Here’s a judicial estoppel hypothetical:
- debtor files Subchapter V bankruptcy and achieves a confirmed plan;
- in the bankruptcy debtor fails to disclose a pre-petition lawsuit claim;
- after plan confirmation, debtor files suit on the pre-petition lawsuit claim; and
- defendant seeks dismissal of the lawsuit, with prejudice, on grounds of judicial estoppel—i.e., for debtor/plaintiff’s failure to disclose the claim in bankruptcy.
Question: Who should be the ultimate beneficiary of a lawsuit claim that debtor fails to disclose:
A Petition for Writ of Certiorari has been granted by the U.S. Supreme Court in Keathley v. Buddy Ayers Construction, Inc., Case No. 25-6, on a ruling from the U.S. Fifth Circuit Court of Appeals.[Fn. 1]
The Question Presented in Kethley v. Buddy Ayers is this:
The U.S. Supreme Court does not like the Bankruptcy Code. It never has. Two examples are:
Mass torts and resulting litigation are a reality of life in these United States.
But one of the truly shocking things about mass tort litigation, in recent times, is this:
- judicial delays override the wishes of mass tort victims for prompt payment of negotiated amounts.
A current example of such delays is the Boy Scouts confirmed bankruptcy plan.
Chronology
Here is a short Chronology of the Boy Scouts bankruptcy plan—and the lapse of more than three years since confirmation without a final resolution:
This past year has featured a diverse range of consequential, precedent-setting insolvency disputes across various industries, reflecting both the breadth of challenges facing Canadian businesses and the adaptability of Canada’s insolvency framework in resolving these issues. The most consequential decisions in which we have been involved are described below, alongside key takeaways for stakeholders participating in insolvency proceedings in 2026 and beyond.
In its decision in In re Brandt, the court seems to draw a clear line: No post-petition add-ons for attorneys’ fees and costs when a secured claim arises from a judgment lien.
Recently, the U.S. Supreme Court denied certiorari in two cases involving bankruptcy questions:
Before the US Supreme Court’s landmark decision in Purdue Pharma,1 it had become common practice for Chapter 11 debtors to include a consensual or nonconsensual non-debtor third-party release in their plans of reorganization.
Earlier this year, the Internal Revenue Service (“IRS”) recognized a victory in United States v. Miller. In this bankruptcy case, the trustee attempted to avoid certain transfers that shareholders of the bankrupt company had made, including a $145,000 transfer to the IRS.