Northern Pipeline Co. V. Marathon Pipe Line Co. - Subsequent Developments

Subsequent Developments

The Court stayed its judgment until October 4, 1982 to give Congress an opportunity to repair the constitutional flaws in the bankruptcy system. The Court then extended its stay until December 24, 1982 upon the motion of the Solicitor General.

In response to Congress’ failure to act quickly, the Judicial Conference of the United States published an Emergency Interim Rule, which the federal district courts adopted on December 25, 1982. This rule allowed the district courts to refer cases to bankruptcy courts, but allowed them to withdraw the case at any time. The rule also narrowed the definition of “related proceedings” as those that could have proceeded in federal or state court in the absence of a bankruptcy petition. The bankruptcy judges could not enter final orders or judgments on such related proceedings without consent of the parties, but had to submit its findings and conclusions to the district court, which were subject to de novo review.

Finally, Congress dealt with the problem with the Bankruptcy Amendments and Federal Judgeship Act of 1984. Like the Emergency Interim Rule, this statute authorized the federal district courts to refer bankruptcy cases to the bankruptcy courts, but in so called “non-core” proceedings, the bankruptcy court must submit proposed findings of fact and conclusions of law to the district court for de novo review.