatic approach yesterday when it held in Wellness Int’l Network, Ltd. v. Sharif that with “knowing and voluntary consent” of the parties, a bankruptcy court could adjudicate a so-called “Sternclaim,” which would otherwise be outside the scope of its constitutional power.  The Court’s 2011 ruling in Stern v.

The U.S. Court of Appeals for the Seventh Circuit recently held that a secured creditor must file its proof of claim no later than the 90-day deadline under Federal Rule of Bankruptcy Procedure 3002(c) in order to receive distributions under a Chapter 13 plan of reorganization.

A copy of the opinion is available here:  Link to Opinion.

In Official Committee of Unsecured Creditors v. Whalen (In re Enron Corp.), the Bankruptcy Court for the Southern District of New York considered whether the debtor’s pre-bankruptcy payment of an employment bonus one day before it became due was “for or on account of an antecedent debt owed by the debtor before such transfer was made” for purposes of determining whether section 547(b) of the Bankruptcy Code made the payment avoidable as a preferential transfer.

In the case of Sherman v. Harbin (In re Harbin), the Ninth Circuit decided that in determining the feasibility of a plan under Bankruptcy Code Section 1129(a)(11), a court must evaluate the possible impact of pending litigation, whether at the trial level or on appeal.

The United States Bankruptcy Court for the Southern District of New York has denied approval of a settlement between Adelphia and its D&O insurers pursuant to which the insurers would have bought back their interests in the relevant policies issued to Adelphia for $32.5 million "with claims of others to policy proceeds...attaching to the proceeds of the sale."

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the “BAPCPA”) created an additional category of administrative expenses

Recently, in In re Northwest Airlines Corp.,1 Bankruptcy Judge Allan Gropper issued an opinion requiring a group of hedge funds that had formed an ad hoc committee of equity security holders (the “Ad Hoc Equity Committee”) to disclose “the amounts of claims or interests owned by the members of the committee, the times when acquired, the amounts paid therefor, and any sales or other disposition thereof” in order to comply with Rule 2019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

Background

Wellness International Network, Ltd. v. Sharif, No. 13-935 (previously described in the July 1, 2014, Docket Report)

On May 26, 2015, continuing a springtime ritual for bankruptcy lawyers, the Supreme Court issued its latest “progeny of Stern” ruling on the adjudicative authority of the bankruptcy courts.  In a 6-3 decision the Court held that  “Our precedents make clear that litigants may validly consent to adjudication by the bankruptcy courts.” Wellness Int’l Network, Ltd. v. Sharif __ U.S. __ (May 26, 2015).

The United States Bankruptcy Court for the District of Massachusetts has denied injunctive relief requested by two bankruptcy trustees seeking to stay the prosecution and settlement of shareholder actions proceeding against various former officers and directors of a bankrupt corporation. In re Enivid, 2007 WL 806627 (Bankr. D. Mass. Mar. 16, 2007).