Creditor Agent Can Be Served Bankruptcy Suit, Appeals Court Says

Debt collectors hired by creditors of Décor Holdings Inc. had legal backing to accept service of a complaint brought on behalf of the decorative fabrics and furniture business, a federal appeals court ruled.

Agents and subagents authorized to file claims and collect debt for Sumec Textile Co., a Nanjing, China-based textile manufacturer, had the implicit and actual authority to accept service of a bankruptcy court action, a three-judge panel of the US Court of Appeals for the Second Circuit ruled Wednesday.

The panel found that Sumec granted its agents power to collect the “full amount” of its debt.

“A principal’s ...