As Blawgletter gets ready for a trial that starts Monday, with a glad and grateful heart we welcome our friend, former team-mate, and world class i-banker (at BDO Capital) Jeffrey R. Manning as guest poster.

Jeff always has something well worth hearing to say. He also has, in the realm of humor, what the French call "I don't know what".

Today, Jeff regales us with his take on Stern v. Marshall (post here) and wonders What It All Means. Here you go:

Disclosure:  While not an attorney, twice in 30 years as an investment banker I received the “I’m not an attorney BUT… Award” at the closing dinner, and it is my distinct pleasure to regularly spend many waking hours around members of the bankruptcy bar.

For decades, bankruptcy judges have steadily labored on in relative obscurity pulling and pushing debtors through the process of the U.S. Bankruptcy Code, and these men and women deserve much credit for enhancing capital markets with a relatively efficient process to deal with default and disappointment; especially compared to “debtor’s prison” approaches around the globe.  I have witnessed “final” sale orders resolving troubling environmental and product liability issues, complicated tax matters, and labor strife with the power of the judge’s signature, as assets were released “free and clear of liens, claims and encumbrances” to a good faith buyer.  Despite the relative obscurity, in this court of equity bankruptcy judges wielded enormous power.

Perhaps no longer, after the U.S. Supreme Court’s groundbreaker in Stern v. Marshall, Case No. 10-179 2011 WL 2472792 (June 23, 2011). In a 5-4 opinion written by Chief Justice John Roberts, the court affirmed the 2010 ruling by the U.S. Court of Appeals for the Ninth Circuit and held that the bankruptcy court did not have constitutional authority to decide a state law claim brought by a debtor against a creditor, even though the matter was part of the “core” statutory jurisdiction of the bankruptcy court.

The case was highly visible, so to speak, as Ms. Vickie Lynn Marshall is best known as the 1993 Playmate of the Year, Anna Nicole Smith, and she brought suit against her late husband’s son, Pierce Marshall – salacious stuff, this. 

However unknown, the impact on the daily grinding work of the bankruptcy bar has been jolted by this Constitutional challenge.  As an adjunct of the U.S. District Court, can a bankruptcy court issue such a thing as a “final” order?  Since Stern was decided, courts have issued more than 70 published and unpublished rulings that cite to it.  Where do we go from here, as judges evaluate this new challenge to their authority?  It will take many billable hours to sort out.