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US Supreme Court clarifies power of bankruptcy judges

May 26, 2015

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.

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