INSIGHT TERMINAL SOLUTIONS, LLC v. CECELIA FINANCIAL MANAGEMENT, et al., BAY BRIDGE EXPORTS, LLC - Articles

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INSIGHT TERMINAL SOLUTIONS, LLC v. CECELIA FINANCIAL MANAGEMENT, et al., BAY BRIDGE EXPORTS, LLC

Posted by: Azya Thornton on Aug 25, 2025

Court: 6th Circuit Court (Published Opinions)

Attorneys 1: ARGUED: Jessica Lynn Ellsworth, HOGAN LOVELLS US LLP, Washington, D.C., for Appellant.

Attorneys 2: Roger G. Jones, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellee.

Attorneys 3: ON BRIEF: Jessica Lynn Ellsworth, Nathaniel A.G. Zelinsky, HOGAN LOVELLS US LLP, Washington, D.C., David P. Simonds, HOGAN LOVELLS US LLP, Los Angeles, California, Robert M. Hirsh, NORTON ROSE FULBRIGHT US LLP, New York, New York, for Appellant.

Attorneys 4: ON BRIEF: Roger G. Jones, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellee.

Judge(s): MURPHY, DAVIS, and BLOOMEKATZ, Circuit Judges

Court Appealed: United States Bankruptcy Court for the Western District of Kentucky at Louisville

MURPHY, Circuit Judge. The Bankruptcy Code gives a bankrupt company’s creditors a greater chance than its equity holders of recovering from the estate. So when a company goes bankrupt, equity holders sometimes claim that they advanced money to the company as a loan. But bankruptcy courts have the power to “recharacterize” this alleged loan as a lower-priority infusion of equity. In this case, a bankruptcy court refused to recharacterize a loan as an equity contribution when a businessman arranged for one of his family-owned companies to transfer money to another. Tragically, this man died before the trial over whether to recharacterize the loan. And the court excluded his deposition testimony from that trial because the opposing side lacked the opportunity to cross-examine him. Yet the court committed a critical legal error when making this evidentiary ruling. We thus must reverse and remand for further proceedings.

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