Justices to Look at Power of Bankruptcy Judges

     (CN) – The power of bankruptcy judges will go before the Supreme Court after the justices on Monday took up a case where one such judge slammed a nonparty for fraudulent conveyance.
     After Bellingham Insurance Agency filed for Chapter 7 bankruptcy protection in 2006, the company’s trustee, Peter Arkison, labeled Executive Benefits Insurance Agency (EBIA) as a successor corporation of Bellingham and thus liable for its debts.
     Agreeing with that argument, a bankruptcy judge in Seattle slapped EBIA with a $373,000 final judgment.
     After a federal judge affirmed, EBIA for the first time raised the question of whether the U.S. Constitution actually barred the bankruptcy judge entering final judgment on the trustee’s claims.
     A three-judge panel of the 9th Circuit concluded that EBIA was right but that it nevertheless consented to the court’s jurisdiction by failing to timely object.
     Proceeding to the merits, then, the court also agreed that BIA’s transfer of assets to EBIA constituted a fraudulent transfer.
     The Supreme Court granted EBIA’s petition for a writ of certiorari on Monday without comment, as is its custom.

%d bloggers like this: