The Supreme Court of the United States says bankruptcy courts have authority to rule on disputes that fall outside the bankruptcy proceedings if the parties to the case consent.
The 6-3 ruling on Tuesday helps clarify the power of bankruptcy judges. That had been in question since a 2011 high court decision that limited their authority to decide non-bankruptcy issues.
The case involves efforts by Wellness International Network Ltd. to recover $655,000 in attorney fees from Richard Sharif, a Chicago resident with whom the company had a legal dispute. Sharif filed for bankruptcy in 2009 to avoid paying the debt. Wellness claimed Sharif had assets in a family trust that could be tapped and lower courts agreed.
The Supreme Court said lower courts must decide whether Sharif consented to the bankruptcy court deciding the issue.