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Court Restricts Bankruptcy Court Jurisdiction in Stern v. Marshall

By William M. Hawkins

The Supreme Court's 5-to-4 decision in Stern v. Marshall, 131 S. Ct. 2594, 2011 WL 2472792 (June 23, 2011), drew upon a tortured factual background filled with sensational accusations and revelations, to deliver an opinion that definitively upsets a quarter-century's jurisdiction by bankruptcy courts over a large set of actions. It alters how trustees and debtors-in-possession can (and must) now seek many (if not most) recoveries on behalf of bankruptcy estates, even when the defendants in such suits have voluntarily submitted themselves to the bankruptcy process by filing a proof of claim.

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