Bankruptcy Courts Lose Ground Amid Texas Electricity Rate Ruling

A Fifth Circuit finding that a Texas bankruptcy court exceeded its power in an electricity pricing dispute stifles debtors looking to use bankruptcy to circumvent state courts in order to nail down cheaper utility pricing.

The US Court of Appeals for the Fifth Circuit’s opinion could not only provide guidance for companies grappling with massive electric bills from 2021’s historic Winter Storm Uri but spill over into bankruptcies that involve other state-regulated utility questions.

“In the faceoff between the two important issues of resolving claims in federal bankruptcy court and respecting the state regulatory power scheme: the state wins,” said ...