An ABI Committee Newsletter
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| Vol 21, Num 2 | December, 2025
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by
Sara L. Abner, Frost Brown Todd LLP (Louisville)
Jon J. Lieberman, Sottile & Barile LLC (Loveland)
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The Bankruptcy Litigation Committee had a banner year! 2025 brought with it a flurry of activity, as well as some new additions to our leadership team.
The year began with the publication of our committee newsletter in January. It featured articles written by some exciting new contributors, including, “Is Waiver of Service an Option in Adversary Proceedings Where Nationwide Service by Mail Is Allowed?,” by Ryan M. Goldstein, and “Drag-Along Clause as a Tool to Sell Assets of the Company,” by Malgorzata Kieltyka.
This year’s Annual Spring Meeting (ASM) occurred in April and was held in Washington, D.C. The meeting was particularly significant, as it marked the 20th anniversary of the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). In recognition of this anniversary, the
Bankruptcy Litigation Committee partnered with the Legislation Committee to present a retrospective of BAPCPA over the years. Moderated by Judge Michelle Harner of Maryland, and with speakers Jon Lieberman, Donald Swanson of Koley Jessen in Omaha, Neb., and Prof. Christopher Hampson of the University of Florida College of Law, the presentation was a highlight of the ASM.
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by
Sarah Primrose, King & Spalding LLP (Atlanta)
Christian John Adams, King & Spalding LLP (Atlanta)
Hannah Peters, King & Spalding LLP (Atlanta)
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A Colorado bankruptcy court recently ruled that a chapter 11 debtor could not collaterally attack an alter-ego suit brought by creditors against its corporate parents and officers by claiming the alter-ego claims as property of the debtor’s estate.
Procedural History
Prior to its bankruptcy filings, Signia, Ltd.’s principal creditors, Male Excel Medical P.A. and Male Excel Inc. (together, “Male Excel”), secured a $2,051,745 judgment against Signia for breach of contract and unjust enrichment in state court in Nevada (the “Nevada Judgment”). In an attempt to stop execution on the Nevada Judgment, in September 2023 Signia filed its first bankruptcy case. Signia failed to comply with the timing requirements for filing a Ssubchapter V plan, and its case was dismissed on June 12, 2024. Notably on June 4, 2024, a Nevada state court awarded
Male Excel attorneys’ fees and costs totaling $1,107,983.26, bringing the judgment to approximately $3.16 million.
Just days after the court dismissed the first bankruptcy case in June 2024, Signia filed a second chapter 11 bankruptcy case under the small business provisions of subchapter V in the U.S. Bankruptcy Court in the District of Colorado. Male Excel asserted general unsecured claims against Signia on the basis of the Nevada Judgment for $4,469,565.48 to $5,376,730.63.
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by
David G. Gharkhany, Frost Brown Todd LLP (Cincinnati)
Mark A. Platt, Frost Brown Todd LLP ( Dallas)
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An individual chapter 7 bankruptcy debtor will generally receive a discharge under § 523(a) for all debts that arose prior to the filing of the petition, other than debts that are found to be nondischargeable. The Bankruptcy Code defines “debt” as a liability on a claim and defines a “claim” as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
When a creditor cannot recover a debt against the principal debtor because of a bankruptcy, or for other distress-related reasons, the creditor may enforce the debt against a guarantor, if such guaranty exists. However, certain types of guaranties may be subject to discharge if the guarantor files its own chapter 7 case.
Whether pre-petition personal
guaranties on contingent liabilities are dischargeable depends on whether the guaranty falls within the Bankruptcy Code’s definition of debt and claim. Courts examine several factors, including the timing of the execution of the guaranty, and whether the guaranty relates to an ongoing and revolving line of credit toward present and future transactions, also known as a continuing guaranty.
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Todd Carney,
U.S. Bankruptcy Court (N.D. Tex.) (Fort Worth)
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The entity that gets to push the “file” button can decide the entire trajectory of a chapter 11 case. Over the last few years, courts have wrestled (again) with three recurring flashpoints: (1) board vs. state-court receiver; (2) subsidiary control and who sits in the filing chair; and (3) creditor-influenced “blocking” rights baked into governance documents. The opinions don’t always point the same way, but together they sketch a clearer playbook for litigating (and drafting) corporate authority to file.
Board vs. Receiver: Who Speaks for the Company?
A fresh Third Circuit ruling in the Whittaker, Clark & Daniels talc case illustrates the tensions. South Carolina had appointed a receiver after a large verdict. Berkshire appointed a new board that authorized a New Jersey chapter 11. The receiver moved to dismiss, arguing he alone
held filing authority. The Third Circuit disagreed and let the case proceed, emphasizing that corporate filing authority turns on the debtor’s state of incorporation and governing law, and that the receiver had not secured the necessary state law change to strip the board’s power.
Other courts have signaled limits on how far a receivership order can go. A Tennessee decision explained that a typical receivership order does not, by itself, enjoin a bankruptcy filing, although tailored orders that actually remove management for cause can change the analysis. Ultimately, a receivership is not an automatic veto, and the text of the appointing order and the applicable corporate law matter.
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