How to reserve a cause of action in bankruptcy

The bankruptcy trustee in Compton v. Anderson filed several avoidance actions, and the bankruptcy court dismissed for lack of standing because the reservation of those claims to the trustee in the debtors’ reorganization plan was not sufficiently “specific and unequivocal.”  No. 11-20478 at 4 (Nov. 14, 2012) (citing Dynasty Oil & Gas v. Citizens Bank, 540 F.3d 351, 355 (5th Cir. 2008)).  The Fifth Circuit reviewed several of its recent cases on this issue and reversed, concluding that “[i]n addition to stating the basis of recovery, the Exhibits referenced in the Reorganization Plan identified each defendant by name.”  Id. at 12. The case was remanded for further review, including the scope of a carve-out in the reservation for released claims.  Id. at 12.  This opinion is an important contribution on a basic issue in bankruptcy litigation.