Ninth Circuit Holds that a Debtor's Compulsory Counterclaims Can Be "Non-Core"

Under 28 USC Section 157(b)(1), a bankruptcy court may issue final orders in all "core proceedings" arising under the Bankruptcy Code, or arising in a bankruptcy case. In contrast, a bankruptcy court may only issue proposed findings of fact and law in "non-core" proceedings, whic...

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Bibliographic Details
Published inAmerican Bankruptcy Institute journal Vol. 29; no. 6; p. 48
Main Author Baum, Kevin M
Format Journal Article
LanguageEnglish
Published Alexandria American Bankruptcy Institute 01.07.2010
Subjects
Bankruptcy
Bankruptcy claims
Court decisions
Defamation
District courts
Federal court decisions
Federal courts
Probate
Provisions
State court decisions
United States > US
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Summary:Under 28 USC Section 157(b)(1), a bankruptcy court may issue final orders in all "core proceedings" arising under the Bankruptcy Code, or arising in a bankruptcy case. In contrast, a bankruptcy court may only issue proposed findings of fact and law in "non-core" proceedings, which are merely related to the bankruptcy case, unless the parties consent to it issuing a final judgment. Counterclaims asserted by a debtor against a creditor in bankruptcy cases have long been deemed core proceedings. However, a recent decision by the Ninth Circuit in Marshall v. Stern (In re Marshall) held that a state-based counterclaim was non-core despite Section 157(b)(2)(C)'s plain language, which provides "that counterclaims by the estate against persons filing claims against the estate" are core. Under Marshall's "closely related to" test, counterclaims that lack an independent basis for core status must be both compulsory and have common elements and factual proof requirements with the creditor's claim to be core.
ISSN:1931-7522