Keathley v. Buddy Ayers Construction, Inc. · ¶29

The Fifth Circuit’s rule is not only overly rigid; it is also overly broad. In particular, the Fifth Circuit holds that an omission falls outside of the exception any time a debtor knows certain facts or could potentially benefit from nondisclosure of a claim. But it is rare for a debtor to be unaware of the underlying facts of his claim, and a debtor will almost always hypothetically benefit from not revealing such a claim to his creditors. In essence, then, the Fifth Circuit’s approach is a one-size-fits-all test that requires courts to view as purposeful nearly every bankruptcy omission. Indeed, the decision below acknowledged as much, noting that, under Fifth Circuit precedent, the potential- motive element “‘is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court.’” 2025 WL 673434, *5 (quoting Love, 677 F. 3d, at 262).

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