NCBRC, NCLC, and NACBA Urged a Narrow, Equitable, Fact-Specific Inquiry
In a unanimous decision authored by Justice Jackson, the United States Supreme Court held that courts deciding whether a debtor’s failure to disclose a claim in bankruptcy was “inadvertent or mistaken”—for purposes of judicial estoppel—must look to the totality of the circumstances surrounding the omission. In Keathley v. Buddy Ayers Construction, Inc., No. 25–6 (June 11, 2026), the Court rejected the Fifth Circuit’s narrow rule, which had limited the inquiry to just two questions: whether the debtor knew the facts underlying the claim, and whether the debtor had a potential motive to conceal it. The Court vacated and remanded, holding the Fifth Circuit’s formulation was “simultaneously too rigid and too broad.”
The decision is a significant win for consumer debtors. NCBRC, joined by the National Consumer Law Center (NCLC) and the National Association of Consumer Bankruptcy Attorneys (NACBA) and the National Consumer Law Center (NCLC) filed an amicus brief in December 2025 urging the Court to decide the bad-faith question narrowly and to refrain from expanding debtors’ disclosure duties. The Court did exactly that, expressly declining to resolve the broader bad-faith dispute and presuming—without opining—on whether a continuing duty to disclose post-petition assets exists.
[Read more…] about Unanimous Supreme Court Adopts Totality-of-the-Circumstances Test for Bankruptcy Judicial Estoppel