AE OPCO III, LLC v. AAR CORP.

── AE OPCO III, LLC v. AAR CORP. ── Court: Court of Appeals for the Eleventh Circuit Date: April 15, 2026 Category: NEW USCA11 Case: 25-11348 Document: 53-1 Date Filed: 04/15/2026 Page: 1 of 30 FOR PUBLICATION In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 25-11348 ____________________ In re: AE OPCO III, LLC., Debtor. ___________________________________ AE OPCO III, LLC, AE HOLDCO III, INC., Plaintiffs-Appellees-Cross Appellants, versus AAR CORP., Defendant-Appellant-Cross Appellee. ____________________ Appeals from the United States Bankruptcy Court for the Middle District of Florida D.C. Docket No. 8:22-bk-01186-CPM ____________________ Before NEWSOM, LAGOA, and KIDD, Circuit Judges. NEWSOM, Circuit Judge: USCA11 Case: 25-11348 Document: 53-1 Date Filed: 04/15/2026 Page: 2 of 30 2 Opinion of the Court 25-11348 This thorny bankruptcy cross-appeal defies easy introduc- tion, but here goes: Together, AE OpCo, the debtor, and AAR, one of its creditors, present several issues concerning the bankruptcy court’s treatment of three of AAR’s claims.1 The claims arise out of AE OpCo’s rejection of a procurement contract with another bankruptcy creditor, Short Brothers. That rejection potentially left AAR on the hook for aspects of AE OpCo’s breach. Accordingly, pursuant to a pre-bankruptcy agreement with AE OpCo, AAR filed the three claims relevant here: one for indemnification pegged to what AAR might owe Short Brothers pending resolution of their dispute in a suit overseas (we’ll call it the “indemnification claim”), one for the attorneys’ fees that AAR incurred while contesting Short Brothers’s collection efforts (the “defense-costs claim”), and one for the attorneys’ fees that AAR incurred in the bankruptcy proceeding itself (the “bankruptcy-costs claim”). Citing 11 U.S.C. § 502(e)(1)(B), the bankruptcy court disal- lowed AAR’s indemnification claim as a contingent claim for reim- bursement—with our emphasis to highlight the point of conten- tion—made by “an entity that is liable with the debtor.” The court next allowed AAR’s defense-costs claim as a fixed, non-contingent claim outside § 502(e)(1)(B)’s ambit. And finally, reading a negative implication into § 502(b)’s general allowance provision, the court 1 AE HoldCo III, AE OpCo’s parent, is also listed as an appellee/cross-appel- lant. As AE OpCo was the debtor and AE HoldCo makes no distinct claims of its own, we’ll refer to AE OpCo in the singular for the sake of convenience. USCA11 Case: 25-11348 Document: 53-1 Date Filed: 04/15/2026 Page: 3 of 30 25-11348 Opinion of the Court 3 disallowed AAR’s bankruptcy-costs claim as a post-petition unse- cured claim for attorneys’ fees. Before us, AAR appeals the disallowed claims and AE OpCo, the allowed claim. With the benefit of extensive briefing and oral argument, we affirm the bankruptcy court’s disallowance of the in- demnification claim and its allowance of the defense-costs claim, but we reverse that court’s disallowance of the bankruptcy-costs claim and remand for further proceedings consistent with this opin- ion.