High Court may revisit 2011 decision that affected authority of bankruptcy judges

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Do I need an attorney to file bankruptcy?”


A long-dead Playboy playmate has come back to haunt the United States Supreme Court, and soon she may be haunting a bankruptcy judge near you.

Anna Nicole Mecklenburg Bankruptcy Lawyer Charlotte Debt AttorneyIn 2011, the Supreme Court ruled in a case involving former playmate Anna Nicole Smith that bankruptcy judges only have the power to make final rulings on issues that stem from the bankruptcy itself. Before that, bankruptcy courts considered only “core” bankruptcy matters, while federal district courts heard “non-core” bankruptcy matters. That division of labor had been prescribed by Congress.

Smith—whose real name was Vickie Lynn Hogan Marshall—died in 2007, but before she did, she married oil tycoon J. Howard Marshall. At the time of their marriage in 1994, Marshall was 89-years old; Smith was only 26. Their marriage lasted until Marshall’s death in August 1995.

Marshall’s will left his estate to a trust; both Smith and Marshall’s eldest son petitioned to have Marshall’s will overturned. Their legal fight continued even after both Smith and Marshall’s eldest son died. Ultimately the Supreme Court ended Smith’s claim to Marshall’s millions, but the larger ramifications of the high court’s decision in Stern v. Marshall continue to reverberate.

Chief Justice John Roberts wrote in Stern v. Marshall that the Constitution did not give bankruptcy judges the power to decide claims that arose solely under state law, even though Congress had conferred that power upon bankruptcy judges by statute.

Instead, bankruptcy judges can only decide an issue if it “stems from the bankruptcy itself.”

The high court did not define what the phrase “stems from the bankruptcy itself” meant, and leaving the meaning open to interpretation meant lawyers could do their jobs and argue it should mean whatever interpretation best fit a particular client’s needs. That led to differing conclusions, differing results, and different takes on the phrase, and to the phrase and the issue of bankruptcy judges’ power being brought back before the Supreme Court.

The issue is back on appeal from a ruling in a Chapter 7 bankruptcy case. The question in the case is whether a bankruptcy court can decide whether a trust tied to Chicagoan Richard Sherif is an asset that can be used to pay off a half-million dollar debt to Wellness International, a creditor of Sherif’s.

The Seventh Circuit United States Court of Appeals ruled that the bankruptcy court did not have the authority to determine whether the trust property was a part of Mr. Sherif’s bankruptcy estate, because deciding that issue would implicate state laws. Wellness appealed the decision, and observers are interested to see whether the high court tackles the issue headlong and clarifies its previous ruling, or whether it “punts” the issue—as it has done in two previous cases.

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.



About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.










Image Credit:




See Our Related Video from our YouTube channel:




See Our Related Blog Posts:

Bankruptcy is never really over, depending on how one defines “over”

American Bankruptcy Institute issues proposed reforms to Chapter 11

Contact Information