Recognizing that bankruptcy court jurisdiction is a “rapidly evolving” area of the law, the three–judge panel held unanimously that federal courts have no bankruptcy jurisdiction over a third–party’s counterclaim that would have no effect on the bankruptcy estate of a debtor who was a co-plaintiff. Further, the court held that entry of a final judgment in favor of the debtor herself on a state law fraudulent transfer claim was beyond the Constitutional authority of the bankruptcy judge under recent U.S. Supreme Court authority. Accordingly, the $500,000 judgment in favor of the debtor was vacated and remanded to the federal district court for de novo review.
Jackson Walker bankruptcy partner J. Scott Rose briefed and argued the case before the 5th Circuit. To review the Court’s opinion in its entirety, CLICK HERE. Attorneys in Jackson Walker’s Bankruptcy practice have the knowledge, experience, and resources to represent clients in a variety of bankruptcy and commercial workout situations, offering clients a sophisticated, solution–oriented approach.