⚖ Oral Arguments, with Context

The United States Court of Appeals for the Fifth Circuit hears argument in NexPoint versus Highland, an appeal out of the Chapter eleven bankruptcy of Highland Capital Management. The appellant is NexPoint Real Estate Partners, a company formerly named HCRE Partners; its lawyer calls it HCRE throughout the argument. Before the bankruptcy, HCRE was one of a number of non-debtor entities controlled by Highland's co-founder, James Dondero. The appellee is Highland Capital Management itself, the reorganized debtor. HCRE filed a proof of claim in the bankruptcy, asserting that the ownership percentages in a real estate limited liability company in which both companies were members had been misallocated, because of a mutual mistake or a failure of consideration. Highland objected. Late in discovery, HCRE moved to withdraw the claim, and the bankruptcy court denied that motion. The claim went to an evidentiary hearing and was disallowed. The bankruptcy court then found, by clear and convincing evidence, that HCRE had filed and prosecuted the claim in bad faith and had willfully abused the judicial process, and, using its inherent power, it ordered HCRE to reimburse Highland just over eight hundred twenty-five thousand dollars in attorneys' fees and costs. The sanction ran against the company alone. Neither its officers nor its lawyers were sanctioned. The district court affirmed. Before the Fifth Circuit, HCRE argues that there is no clear and convincing evidence that the company itself acted in bad faith, and that the fees Highland ran up after HCRE moved to withdraw the claim should not have been shifted onto it. Highland defends both the finding and the award.

NexPoint v. Highland (No. 25-11185) — U.S. Court of Appeals for the Fifth Circuit, argued August 3, 2026.