Highland Liability Shields Are Still Too Broad, Fifth Cir. Rules

The bankruptcy court overseeing Highland Capital Management LP’s Chapter 11 case “exceeded its power” by allowing a reorganization plan that improperly shielded people who aren’t bankrupt from liability, the Fifth Circuit ruled.

A three-judge panel said Tuesday that the US Bankruptcy Court for the Northern District of Texas failed to narrow the definition of “protected parties” in the investment firm’s plan, first approved four years ago, despite the appeals court’s 2022 decision directing it to do so.

The Tuesday decision, by Chief Judge Jennifer Walker Elrod, is the latest development in a lengthy legal battle stemming from the firm’s ...