Celotex Corp. v. Edwards

Summary

The Court held that the Edwards were required to obey the Bankruptcy Court’s injunction barring execution against Celotex’s surety and could not attack that injunction collaterally in the federal courts in Texas. Execution on the supersedeas bond was related to Celotex’s bankruptcy because it could substantially impair the Chapter 11 reorganization, and Rule 65.1 did not preclude an injunction staying execution. The Court did not decide whether the injunction was properly issued on its merits. Justice Stevens, joined by Justice Ginsburg, dissented, arguing that the statutory and constitutional limitations on non-Article III bankruptcy judges deprived the Bankruptcy Judge of jurisdiction and authority to prevent an Article III court from enforcing the bond. He would have affirmed and also considered the injunction to have only a frivolous pretense to validity.