Final Orders Allowed in Preference Suits Against Defendants Who Didn’t File Claims

Constrained by the logic of In re Bellingham Ins. Agency Inc., 702 F.3d 553, 565 (9th Cir. 2012), although not by its holding, Bankruptcy Judge Daniel P. Collins of Phoenix went as far as he could toward holding that bankruptcy courts have constitutional authority to issue final orders in preference and fraudulent transfer suits. The March 15 opinion by Judge Collins is strikingly similar to a decision four days earlier by Chief Bankruptcy Judge Christopher S. Sontchi of Delaware in Paragon Litigation Trust v. Noble Corp. PLC (In re Paragon Offshore PLC), 17-51882, 2019 BL 81418, 2019 WL 1112298 (Bankr. D. Del. March 11, 2019). Judge Sontchi held in Paragon that a bankruptcy court has constitutional authority to enter a final judgment in a fraudulent transfer suit against a defendant who neither filed a claim nor consented to final adjudication in the bankruptcy court.

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