Keathley v. Buddy Ayers Construction, Inc.
Issues
Can judicial estoppel prevent a plaintiff from pursuing a civil claim that he failed to disclose during bankruptcy proceedings, even without evidence that the plaintiff acted in bad faith?
This case asks the Supreme Court to determine whether a bankruptcy debtor who fails to disclose a civil claim during bankruptcy proceedings can later pursue that claim in federal court. The case also asks whether courts can prohibit undisclosed claims when a bankruptcy trustee, instead of the debtor, seeks to continue the lawsuit. Keathley argues that the Fifth Circuit’s rigid judicial estoppel test is inconsistent with equitable principles and suggests a flexible, totality of the circumstances approach that allows debtors to correct mistakes without forfeiting valuable claims. On the other hand, Buddy Ayers Construction, Inc. contends that an objective judicial estoppel rule best aligns with bankruptcy’s goal of protecting creditors while conditioning a debtor’s fresh start on full disclosure of known assets. The Court’s decision has sweeping implications for debtors and creditors and fairness in bankruptcy proceedings.
Questions as Framed for the Court by the Parties
Whether the doctrine of judicial estoppel can be invoked to bar a plaintiff who fails to disclose a civil claim in bankruptcy filings from pursuing that claim simply because there is a potential motive for nondisclosure, regardless of whether there is evidence that the plaintiff in fact acted in bad faith.
To discharge his debts, Thomas Keathley filed a bankruptcy petition and Chapter 13 repayment plan in the United States Bankruptcy Court for the Eastern District of Arkansas on De
Additional Resources
- Keathley v. Buddy Ayers Construction, Inc., Ballotpedia.
- Ralph Lewis Landy, Supreme Court Will Hear Bankruptcy-Related Judicial Estoppel Case, American Bar Association (Dec. 12, 2025).
- Randi Love & James Nani, Supreme Court to Hear Bankruptcy Case Over Claim Disclosures (2), Bloomberg Law (Oct. 20, 2025).