Brent S Jackson

IN TH E UNITE D STATE S BANKRUP TCY COURT
F OR TH E DISTRICT OF NE BRASKA
In t h e Ma t t er of:
BRE NT S. J ACKSON,
Debt or .
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Ca se No. BK25-80772
Ch a pt er 7
F in d in g s a n d C o n c lu s io n s R e g a r d in g O b je c t io n t o C la im N o. 4-1
P h ilip M. Kelly, t h e Ch a pt er 7 t r u st ee object ed t o t h e pr oof of cla im filed by
Da vid Ra ym on d (Doc. #53). Th e Ch a pt er 7 t r u st ee appea red. Mich a el T.
E ver sden a ppea r ed for Mr . Ra ym on d. The t r u st ee’s object ion is sust ain ed.
Ra ym on d’s claim is disallowed. Th e cla im is a con t in gen t cla im for
con t r ibut ion fr om t h e debt or on a st a t e cou rt judgm en t for wh ich Ra ym on d
a n d t h e debt or a r e bot h lia ble, t r iggerin g 11 U.S.C. § 502(e)(1)(B). Ra ym on d
con cedes ea ch elem en t of § 502(e)(1)(B). Th e st a t u t e m a n dat es disa llowa n ce.
F in d in g s o f F a c t
Tr a n e U.S. In c. (“Tr a n e”) su ed Ra ym ond, t h e debt or, a n d F a cilit y Advoca t es,
LLC, in t h e Dist r ict Cou r t of Dou glas Cou n t y, Nebr a ska, a t Ca se No. CI 22-
3093.1 Tr a n e a ssert ed cla im s for br ea ch of cont ra ct a nd brea ch of t h e dut y of
loya lt y a ga in st t he debt or a n d Ra ym on d. It asser t ed va r ious t or t claim s a n d a
cla im for civil con spir a cy a ga in st a ll t h r ee defen da n t s. A ju r y awa rded Tr a n e
da m a ges, assessin g t h em defenda n t by defen dan t :
C la im 	R a y m o n d 	D e b t o r 	F a c ilit y Ad v o c a t e s
Br ea ch of Cont r a ct 	$125,000 	$125,000 	N/A
Tor t Cla im s 	$2,616,136 	$1,579,600 	$1,425,600
Du t y of Loya lt y 	$329,367 	$108,071 	N/A
T o t a l 	$3,070,503 	$1,812,671 	$1,425,600
1 F a cilit y Advoca t es filed a pr oof of cla im , t o wh ich t h e t r u st ee a lso object ed. (Doc.
#54). Th e object ion wa s r esist ed on sim ila r gr ou n ds. Th ese fin din gs a n d con clu sion s
a pply equ a lly t o F a cilit y Advoca t es’ cla im . A sepa r a t e or der will be en t er ed
su st a in in g t h e sepa r a t e object ion a n d disa llowin g F a cilit y Advoca t es’ cla im .
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Accor din g t o Ra ym on d, t h e st a t e cour t en t er ed a n or der con fir m in g t h e
n a t u r e of t h e ju dgm ent : Th e con t r act a nd du t y-of-loya lt y dam a ges a r e
sever a l. Th e ju r y assessed t he t or t dam a ges a ga in st ea ch defen da n t for it s
own m iscon duct. Beca use t h e ju r y fou nd a ll t hree defen da nt s wer e co-
con spir a t or s, t h ey a re join t ly a n d sever a lly lia ble for t he t or t dam a ges.2
Th e ju dgm ent is on a ppea l t o t h e Nebr a ska Supr em e Cou rt . Th e issues
a ppea led inclu de whet her t h e ju dgm en t is join t a n d sever a l a s bet ween
Ra ym on d a n d t he debt or . Th e case is set for a r gu m en t in Novem ber 2026.
Ra ym on d post ed a su per sedea s bon d of $1,089,646.50, wh ich h e descr ibes as
“in dividu a lized” t o h im a n d secu r in g “h is own exposu r e.”3
Th e debt or filed h is Cha pt er 7 pet it ion on J u ly 28, 2025. Ra ym ond filed Cla im
No. 4-1, asser t in g t h a t “in t h e even t t h e a ppea l of t he J udgm en t is
u n su ccessfu l,” he h olds a con t in gent cla im “for con t r ibut ion or in dem n it y for
a n y por t ion of t h e J udgm en t t h a t h e pa ys t h a t is at t r ibut a ble t o t h e Debt or .”4
Tr a n e a lso filed a cla im in t h e a m ou nt of $1,856,035.95, con sist in g of
$1,812,671.00 in pr in cipa l a n d $43,364.95 in post -judgm en t in t er est .
Th e t r ust ee liqu ida t ed t h e debt or ’s est at e a n d recover ed asset s. H e filed a
fin a l r epor t seekin g t o dist r ibut e $101,929.58 t o gen er a l u n secu r ed cr edit or s.
In h is r epor t , h e proposed t o pa y Tr a n e, t he largest u nsecur ed credit or ,
$100,642.79. H e a lso proposed t o a llow Ra ym ond’s cla im , “but pa y zer o”
beca u se “[n ]o a m ou nt s wer e cla im ed.” Ra ym ond object ed t o t h e fin al repor t .
Th e cou rt dir ect ed t h e t r u st ee t o object t o t h e cla im so it s a llowa n ce or
disa llowa nce cou ld be decided on t h e m er it s.5 Th e t r ust ee filed t h e object ion ,
wh ich is n ow before t he cou r t. In it he asser t s Ra ym on d’s cla im is a
2 Th e or der is n ot in t h e r ecor d. Ra ym on d’s descr ipt ion is a ccept ed for pu r poses of
t h ese fin din gs a n d con clu sion s.
3 Sim ila r ly, F a cilit y Advoca t es st a t es it post ed a su per sedea s bon d of $848,966.50,
wh ich is “in dividu a lized t o F a cilit y Advoca t es a n d secu r es it s own exposu r e.”
4 If h is a ppea l is su ccessfu l, Ra ym on d will h a ve n o con t r ibu t ion cla im . An d h e h a s n o
con t r ibu t ion cla im for t h e br ea ch of con t r a ct or du t y of loya lt y da m a ges. Wh a t ever
cla im h e h olds ca n be ba sed on ly on t h e $1,579,600 in t or t da m a ges a ssessed a ga in st
t h e debt or .
5 A filed cla im is deem ed a llowed u n less a pa r t y in in t er est object s. 11 U .S.C.
§ 502(a ); In r e Ar ch d iocese of S a in t P a u l & Min n ea polis, 579 B.R. 188, 196 (Ba n kr . D.
Min n . 2017). A cla im filed in a n u n kn own a m ou n t is n ot disa llowed by a ssign in g it a
va lu e of zer o wit h ou t a n object ion .
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con t in gen t cla im for r eim bu r sem ent or con t r ibu t ion t h at m u st be disa llowed
u n der § 502(e)(1)(B).
Ra ym on d resist ed. H e does not dispu t e h is cla im m eet s t h e st a t u t e: “Cla im
No. 4-1 fa lls wit h in Sect ion 502(e)(1)(B), a n d Ra ym on d does n ot con t en d
ot h erwise.” H e seeks t hr ee a lt er n a t ive for m s of r elief. H e a sks t he cou r t t o
over r u le t h e object ion . H e seeks a con t in u a nce u n t il t he Nebr a ska Su pr em e
Cou r t r ules on t h e a ppea l. An d h e a sks t h e court t o defer r u lin g, est im at e h is
cla im u n der § 502(c), a nd dir ect t he t r u st ee t o hold a r eser ve for t he est im a t e.
C o n c lu s io n s o f L a w
Disa llowa n ce Un der § 502(e)(1)(B) Is Ma n d a tory
Sect ion 502(e)(1) m a n da t es disa llowa n ce of Raym on d’s cla im. It provides in
r eleva n t pa r t :
Not wit h st a n din g su bsect ion s (a ), (b), a n d (c) of t h is sect ion a n d
pa r a gr a ph (2) of t h is subsect ion , t h e cour t sh a ll disa llow a n y
cla im for reim bu rsem ent or cont r ibu t ion of a n en t it y t h at is
lia ble wit h t h e debt or on or h a s secu r ed t he claim of a credit or ,
t o t he ext ent t h a t — ... (B) such cla im for r eim bu r sem en t or
con t r ibut ion is con t in gen t a s of t he t im e of a llowa n ce or
disa llowa nce of su ch claim for r eim bu rsem ent or cont r ibu t ion [.]
11 U.S.C. § 502(e)(1)(B).
Th e st at u t e “pr eclude[s] r edu nda n t r ecover ies on ident ica l cla im s a ga inst
in solven t est a t es in viola t ion of t h e fu n dam en t a l Code policy fost er in g
equ it a ble dist r ibut ion am on g a ll credit or s of t he sam e cla ss.” P otter v. CNA
In s. Cos. (In re ME I Diver sified , Inc.), 106 F.3d 829, 831 (8t h Cir. 1997)
(qu ot in g J u niper Dev. Gr p. v. Ka h n (In r e H em in gwa y Tr a nsp., Inc.), 993 F .2d
915, 923 (1st Cir . 1993)). It a lso a llows “dist r ibut ion t o u nsecur ed cr edit or s
wit h out a r eser ve for t hese t ypes of con t in gen t cla im s wh en t h e con t ingen cy
m a y n ot occu r u nt il a ft er t h e sever a l year s it oft en t akes t o lit iga t e t h e
u n der lyin g lawsu it .” In r e Dr exel Bu r n h a m La m ber t Grp., In c., 148 B.R. 982,
986 (Ba nkr . S.D.N.Y. 1992) (qu ot in g In r e Wedtech Corp., 85 B.R. 285, 290
(Ba n kr. S.D.N.Y. 1988)). Bot h pur poses a r e im plica t ed.
Disallowa n ce r equ ires t h r ee elem ent s: “(1) t he cla im is for r eim bur sem en t , (2)
t h e claim a n t is ‘lia ble wit h t h e debt or’, a n d (3) t h e cla im is con t in gent as of
t h e t im e of it s allowa n ce or disa llowa n ce.” In re P ettibon e Cor p., 110 B.R. 837,
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847 (Ba nkr . N.D. Ill. 1990); a ccor d In r e AP CO Liqu id a tin g Tr., 370 B.R. 625,
631 (Ba nkr . D. Del. 2007).
Ra ym on d con cedes a ll t h r ee elem ent s. Th e concession is well t aken. A cla im
for in dem n it y, a s well as on e for con t r ibu t ion, is a cla im for r eim bu rsem en t .
In r e Pettibon e, 110 B.R. a t 848; In r e Drexel, 148 B.R. a t 985. Th e debt or a n d
Ra ym on d a re joint ly a nd sever a lly lia ble t o Tr an e for t he con spir a cy
da m a ges. And t he cla im is cont in gen t . “Th e pr im a r y exam ple of a con t in gen t
cla im . . . is wh en ‘a codebt or h a s n ot pa id t he cr edit or a nd [t h ereby]
est a blish ed h is righ t t o pa ym en t from t h e debt or .’” In re ME I, 106 F .3d a t 832
(qu ot a t ion om it t ed).
Con t in gen cy is m ea sur ed on t h e da t e of t he r ulin g on t h e object ion, a nd it
“r ela t es t o bot h pa ym ent a n d lia bilit y.” In re Drexel, 148 B.R. a t 986. A co-
obligor ’s cla im “is con t in gen t u n t il t h eir lia bilit y is est a blished . . . a n d th e co-
d ebtor h a s pa id th e cr editor .” Id . a t 987 (em ph asis a dded); In r e AP CO, 370
B.R. at 636. Ra ym ond’s lia bilit y is on appea l, a nd h e h a s pa id n ot h in g.
Ra ym on d’s r equest t o over r u le t h e object ion m u st be den ied. When t he t h r ee
elem en t s a r e m et , “t h e cou r t sh a ll disa llow” t he cla im . 11 U.S.C.
§ 502(e)(1)(B); In r e P inn a cle Br a n ds, Inc., 259 B.R. 46, 56 (Ba nkr. D. Del.
2001). Th a t t h e est at e is bein g liqu idat ed r a t h er t h a n r eor ga n ized “is
in sign ifica n t for t h e purposes of det er m inin g t he a pplica bilit y of sect ion
502(e)(1)(B). Th e Code m a kes no su ch dist in ct ion .” In r e P in na cle Bra nd s, 259
B.R. at 56.
Disa llowa n ce Is Not F orfeitu re
Ra ym on d is cor rect in st a t in g disa llowa nce u nder § 502(e)(1)(B) is n ot a
for feit u re. Sect ion 502(e)(2) pr ovides:
A cla im for r eim bu r sem en t or cont r ibut ion of such a n en t it y
t h a t becom es fixed a ft er t h e com m en cem ent of t h e case sh a ll be
det erm in ed, a n d sh a ll be a llowed u n der su bsect ion (a), (b), or
(c) of t h is sect ion, or disa llowed u nder su bsect ion (d) of t h is
sect ion , t h e sam e a s if su ch cla im h ad becom e fixed befor e t h e
da t e of t h e filin g of t h e pet it ion .
11 U.S.C. § 502(e)(2). Sect ions 502(e)(1)(B) a n d 502(e)(2) “ser ve essent ia lly t o
defer a llowin g cla im s for r eim bu rsem en t u nt il t h ey a r e no lon ger con t ingen t .
On ce such a cla im is no lon ger con t in gen t , § 502(e)(2) perm it s it t o be a llowed
a s a pr e-pet it ion cla im .” In r e P ettibon e, 110 B.R. a t 846-47. A co-obligor
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fa cin g disa llowa nce “m ay elect t o ca use it s con t in gen t cont r a ct cla im t o
becom e ‘fixed’ prior t o disa llowa n ce . . . by it self sa t isfyin g t h e debt du e t h e
cr edit or of t h e debt or est a t e, lea vin g t h e en t it y a s t he sole h older of a cla im
a ga in st t h e est at e based on t h a t debt .” In r e H em in gwa y Tra n sp., 993 F .2d at
923-24; see a lso In re Lull Cor p., 162 B.R. 234, 238 (Ba nkr . D. Min n. 1993).
Con t r ibu t ion cla im s a risin g fr om join t t or t lia bilit y a r e t r ea t ed t he sa m e wa y:
“t o t h e ext en t t h a t t h e pa r ish es event u a lly m a ke pa ym ent s t o t h e t or t
cr edit ors, t h eir cla im s m a y be a llowed.” In r e Ar ch diocese, 579 B.R. a t 197.
If t h e con t in gen cy is r esolved aft er disa llowa n ce, t he cla im a n t m a y seek
r econsider at ion. 11 U.S.C. § 502(j). A ba n kr u pt cy cou r t “h as t h e power t o
r econsider t h e a llowa n ce or disa llowa n ce of a cla im for ca use by vir t u e of
§ 502(j) a n d Ba n kr u pt cy Ru le 3008.” Pettr y v. P a tr iot Coa l Cor p. (In re P a triot
Coa l Cor p.), 511 B.R. 563, 566 (B.A.P . 8t h Cir . 2014).6
A Con tin ua n ce Is Una va ilin g
Th e r equ est ed con t in u an ce wou ld n ot ch a n ge t h e r esu lt . Cont in gen cy is
m ea sur ed on t h e da t e t h e cou rt r u les. Th e Nebr a ska Supr em e Cour t ’s
decision will n ot fix Ra ym on d’s cla im . P a ym en t will. If t h e ju dgm ent is
r ever sed, Ra ym on d’s cla im disappea rs. If it is a ffirm ed, t h e cla im rem a in s
con t in gen t u n t il Ra ym on d pa ys m or e t h a n h is own sh a r e of t h e com m on
lia bilit y. H is bon d secu res h is own exposu r e, a nd it is rou gh ly a t h ir d of t h e
da m a ges a ssessed a ga in st him a lon e. Th e decision will n ot com e u n t il a ft er
or a l a r gum en t in Novem ber, a n d pa ym en t , if an y, on ly aft er t h e decision .
Not h in g in t h e r ecor d su ggest s t h e cla im will be fixed wit h in a n y defined
per iod.
Th e cou rt in In re Agwa y r eject ed a sim ila r r equ est t o “defer disa llowan ce of
t h e ba la nce of [t h e] cla im u n t il t he end of t h e ca se.” In r e Agwa y, In c., 2008
WL 2827439, a t *3 (Ba n kr . N.D.N.Y. J uly 18, 2008). In declin in g, t h e cou r t
r ea son ed:
6 Ra ym on d a sk s t h a t t h e or der specifica lly “pr ovide t h a t a n y disa llowa n ce is wit h ou t
pr eju dice a n d su bject t o r econ sider a t ion u n der 11 U.S.C. § 502(j).” Un der § 502(j),
a llowa n ce or disa llowa n ce ca n be r econ sider ed for ca u se. Th e st a t u t e pr ovides wh a t
Ra ym on d r equ est s. No or der is n ecessa r y. To t h e ext en t Ra ym on d a sk s t h e cou r t t o
fin d n ow t h a t t h e det er m in a t ion of t h e a ppea l a n d pa ym en t wou ld con st it u t e ca u se,
t h e r equ est is den ied. A pr e-det er m in a t ion of ca u se on a h ypot h et ica l is n ot
a ppr opr ia t e.
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F & D h as a rem edy pur su a n t t o Code § 502(j) t o h a ve it s claim (s)
r econsidered on ce t h e cla im (s) h a s becom e fixed a n d liqu idat ed. Th e
Cou r t is at a loss t o u n der st a nd t h e adva n t a ge t o F & D in h a vin g t h e
Cou r t defer indefinit ely it s r ulin g on t h e disa llowa n ce of F & D’s
cla im (s). It h as su ggest ed t h at t h is will r esult in it s h a vin g t o m a ke
sever a l m ot ion s in t h e fu t u r e pu rsu a n t t o Code § 502(j). H owever , if it
wer e willin g t o wa it for t h e Cou rt t o dela y r uling on t h e disa llowa nce
of it s cla im (s) t o som e da t e in t h e fut u r e, t hen it shou ld h a ve n o
pr oblem dela yin g a n y requ est s for r econ sider at ion of t h e disa llowa nce
of it s cla im (s) pu rsu a n t t o Code § 502(j) as well. It a ppea rs t o be a
dist in ct ion wit h out a differ en ce as fa r a s t h e t r ea t m en t of it s cla im (s)
is con cer ned.
Id . a t *4. Th e sa m e is t ru e h er e, except t h at h ere t h e differ en ce h a s a cost .
Th e est a t e would r em ain open, wit h it s fu n ds un dist r ibu t ed a nd
a dm in ist r at ive expen ses a ccr u in g.7
E stim a tion a n d Reserve Are Not Ava ila ble
Ra ym on d’s claim ca n n ot be est im at ed u n der § 502(c) a n d r eser ved. Neit h er is
a n a va ila ble r em edy. Sect ion 502(e)(1) a pplies “[n ]ot wit h st a ndin g su bsect ions
(a ), (b), a n d (c).” 11 U.S.C. § 502(e)(1). As t h e cou r t expla in ed in In r e Dr exel:
Alt h ou gh § 502(c) pr ovides for t he est im a t ion of cont in gen t
cla im s, t h e sect ion on ly a pplies t o dir ect con t in gen t claim s
beca u se § 502(e)(1)(B) expr essly pr ovides for disa llowa n ce of
con t in gen t cla im s of a pa r t y seconda r ily lia ble wit h t h e debt or
“[n ]ot wit h st a n din g su bsect ions (a ), (b), a nd (c) of t h is sect ion.”
11 U.S.C. § 502(e)(1)(B). Alt h ou gh a cr edit or’s cla im wh ich is
con t in gen t m a y give a righ t t o est im at ion, “a per son
seconda r ily lia ble t o a cr edit or is n ot in t h e sam e posit ion a s
t h e [dir ect ] cr edit or.” Th u s, t h e cla im m a y be est im a t ed on ly if
it is n ot disa llowed by § 502(e)(1)(B).
In r e Drexel, 148 B.R. at 991 (cit at ion m odified) (qu ot in g In r e P a cor , Inc., 110
B.R. 686, 690 (E.D. P a. 1990)); see a lso In r e H em in gwa y Tr a nsp., 993 F .2d at
7 Ba sed on t h e t r u st ee’s fin a l r epor t , t h e est a t e h a s pa id h is ba n k bet ween $25.68 a n d
$128.05 per m on t h in ser vice fees. If Ra ym on d wer e gr a n t ed a con t in u a n ce, t h e
t r u st ee wou ld in cu r sever a l m on t h s of a ddit ion a l fees, n ea r ly a ll a t Tr a n e’s expen se.
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926 n .12 (n ot in g a lt er na t ives su ch a s pla cin g a codebt or’s dist ribu t ion in t r ust
“fin d lit t le su pport in t he ca t egor ica l la n gu a ge of sect ion 502(e)(1)(B)”).8
Th e a u t h or it y Ra ym ond cit es t o su pport a r eserve is n ot a pplica ble. H e cit es
In r e H ea lth Dia gn ostic La b’y, Inc., 551 B.R. 218, 235 (Ba nkr . E .D. Va . 2016),
a n d In ter co In c. v. ILGWU Na t’l Ret. F u n d (In r e In ter co In c.), 137 B.R. 993,
997 (Ba nkr . E .D. Mo. 1992). Neit her ca se in volved a cla im su bject t o
disa llowa nce u nder § 502(e)(1)(B). In In r e H ea lth Dia gn ostic t he cou r t
a ppr oved a pr ovision in a Ch a pt er 11 liqu idat ing pla n a llowin g a liqu ida t in g
t r u st ee t o est im a t e cla im s a n d set reser ves du rin g t h e dist r ibut ion pr ocess.
Th e cou rt in In re In terco est im at ed a dir ect pension wit h dr awa l-lia bilit y
cla im “for t h e pu r pose of a llowa n ce.”
Nor does equ it y m a n da t e a differ ent a nswer . Any equ it a ble power t h e cou r t
h a s u n der 11 U.S.C. § 105(a ) “does n ot a llow t he ba n kr u pt cy cour t t o over r ide
explicit m a nda t es of ot her sect ion s of t h e Ba n kru pt cy Code.” La w v. S iegel,
571 U.S. 415, 421 (2014) (quot in g 2 Collier on Ba n kr u ptcy ¶ 105.01[2], p. 105-
6 (16t h ed. 2013)). Th e Ba n kr u pt cy Code requ ir es disa llowa n ce. It does n ot
a u t h or ize est im at ion a nd r eser ve on equ it a ble gr ou n ds. E qu it y ca n not
in t er cede.
8 Ra ym on d a sser t s equ it a ble r elief is r equ ir ed t o a void a n “in ju st ice.” No in ju st ice is
eviden t . E ven if Ra ym on d’s cla im wer e a llowed, it wou ld ben efit h im m in im a lly.
Tr a n e’s ju dgm en t in clu des join t com pon en t s a n d sever a l com pon en t s. Un der
Nebr a sk a la w, a pa ym en t t h a t n eit h er t h e debt or n or t h e cr edit or h a s a pplied is
a pplied by t h e cou r t “in su ch m a n n er , in view of a ll of t h e cir cu m st a n ces, a s is m ost
in a ccor d wit h ju st ice a n d equ it y,” a n d t h e r u le “a pplies t o in volu n t a r y, a s well a s t o
volu n t a r y, pa ym en t s.” Ricku s v. Ricku s, 172 N.W.2d 628, 630-31 (Neb. 1969). A
dist r ibu t ion fr om a ba n kr u pt cy est a t e is a n in volu n t a r y pa ym en t , a n d r a t a ble
a pplica t ion is a com m on r esu lt . S ee F ir st Na t’l City Ba n k v. Klin e, 439 F . Su pp. 726,
729 (S.D.N.Y. 1977) (a pplyin g dist r ibu t ion fr om a ba n kr u pt bor r ower ’s est a t e
“r a t a bly, t o a ll t h e debt s” t o det er m in e a gu a r a n t or ’s r em a in in g lia bilit y). Applied pr o
r a t a , 87.14% of Tr a n e’s $100,642.79 dist r ibu t ion , or $87,702.26, wou ld r edu ce t h e
con spir a cy da m a ges for wh ich Ra ym on d a n d t h e debt or a r e join t ly lia ble. If
Ra ym on d’s cla im wer e a llowed in t h e fu ll $1,579,600, t h e dividen d wou ld fa ll t o a bou t
2.95%. Ra ym on d wou ld r eceive $46,542.62, a n d on ly $47,656.06 of Tr a n e’s r edu ced
$54,687.75 dist r ibu t ion wou ld r edu ce t h e con spir a cy da m a ges, for a com bin ed ben efit
of $94,198.68. Th a t is $6,496.42 m or e t h a n Ra ym on d ga in s fr om t h e pa ym en t t o
Tr a n e a lon e, a n d it com es fr om Tr a n e’s r ecover y on t h e debt or ’s sever a l lia bilit y a n d
fr om t h e ot h er cr edit or s. E ven t h a t su m a ssu m es § 509(c) wou ld n ot r edir ect
Ra ym on d’s dividen d t o Tr a n e. See in fr a n ot e 9. Wh a t m a t t er s t o Ra ym on d is h ow
Tr a n e’s dist r ibu t ion is a pplied, n ot wh et h er h is cla im is a llowed, a n d t h e cou r t ca n n ot
m a ke t h a t det er m in a t ion .
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Ra ym on d’s pr in cipa l equ it a ble ar gu m en t overst a t es In re H em in gwa y
Tr a n sp. Ra ym on d a r gues t h e F ir st Circu it “ca ut ion ed a ga in st a llowin g
§ 502(e)(1)(B) t o inflict a point less loss on a co-obligor wh ose pa ym en t wou ld
fix it s cla im .” In re H em in gwa y Tra n sp. in volved a pr e-pet it ion CE RCLA
cla im t h e E P A h eld a gain st t h e debt or . J u n iper pu rch a sed t he con t a m in a t ed
la n d fr om t h e debt or in possession. CE RCLA im posed lia bilit y on J u n iper as
su bsequ ent own er . Th e E P A r efu sed t o file a claim in t h e ba nkr u pt cy case,
ca u sin g t h e F ir st Circu it t o n ot e t h at t h er e was on ly “a r em ot e ‘dou ble-
dippin g’ pr ospect ,” a n d disa llowa nce “m a y occasion a poin t less fin a ncial loss
t o J u n iper a n d r esult in a win dfa ll t o t h e ch a pt er 7 est a t e.” In r e H em in gwa y
Tr a n sp., 993 F .2d a t 926, 928. Th e cour t r equ ired a su rr oga t e cla im for t h e
E P A u n der § 501(c) a s a pr econ dit ion t o disa llowa n ce. H ere, Tr a n e filed it s
own cla im for t h e debt or ’s sh ar e of t h e judgm ent . Th e r isk of pa yin g t h e sam e
debt t wice is n ot r em ot e. Th e r isk exist s. Th is ca se pr esen t s t h e com pet it ion
bet ween cr edit or a n d co-obligor t h a t t h e st a t u t e exist s t o pr event . In re ME I,
106 F .3d a t 831.9
C o n c lu s io n
F or t h e r easons st a t ed a bove, t h e t r u st ee’s object ion (Doc. #53) is sust ain ed.
Cla im No. 4-1 is disa llowed u n der 11 U.S.C. § 502(e)(1)(B). Ra ym on d’s
r equ est s t o con t in u e t h e h ea r in g, defer r u lin g, est im a t e t h e cla im u nder
§ 502(c), a n d r equir e t he t r ust ee t o h old a r eserve (Doc. #58) ar e den ied. A
sepa r at e or der will be en t er ed.
Da t ed: Oct ober 14, 2026
BY TH E COURT:
/s/ Br ia n S. Kr use
Br ia n S. Kr use
Ch ief Ba nkr u pt cy J udge
9 In depen den t ly, even if Ra ym on d’s cla im beca m e fixed a n d wer e a llowed, it wou ld be
su bor din a t ed t o Tr a n e’s cla im u n der 11 U.S.C. § 509(c), wh ich su bor din a t es a cla im
for r eim bu r sem en t or con t r ibu t ion of a n en t it y t h a t is lia ble wit h t h e debt or u n t il t h e
com m on cr edit or ’s cla im is pa id in fu ll.
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