• The Supreme Court Holds Unconstitutional a Key Provision of the Bankruptcy Code
  • July 7, 2011 | Authors: Scott W. Everett; Kenric Kattner; Stephen Manz; Stephen M. Pezanosky; Robin E. Phelan
  • Law Firms: Haynes and Boone, LLP - Dallas Office ; Haynes and Boone, LLP - Austin Office ; Haynes and Boone, LLP - Houston Office ; Haynes and Boone, LLP - Dallas Office ; Haynes and Boone, LLP - Houston Office ; Haynes and Boone, LLP - Fort Worth Office ; Haynes and Boone, LLP - Dallas Office ; Haynes and Boone, LLP - San Antonio Office
  • On June 23, 2011, the Supreme Court handed down a 5-4 decision in the Stern v. Marshall case, holding that a bankruptcy court’s exercise of statutory jurisdiction was unconstitutional when it adjudicated a counterclaim relating to a purely state law cause of action. This decision will make it more difficult for debtors and others to sue third parties in the bankruptcy court and will allow defendants to have cases tried in a potentially more favorable forum. This decision is of particular importance to lenders, investment funds, investment banks, and others who are often the targets of suits by debtors.