- Case Type:
- Consumer
- Case Status:
- Affirmed in part and Reversed in part
- Citation:
- 25-10548 (5th Circuit, Feb 11,2026) Published
- Tag(s):
-
- Ruling:
- The Fifth Circuit certifies a question of state law to the Texas Supreme Court: Is an LLC membership interest exempt property in a federal bankruptcy proceeding, based on section 101.112 of the Texas Business Organizations Code?
[NOTE: there is no affirmance or reversal by the Fifth Circuit yet; will need to wait for the Texas Supreme Court’s response.]
- Procedural context:
- Debtor appeals from the district court decision affirming the bankruptcy court decision rejecting the debtor’s contention that his membership interest in an LLC is exempt property that a bankruptcy trustee cannot sell to generate funds for creditors. The Fifth Circuit determined that the question was a close one and better suited to certification to the Texas Supreme Court than to an Erie guess.
- Facts:
- The debtor, an individual, filed a petition for relief. He scheduled his 70% ownership interest in an LLC as exempt property. The trustee objected to the exemption and prevailed in the bankruptcy court and on appeal at the district court.
- Judge(s):
- Ho, Southwick, Willett
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