The Reach Of Bankruptcy Courts

In the beginning of the opinion he wrote for Stern v. Marshall, Chief Justice Roberts referenced Charles Dickens' Bleak House, in which Dickens gives a grim description of a lawsuit litigated in a foggy courtroom.1 In resolving the tumultuous Stern dispute, the Supreme Court created a new fogginess in bankruptcy courtrooms as to the exact contours and scope of a bankruptcy courts' authority. As our readers are aware, the Supreme Court and the various Circuit Courts have issued a number of opinions in the wake of Stern to clarify the exact parameters of a bankruptcy court powers and the recent opinion by the Fourth Circuit in In re Lewis addressing the specific power of a bankruptcy court to discipline attorneys further helps clear the proverbial fog surrounding the bankruptcy courts' powers.2

In In re Lewis, Mr. Lewis was the attorney to a debtor in bankruptcy.3 The Bankruptcy Administrator observed several discrepancies in Mr. Lewis' representation, prompting the Bankruptcy Court to sanction and temporarily suspend Mr. Lewis from further proceedings.4 On appeal, Mr. Lewis contended that the court did not have the authority, as an Article I tribunal, to suspend his bar privileges or to sanction him.5 Relying on Stern, he argued that the court did not possess the authority to rule on disciplinary matters against him.6 The Fourth Circuit disagreed.7

The Court of Appeals explained that the Bankruptcy Court appropriately exercised its authority to sanction Lewis for his misconduct.8 Bankruptcy courts have inherent power, "'incidental to all courts' to...