The case involved a bankruptcy proceeding where the debtor, Bellingham Insurance Agency Inc. (BIA), had filed for Chapter 7 bankruptcy. The bankruptcy trustee, Peter Arkison, filed a complaint against Executive Benefits Insurance Agency (EBIA), alleging that BIA had fraudulently transferred $373,000 to EBIA before filing for bankruptcy. The bankruptcy court granted summary judgment in favor of the trustee, finding that the transfer was fraudulent, and the district court affirmed.
EBIA, as a third party to the bankruptcy proceeding, appealed the decision. The key issue was whether the bankruptcy court had the authority to enter a final judgment on the fraudulent transfer claim, or whether it was required to submit proposed findings of fact and conclusions of law to the district court. The Supreme Court ultimately held that while the bankruptcy court did not have the authority to enter a final judgment, the bankruptcy court's decision could be treated as proposed findings of fact and conclusions of law, which the district court could then review and enter a final judgment.