In re: Off-Spec Solutions, LLC, 651 B.R. 862

Off‑Spec Solutions, LLC (a corporate debtor/LLC) filed a subchapter V chapter 11 petition in August 2022.
Kristina Jayn Lafferty filed a proof of claim and an adversary complaint asserting a nondischargeable claim under 11 U.S.C. § 523(a)(6) for alleged workplace sexual harassment, discrimination, and retaliation; IHRC found probable cause and gave her the right to sue privately.
Debtor moved to dismiss under Civ. R. 12(b)(6), arguing § 523(a) applies in subchapter V only to individuals (relying on In re Rtech Fabrications and In re GFS Industries); Lafferty relied on the Fourth Circuit’s decision in Cantwell‑Cleary (In re Cleary Packaging) that § 1192 makes the types of § 523(a) debts nondischargeable regardless of debtor type.
The bankruptcy court granted dismissal, holding § 1192 does not expand § 523(a) to corporate debtors in subchapter V; Lafferty appealed to the BAP.
The BAP affirmed, concluding § 523(a) by its text applies only to individual debtors and § 1192’s reference to debts “of the kind specified in section 523(a)” reiterates that list rather than transforming those exceptions into applicable corporate exceptions.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 11 U.S.C. § 1192(2) makes the categories of nondischargeable debts in § 523(a) applicable to corporate debtors under nonconsensual subchapter V confirmations	Lafferty: § 1192’s exception to discharge covers debts “of the kind specified in § 523(a)” — that language makes those categories nondischargeable as to any debtor confirmed under § 1191(b), corporate or individual (relying on Cleary)	Debtor: § 523(a) by its preamble expressly applies only to “an individual debtor,” and § 1192 merely references the list of debts; Congress did not intend to expand § 523(a) to corporations without explicit language	The BAP affirmed dismissal: § 1192 does not make § 523(a) exceptions applicable to corporate debtors; § 523(a) remains limited to individuals, and § 1192 reiterates the nondischargeable categories for individual debtors in subchapter V

Cantwell‑Cleary Co. v. Cleary Packaging, LLC, 36 F.4th 509 (4th Cir. 2022) (held § 1192 makes § 523(a) categories nondischargeable regardless of debtor type)
In re Rtech Fabrications, LLC, 635 B.R. 559 (Bankr. D. Idaho 2021) (held § 523(a) applies in subchapter V only to individuals)
In re GFS Indus., LLC, 647 B.R. 337 (Bankr. W.D. Tex. 2022) (similar reasoning rejecting Cleary)
Cohen v. de la Cruz, 523 U.S. 213 (1998) (canon: courts should not read statutory text as departing from established practice absent clear indication)
United States v. Ron Pair Enters., Inc., 489 U.S. 235 (1989) (start statutory interpretation with the statute's plain language)
RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012) (scope matters for general/specific canon application)