5th Cir. Holds Raymond James’ Setoff & Compensation Defenses are Barred by a Confirmed Plan in Firm’s Ongoing Louisiana Pellets Case

On January 30, 2024, a U.S. Fifth Circuit Court of Appeals panel issued a published opinion that holds several of Raymond James’ affirmative defenses are barred by the Chapter 11 bankruptcy plan of Louisiana Pellets, Inc. The Court relied on the fact that Raymond James had “actual knowledge” of the company’s bankruptcy proceedings and held that the financial service firm would be unable to employ defenses based on a pre-bankruptcy indemnity agreement, further ruling that the post-confirmation trust is not the entity against which to invoke the debtor’s indemnity obligation. Fishman Haygood serves as lead counsel to Craig Jalbert, the liquidating trustee of German Pellets Louisiana and Louisiana Pellets. Click here to read the Fifth Circuit’s full opinion.

Nearly a decade ago, Louisiana Pellets sought to construct a wood pellet manufacturing facility in Urania, La. To help fund the facility, the company sold over $365 million in public finance municipal bonds through a public financing authority. Raymond James underwrote the bonds and resold them to investors.

The project failed within months of commencing preliminary operations and prior to completing construction. Louisiana Pellets declared bankruptcy in 2016, and its Chapter 11 plan was approved in 2017. Mr. Jalbert was then appointed trustee of the company’s liquidation trust.

Fishman Haygood is prosecuting securities fraud claims assigned by investors to Mr. Jalbert against Raymond James as underwriter of the bonds. Investors allege that the prospectuses for the bonds contained numerous misrepresentations about the equity contributions purportedly made by Louisiana Pellets’ German parent company.

Fishman Haygood partner Brent Barriere handled this most recent argument before the Fifth Circuit. Appellate briefing was done by Barriere along with Jason Burge, Cherie Nobles, and Carly McCleskey. Read more coverage on Law360.