By: Joseph P. Donnelly IV
St. John’s Law Student
Adopting a narrow interpretation of the holding of
Stern v. Marshall,
[1] the Bankruptcy Court for the District of Delaware, in
In re DBSI,
[2] held that
Stern does not preclude a bankruptcy court from adjudicating avoidance claims.
[3] In November 2008, DBSI Inc. and several of its affiliates (the “Debtors”) filed for Chapter 11 bankruptcy protection.
[4] Following confirmation of the Debtors’ liquidating plan, a litigation trustee commenced several adversary proceedings relating to,
inter alia, preferential or fraudulent transfer claims.
[5] Certain defendants (the “Movants”) sought to have these adversary proceedings dismissed, arguing that the bankruptcy court lacked jurisdiction under 28 U.S.C. § 157 and the United States Supreme Court’s decisions in
Stern v. Marshall and
Granfinanciera, S.A. v. Nordberg,
[6]to adjudicate causes of action sounding in preference or fraudulent conveyance.
[7]