What Happens To Personal Injury and Wrongful Death Claims In The The Manhattan Bankruptcy Court?

1. The Bankruptcy Court is a Court of Limited Jurisdiction.

Upon the commencement of a bankruptcy case the automatic stay goes into effect. The automatic stay is a mandatory injunction of the bankruptcy court that prevents to commencement or continuation of litigation against the debtor (person or entity that has filed for bankruptcy).

The bankruptcy court, however, has limited subject matter jurisdiction. This means that there are certain subject matters that the bankruptcy court does not have jurisdiction over. For example, the bankruptcy court does not have jurisdiction to determine criminal, family law or probate matters, among others.

In addition, the statutory grant of jurisdiction to the Bankruptcy Code provides that the bankruptcy court does not have jurisdiction to enter final orders in personal injury or wrongful death matters. A bankruptcy judge has jurisdiction to make findings of facts and conclusions of law based on the record before the court, and based on this the United States District Court in the district where the bankruptcy case is pending has jurisdiction to enter final orders. In this regard a bankruptcy judge’s jurisdiction is similar to that of a United States Magistrate Judge (the underlying reason for this is the distinction made between judges appointed under Articles III and IV of the Constitution).

2. Core versus Non-Core Matters & Abstention

The grant of jurisdiction to the Bankruptcy Court distinguishes between “core” and “non-core” matters. Core matters are generally those that intimately affect the administration of a bankruptcy case, or involved claims arising under bankruptcy law. Non-core matters include personal injury and wrongful death claims.

A personal injury or wrongful death claimant can bring a motion to have the Bankruptcy Court abstain from hearing any personal injury or wrongful death claims.

At Starr & Starr, PLLC we are experienced in representing creditors and other parties in interest in matters involving the interaction of personal injury claims and bankruptcy law. Please feel free to contact us at 888-867-8165 or by e-mail at info@starrandstarr.com for further information.