Virgin Islands Bankruptcy Court Authority Gets 3rd Circuit Look

The Third Circuit in oral arguments Tuesday seemed skeptical of a challenge to the legal authority of the Virgin Islands Bankruptcy Court, an argument that has the potential to undo the bankruptcy court’s rulings.

The appellants—attorneys who seek to upend a sanctions order in a bankruptcy case—assert that the structure of the system is unconstitutional because the bankruptcy judges are transferred from other judicial districts and their orders aren’t subject to direct review by an Article III court, but must first be heard by the US District Court for the Virgin Islands, which is an Article IV court.

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