Judge Sontchi (Bankr. D. Del.) Holds That Bankruptcy Courts May Enter Final Judgment on Core Fraudulent Transfer Claims Against Party With No Filed Claim

Written by Daniel N. Brogan A recent decision by Judge Sontchi for the Bankruptcy Court for the District of Delaware in Paragon Litigation Trust v. Noble Corp. plc (In re Paragon Offshore, plc, et al.), Adv. Proc. No. 17-51882 (CSS) [D.I. 168] (Bankr. D. Del. Mar. 11, 2019) (“Paragon”) holds that significant Supreme Court precedent does not preclude bankruptcy courts from entering final orders on fraudulent transfer claims brought against a defendant that has not asserted a claim against the debtor’s estate. The opinion is contrary to prior decisions in the Ninth Circuit and the Southern District of New York, creating the likelihood that the issue will be addressed on appeal. The decision also addresses a party’s potential implied consent to final determination by a bankruptcy court. In Paragon, a post-confirmation litigation trust (the “Trust”) sued Noble Corporation plc (“Noble”) asserted several causes of action, including five…

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