The Significance of Wellness International v. Sharif

The United States Supreme Court, on July 1, 2014, granted a petition for certiorari in an important Seventh Circuit case limiting the power of bankruptcy courts to decide property disputes. Wellness International Network Ltd. et al. v. Sharif, 727 F.3d 751 (7th Cir. 2013). The Seventh Circuit had held last year that the bankruptcy court lacked the constitutional authority to determine whether purported trust assets were property of the debtor’s estate. In its view, this was a “state law claim between private parties that is wholly independent of federal bankruptcy law and is not resolved in the claims-allowance process.” 727 F.3d at 776. In this article, SRZ partner Michael L. Cook discusses the Supreme Court’s decision.