Wells Fargo Bank of Texas N.A. v. Sommers (In re Amco Ins.)
Mar
31
2006
Ruling
Bankruptcy court erred in applying substantive consolidation nunc pro tunc since the court had authorized pursuit of state court litigation that it later invalidated well after the litigation had ended in a settlement.
Procedural posture
Appellant creditor appealed to the District Court for the Southern District of Texas, the bankruptcy court's order granting substantive consolidation. The district court ruled unfavorably to the creditor and the creditor appealed. The significance of the case related to the nunc pro tunc substantive consolidation of the assets and liabilities of a corporation in bankruptcy and its sole shareholder, not in bankruptcy (until afterwards).
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