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Fifth Circuit Agrees With 'Cleary': Corporate Debtors Are Subject to Section 523(a) In Subchapter V Case

Armed with two circuit-level decisions, creditors who lose at the bankruptcy court level may feel encouraged to appeal. As of now, no court in the Second Circuit has addressed the issue and it remains to be seen how other courts will react.

7 minute read August 01, 2024 at 12:07 AM
By
Jeffrey M. Rosenthal, Vincent J. Roldan and Joshua S. Bauchner
Fifth Circuit Agrees With 'Cleary': Corporate Debtors Are Subject to Section 523(a) In Subchapter V Case

The goal of most corporate reorganization cases is for the company to obtain a "discharge" of its debts, and obtain a "fresh start." Though a Chapter 11 plan will discharge most types of debts, certain debts are deemed ineligible for discharge for public policy reasons.

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