Reading Stern Narrowly, Delaware Judge to Issue Final Order in Fraudulent Transfer Suit
Narrowly interpreting Supreme Court authority, Chief Bankruptcy Judge Christopher S. Sontchi of Delaware disagreed with the Ninth Circuit and several district courts by holding that the 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 bankruptcy court.
Judge Sontchi concluded that the Supreme Court has not explicitly ruled that Sections 157(b)(1) and (b)(2)(H) are unconstitutional when applied to fraudulent transfer suits against defendants who have not filed proofs of claim. Absent high court authority, he declined to find the statute to be unconstitutional.
When thinking about Judge Sontchi’s opinion, consider this question: Did he ignore an obvious implication of Stern v. Marshall, 564 U.S. 462 (2011)?
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