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Stern Amendments to Bankruptcy Rules

September 19, 2016


Stern Amendments to Bankruptcy Rules

September 19, 2016

Authored by: James Maloney

While it has taken five years of committee and court efforts, the “Stern Amendments” to the Federal Rules of Bankruptcy Procedure will become effective December 1, 2016.  These amendments will streamline litigant and court procedures in resolving subject matter jurisdiction matters as between district courts and bankruptcy courts.

The Bankruptcy Cave has followed many procedural issues since Stern v. Marshall.[1]/ Stern held certain claims designated by statute for final adjudication in bankruptcy court, are nonetheless required by the Constitution to proceed in an Article III district court (Stern post). Various Stern progeny has explored the role of parties’ consent to final adjudication in the bankruptcy court, the ability of the bankruptcy court to make findings of fact and conclusions of law for final determination by the district court, emerging local rule accommodations of jurisdictional uncertainty, and a special practitioner’s peril where a trial in district court is (oddly) governed by bankruptcy rules.  See our posts from the Bankruptcy Cave’s “Stern Series” on In re Fisher Island Invs., Inc., 778 F.3d 1172 (11th Cir. 2015), the sequence of Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014) and Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015), and Rosenberg v. DVI Receivables XIV, LLC, 818 F.3d 1283 (11th Cir. 2016).

The delay in rule amendments responsive to Stern was in no way due to inaction by the courts or rule committees involved.  In fact, the prime cause of the extended timeline was that the Supreme Court continued to attend to developing Stern issues through Executive Benefits and Wellness, cited above.  It was deemed inappropriate for the Supreme Court to consider rule changes involving the same subject matter as cases before the Court.

To understand the Stern Amendments, a brief background:  Constitutionally, there is a limit on the scope of rights that Congress can direct to resolution in an Article I court instead of an Article III court.  A part of this constitutional division is provided by statute at 28 U.S.C. § 157(b) and (c).  Section 157(b) lists core proceedings as to which bankruptcy courts can determine and issue final judgments and orders.  Section 157(c) provides that for non-core matters, a bankruptcy court may hold hearings and submit proposed findings of fact and conclusions of law to its district court, unless the parties consent to bankruptcy court final adjudication.  These statutory core versus non-core provisions were further reflected in bankruptcy rules.

However, in 2011 Stern identified a third kind of proceeding that was “core” but also beyond the constitutional authority of the bankruptcy court—a constitutionally non-core proceeding.  Through Executive Benefits and Wellness, along with responsive changes to Local Rules in the bankruptcy courts (See, Wellness post), it became increasingly apparent that litigant consent to final determination by the bankruptcy court could solve a lot of problems that would otherwise engender uncertainty (by both courts and litigants) as a case moved forward.

The Stern Amendments change Bankruptcy Rules 7008, 7012, 7016, 9027, and 9033.  Collectively, they eliminate the requirement that a litigant state whether a proceeding is core or non-core, and rather go straight to a requirement that the pleader state whether it consents to final adjudication in bankruptcy court.  If all parties to the dispute consent, then it does not matter if a matter is core or non-core.  However, if any party does not consent, then the bankruptcy court must act under Rule 7016(b) and decide whether the proceeding is within its core jurisdiction and constitutional authority, and also determine whether to issue final judgments and orders, to submit proposed findings of fact and conclusions of law to the district court, or to take some other approach.  The Stern Amendment changes include:


  • BR 7008 – General Rules of Pleading – Changes eliminate the requirement for the pleader to state whether the proceeding is core versus non-core in favor of stating whether the pleader does or does not consent to final determination by the bankruptcy court.
  • BR 7012 – Defenses and Objections – Changes to subdivision (b) regarding responsive pleading again eliminate distinctions of core versus non-core in favor whether the pleader does or does not consent to final determination by the bankruptcy court.
  • BR 7016 – Pretrial Procedures – Changes with new subdivision (b) provide three options for the bankruptcy court on consent or non-consent of parties: (1) to hear and determine the dispute, (2) to hear it and issues proposed findings of fact and conclusions of law for the district court, or (3) to take some other action. Option (3) will allow some measure of responsiveness to the many variations of scenarios the bankruptcy court might face in the operation of these amendments.
  • BR 9027 – Removal – Changes to subdivision (a)(1) and (e)(3) regarding removal again eliminate distinctions of core versus non-core in favor whether the pleader does or does not consent to final determination by the bankruptcy court.
  • BR 9033 – Proposed Findings of Fact and Conclusions of Law – Changes to subdivision (a) make the service of proposed findings of fact and conclusions of law applicable to both core and non-core proceedings.








After the Stern Amendments take effect, the complicated and sometimes esoteric constitutional issues involved in the identification of a statutorily core but constitutionally non-core Stern proceeding will remain.  However, all those substantive issues should now find their procedural expression under the Rules cited above.  The changes should “weed out” casual or uncommitted expressions of non-consent, yet give real jurisdictional disputes a dedicated and explicitly flexible means for adjudication.

[1]/ 131 S. Ct. 2594 (2011).

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Failure to Observe Bankruptcy Rule Deadline in An Adversary Proceeding Tried in District Court Costs Defendants Opportunity to Appeal $6,000,000 Verdict.

May 17, 2016


A recent case from the 11th Circuit illustrates the procedural perils of litigation arising from a bankruptcy case but ultimately tried in the district court.  In Rosenberg v. DVI Receivables XIV, LLC,[1] the defendants lost their appeal not on the merits, but based upon the difference between civil rules and bankruptcy rules regarding what are timely post-trial motions.

BC has previously addressed procedural issues between bankruptcy courts and district courts arising from the Supreme Court’s ruling in Stern v. Marshall.[2]   As we have written when Stern was first decided, Stern held certain claims designated by statute for final adjudication in bankruptcy court, are nonetheless required by the Constitution to proceed in an Article III district court.  Relevant Stern progeny has explored the role of parties’ consent to bankruptcy court proceedings, the ability of the bankruptcy court to make findings of fact and conclusions of law for final determination by the district court, and emerging local rule accommodations of jurisdictional uncertainty, including posts on In re Fisher Island Invs., Inc., 778 F.3d 1172 (11th Cir. 2015), and the sequence of Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014) and Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015).

Rosenberg featured an adversary proceeding tried by a jury, conducted in the district court after withdrawal of the reference in the related bankruptcy case.  Rosenberg teaches us that just because a case is tried before a U.S. District Court judge in a U.S. District Court courtroom, it does not mean that the Federal Rules of Civil Procedure apply.  For cases arising under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure apply, regardless of whether the case is being heard in bankruptcy court or in the district court.  As recounted by the 11th Circuit opinion, a failure to abide by the shorter time frame for filing a post-trial motion imposed by the Bankruptcy Rules resulted in several defendants losing their right to appeal a $6,000,000 jury verdict.  The specific holdings in Rosenberg were:

  • Even though tried before a jury in district court, adversary proceeding are still governed by Fed. R. Bankr. P. 9015, which requires any motion for judgment as a matter of law or for a new trial be filed within 14 days of the final judgment, as opposed to the 28 days allowed by the Federal Rules of Civil Procedure.
  • Where a district court has withdrawn the reference for some claims asserted in an adversary proceeding, while leaving others before the bankruptcy court, two separate proceedings are created with their own, independent timelines.  Thus, a judgment in the district court, which does not resolve all issues raised in the adversary proceeding is still final for purposes of appeal.

Rosenberg arose from an involuntary bankruptcy proceeding, dismissed after a determination that some petitioners were not eligible creditors, and, alternatively, were judicially estopped from prosecuting the case.  The bankruptcy court retained jurisdiction to hear the debtor’s claims against the petitioning creditors under 11 U.S.C. § 303(i), which allows an involuntary debtor who has won dismissal of his case to recover costs, attorney’s fees and, in cases where a petitioner is determined to have acted in bad faith, actual and punitive damages.

The debtor filed an adversary proceeding on these claims, and demanded a jury trial.  The defendants would not consent to a jury trial in the bankruptcy court.  The district court granted the defendants’ motion to withdraw the reference on the claims for damages under 303(i)(2), reasoning that they were analogous to common law claims for malicious prosecution.  The bankruptcy court retained jurisdiction over the claim for attorney’s fees.  The case was tried in the district court and the jury found that the defendants had acted in bad faith by filing the involuntary petition.  The jury awarded $1,120,000 in compensatory damages and $5,000,000 in punitive damages. The district court entered a “final judgment” on its docket on March 14, 2013.

The defendants moved for judgment as a matter of law 28 days after the final judgment was entered.  This motion would be timely under Fed. R. Civ. P. 50(b), which allows 28 days to file.  But the debtor moved to strike, arguing that the motion was untimely because 14 day deadline established by Fed. R. Bankr. P. 9015(c) applied.  The district court overruled the motion to strike and reduced the damage award to $350,000.

The 11th Circuit ruled in favor of the debtor, finding that the motion for judgment as a matter of law was untimely and should have been denied.  The 11th Circuit first noted that Fed. R. Bankr. P. 1001 provided that the bankruptcy rules were to apply in cases under Title 11 of the United States Code (i.e., the Bankruptcy Code).  It was observed that a 1987 amendment to Fed. R. Bankr. P. 1001 was enacted specifically to make the bankruptcy rules applicable in all courts hearing bankruptcy matters.  The opinion quotes the advisory committee notes as stating: “[t]his amended Bankruptcy Rule 1001 makes the bankruptcy rules applicable in cases and proceedings under title 11, whether before the district judges or the bankruptcy judges of the district.”

The 11th Circuit further observed that the Federal Rules of Civil Procedure themselves provide for the primacy of the bankruptcy rules when bankruptcy proceedings are adjudicated in the district court, by way of Fed. R. Civ. P. 81(a)(2) (“These rules apply to bankruptcy proceedings to the extent provided by the Federal Rules of Bankruptcy Procedure.”).  The opinion notes that the rule refers to “bankruptcy proceedings” and not to “proceedings in a bankruptcy court,” and thus it does not matter where the matter is being heard – the Bankruptcy Rules control in any “bankruptcy proceeding” in whatever court.  As to application of Fed. R. Civ. P. 50 to bankruptcy proceedings, it is made applicable under Fed. R. Bankr. P. 9015, but is specifically modified to provide that a renewed motion for judgment or request for a new trial must be made no later than 14 days after the entry of judgment.  Consequently, defendants’ motion filed on the 28th day was untimely.

Also worth noting from Rosenberg is the 11th Circuit’s rejection of the defendants’ argument that the “real” final judgment in the adversary proceeding was not entered until April 11, 2013, when the bankruptcy court entered an order on the separate attorneys’ fees action.  Under normal circumstances, a judgment is only final if it resolves all issues.  However, the opinion declares that once the district court withdrew the reference for the damages claim, while leaving the attorney’s fee claim before the bankruptcy court, it created two separate claims operating on their own timelines in separate courts.

Readers, this opinion is a good reminder that regardless of the court, litigators must be students of procedure, first and foremost.  When coming across a tough procedural issue, think, read, talk to your colleagues, and then think and read again.  Jurisdictional and Stern issues are tough, and the multi-court proceedings that sometimes flow from these issues require a lot of deep analysis.  Rosenberg is a scary reminder of the worst that can happen.


[1] 2016 WL 1392642 (Case No. 14-14620, April 8, 2016).

[2] 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011).

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The Stern Files: Evolving Jurisdiction by Consent, Wellness International Network Ltd. v. Sharif.

August 3, 2015


Directional text on stone

In a previous post this blog addressed the Supreme Court’s 2011 ruling in Stern v. Marshall.[1] In Stern, the Court held that Article III of the Constitution limited bankruptcy courts from entering final orders on certain state law counterclaims despite such claims being designated as “core” proceedings by statute (now known as Stern Claims).

The Supreme Court left questions of great interest unanswered in Stern, but two emerged quickly: 1) can a bankruptcy court treat a “core” Stern Claim by the same procedures as “non-core” (disputes not significantly related to a bankruptcy case) under 28 U.S.C. Section 157, and thereby carry the dispute through proposed findings of fact and conclusions of law to forward to the district court; and 2) can a bankruptcy court enter a final judgment on Stern Claims with the parties’ consent?

In Exec. Benefits Ins. Agency v. Arkinson,[2] the Supreme Court addressed the availability of non-core procedures for Stern Claims. While the Ninth Circuit had described Stern as creating a statutory gap where Stern Claims fell somewhere in between a bankruptcy court’s jurisdiction over core and non-core proceedings, the Supreme Court disagreed. Rather it held that Stern Claims do not create a statutory gap and that these claims can proceed in bankruptcy court as non-core claims. As such, the bankruptcy court must treat the Stern Claim as a “non-core” matter and issue proposed findings of fact and conclusions of law for review by the district court.

In what would be in some ways a preview of Supreme Court treatment of jurisdiction by consent, the Eleventh Circuit stepped forward in In re Fisher Island Invs., Inc.[3] and took up the issue. Fisher, as discussed in a previous post, held bankruptcy court jurisdiction to exist where the parties “expressly consented to the bankruptcy court’s final adjudication” of the matters at issue in the case.

The Supreme Court took up the issue of consent in Wellness Int’l Network Ltd. v. Sharif.[4] In Wellness, the creditor, Wellness, sought a finding in the debtor’s Chapter 7 bankruptcy that a state court judgment against the debtor was non-dischargeable and that certain assets contained in a trust were included as part of the bankruptcy estate. Creditor obtained its remedy by default and the debtor appealed. On appeal, the parties completed all briefing prior to the debtor’s attempt to object to jurisdiction under Stern. Among its rulings, the Seventh Circuit held that a party cannot waive a constitutional objection based on Stern.[5]

The Supreme Court granted certiorari on the issues of consent to jurisdiction. The Court upheld the constitutionality of a bankruptcy court final judgment on a Stern Claim by reason of the parties’ consent, and that such consent may arise either impliedly or expressly.[6]

While, as discussed above, Stern progeny has developed on the Stern Claim issues of utilizing non-core procedures and establishing bankruptcy court jurisdiction by consent, bankruptcy law participants still await the clarity that would come from more direction of the Supreme Court on the scope of, limits of, and safe harbors of a Stern Claim—or what the bankruptcy courts could efficiently do in the case of a non-consenting party to a Stern Claim.

However, as for such efficiencies as may be available currently under Stern and its progeny, the United States bankruptcy courts and committees have moved forward.

In response to Stern, and before Wellness, the Bankruptcy Rules Committee proposed amendments that would require parties to indicate whether they consent to bankruptcy court jurisdiction. However, when the Court granted certiorari in Wellness, the Rules Committee withdrew the proposed amendments.[7] In light of the eventual holding in Wellness, it would not be surprising if the Rules Committee were to re-introduce a version of these proposed amendments. Further, some individual bankruptcy courts have amended their local rules to require a statement regarding the parties’ consent to final adjudication of the claims. (Southern District of Indiana in 2012 (B-7008-01, 7012-1, 9027-1 and 9033-1); Local Bankruptcy Rules for the United States Bankruptcy Court for the Central District of California (effective 1/1/15) (Rule 7008-1(mandating that statements required by FRBP 7008(a) and 7012(b) be “plainly stated in the first numbered paragraph of the document.”)).)

Beyond procedural changes, since Wellness, Courts appear to have moved forward on the development of holdings finding implied consent where: 1) the parties failed to object to the entry of an order;[8] 2) the parties identified the matter as a core matter on which the bankruptcy court could enter final judgment;[9] 3) a party requested the bankruptcy court issue an order where the party never filed a motion to withdraw the reference;[10] 4) a scheduling order required parties to file objection to entry of final order and failure to do so amounted to consent (“[t]he failure to comply with the terms of this paragraph shall be deemed to constitute consent to the entry of final orders by the Bankruptcy Judge”);[11] and 5) the parties have made a preliminary statement expressly consenting to the bankruptcy court entering a final order on the subject claims.[12]

So, while bankruptcy law participants look forward to further clarity from the Supreme Court regarding the scope, limits, and safe harbors of Stern Claims, we do see headway on the use of non-core procedures for use in Stern Claims where one or more parties do not consent, as well as developing rules and jurisprudence enhancing the clarity of express and implied consent.

[1] Stern v. Marshall, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011); In re Newton Enters., No. 9:13-BK-12388-PC, 2015 WL 3524603, at *2 (Bankr. C.D. Cal. June 3, 2015).

[2] Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014).

[3] In re Fisher Island Invs., Inc., 778 F.3d 1172 (11th Cir. 2015).

[4] Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015).

[5] Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751, 772 (7th Cir. 2013).

[6] Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015).


[8] In re Revel AC, Inc., 2015 WL 3929581, at *5 (Bankr. D.N.J. June 24, 2015) (sale order); In re Crawford, 2015 WL 3948013, at *4 (Bankr. D.S.C. June 8, 2015) (failure to object to plan); In re Hackman, No. 10-17176-BFK, 2015 WL 4454999, at *1 (Bankr. E.D. Va. July 20, 2015) (where the parties litigated the case for eight years and never objected).

[9] In re Smalis, 2015 WL 3745352, at *1 (Bankr. W.D. Pa. June 12, 2015).

[10] In re Perkins, 2015 WL 4312313, at *4.

[11] In re Labgold, 532 B.R. 276, 285 (Bankr. E.D. Va. 2015) (scheduling order required objecting party to file a motion or seek other relief within 30 days of order).

[12] In re ATP Oil & Gas Corp., No. 12-36187, 2015 WL 4381068, at *3 (Bankr. S.D. Tex. July 15, 2015).

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The Stern Files: A Review of In re Fisher Island Investments, Inc.

March 9, 2015


The latest in Stern analysis can be found in a fascinating story of mystery, money, and international intrigue. Last month, the Eleventh Circuit in In re Fisher Island Invs., Inc., No. 12-15595, 2015 WL 729689 (11th Cir. Feb. 20, 2015), upheld the bankruptcy court’s ruling as to the ownership of putative debtors, despite a party’s objection to the bankruptcy court’s constitutional authority to decide the putative debtors’ ownership under Stern v. Marshall.[1]

Fisher Island Investments is merely one part of the global litigation following the unexpected death of Arkadi Patarkatsishvili regarding the disputed ownership of three trusts—purportedly worth billions of dollars—between two competing groups: the Redmond Group and the Zeltser Group. Following litigation in the Republic of Georgia, the United Kingdom, Liechtenstein, the British territory in Gibraltar, and state litigation in the United States, a group of six entities (the “Petitioning Creditors”) filed three separate involuntary Chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the Southern District of Florida against the three trusts (the “Alleged Debtors”) based on an unpaid promissory note purportedly executed by the Alleged Debtors. Two sets of attorneys, one representing the Redmond Group and the other representing the Zeltser Group, entered appearances, both purporting to act on behalf of the Alleged Debtors. The Zeltser Group asked the bankruptcy court to deny the relief sought by the Petitioning Creditors until the court resolved the issue of whether the Zeltser Group or the Redmond Group owned the trusts and, therefore, which group had the authority to act on behalf of the Alleged Debtors.[2]

Following a hearing, an unfavorable report by the Chapter 11 Examiner appointed to investigate the ownership issue, and the Supreme Court’s issuance of the Stern opinion, the Zeltser Group moved for partial summary judgment on the ownership issue. The bankruptcy court denied the Zeltser Group’s partial summary judgment and then later, sua sponte, entered an order granting summary judgment in favor of the Redmond Group. Three groups appealed: the Zeltser Group, five non-party entities affiliated with the Zeltser Group, and the Petitioning Creditors.

Prior to the grant of summary judgment, the Zeltser Group filed a motion in the district court to withdraw reference of the ownership issue, pursuant to 28 U.S.C. § 157(d) and Stern, in each bankruptcy case, objecting to the bankruptcy court’s adjudication of the ownership issue. At first, the Zeltser Group contended that the ownership issue was not a “core” matter.[3] Later, the Zeltser Group conceded that the ownership issue was a “core” matter, but asserted that it was entitled to a trial in an Article III court as a result of Stern—even though it had consented to a trial in the bankruptcy court before the Stern decision was issued. The district court denied the Zeltser Group’s motion, characterizing it as a “belated change of heart” and finding that the ownership issue was a “core” matter within the bankruptcy court’s jurisdiction. The district court commented that, unlike the state-law counterclaim at issue in Stern, the ownership issue was “deeply embedded” and required the bankruptcy court’s determination in order for the court to rule on the merits of the creditors’ claims. Alternatively, the district court held that the Zeltser Group clearly waived any right it may have had to a trial before an Article III judge. The Zeltser Group appealed the district court’s order to the Eleventh Circuit Court of Appeals, which affirmed in whole.

On appeal, the Zeltser Group asserted that an objection to a bankruptcy court’s constitutional authority under Stern’s interpretation of 18 U.S.C. § 157 cannot be waived and that its voluntary pre-Stern participation in pre-trial proceedings did not constitute consent to a non-jury trial before the bankruptcy court. The Eleventh Circuit agreed that the ownership issue was clearly a “core” matter because the resolution of the ownership issue was critical to the administration of the Alleged Debtors’ estates—namely whether the Petitioning Creditors’ claims would be admitted or contested. Therefore, the bankruptcy court necessarily had to determine who owned the Alleged Debtors to adjudicate the validity of the Petitioning Creditors’ claims. The Court found Stern to be “wholly inapplicable,” noting that, while the Zeltser Group’s claim was a state-law claim that, like the counterclaim in Stern, did not involve “public rights” or stem from a federal statutory scheme and would not be determined by bankruptcy law, the ownership issue did not simply have “some bearing” on the bankruptcy proceedings. Rather, the bankruptcy court could not undertake the bankruptcy proceedings without first determining the threshold issue of ownership.[4] Furthermore, even if the ownership issue were a “non-core” matter, the Court found that the Zeltser Group “expressly consented to the bankruptcy court’s final adjudication of the ownership issue and waived any argument to the contrary” by making representations to the bankruptcy court, voluntarily participating in discovery, and appearing at a hearing before the bankruptcy court—indicating its willingness for the bankruptcy court to decide the ownership issue.


[1]           Stern v. Marshall, 546 U.S.___, 131 S. Ct. 2594 (2011), involved a voluntary bankruptcy proceeding in which a creditor filed a defamation claim in the debtor’s case and the debtor filed a state law counterclaim for tortious interference against the creditor. The bankruptcy court entered final judgment on the creditor’s claim and the debtor’s counterclaim, finding the counterclaim to be a “core” proceeding under § 157, which lists “counterclaims against persons filing claims against the estate” as one of the sixteen named types of “core” proceedings. See 28 U.S.C. § 157. The United States Supreme Court found that the final judgment violated Article III of the Constitution, even though the bankruptcy court had statutory authority to enter final judgment on the counterclaim under § 157. Stern, 131 S. Ct. at 2601, 2620. The Supreme Court found that “Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.” Id. at 2618.

[2]           Notably, the Redmond Group sought to contest the allegations in the involuntary petitions, while the Zeltser Group sought to admit to the allegations and consent to the relief requested by the Petitioning Creditors.

[3]           The Judicial Code divides all matters that may be referred to a bankruptcy court into two categories. See 28 U.S.C. § 157. On one hand are “core” proceedings—those that “aris[e] under title 11” or “aris[e] in a case under title 11.” Id. On the other hand are “non-core” proceedings—those that are “otherwise related to a case under title 11”). Id. The “core”/ “non-core” distinction matters because it affects the manner in which a bankruptcy court may act and whether the court has the authority to hear and enter final judgments in a proceeding (“core” proceedings), subject to the Article III issues identified in Stern, or whether it may only submit proposed findings of fact and conclusions of law to the district court, which then may enter final judgment after de novo review (“non-core” proceedings). Id. Note, however, that the issue of whether parties may consent to the entry of final judgment by a bankruptcy court in “non-core” proceedings is currently before the United States Supreme Court in Wellness Int’l Network, Ltd v. Sharif.

[4]           The Court also commented that, although the relevant parties did not file a proof of claim, per the holding in Stern, the Zeltser Group “invoked the aid of the bankruptcy court by asking it to adjudicate the ownership issue. As a result, it must abide by the consequences of that decision.”

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