In Celotex Corp. v. Fibreboard Corp., 2006 U.S. App. LEXIS 31305 (11th Cir. 2006), the 11th Circuit Court of Appeals held that Fibreboard could not bring a subrogation claim against Celotex in bankruptcy proceedings under either the Bankruptcy Code or state law. The Court held that Fibreboard is not entitled to subrogation for payment of judgments on which both companies were jointly and severally liable. Both Celotex and Fibreboard were found jointly and severally liable for asbestos personal injury cases in 1989. In 1990, Celotex filed a Chapter 11 petition. To protect their assets, Celotex filed supersedeas bonds in the appeals of the adverse judgments. (A supersedeas bond is a bond that suspends a judgment creditor’s right to levy execution pending appeal). Fibreboard paid the entire amount of the joint and several liability judgments and judgment creditors released their claims against Fibreboard and assigned their claims against Celotex to Fibreboard. Fibreboard asserted a subrogation claim under Section 509 of the Bankruptcy Code in bankruptcy court to recover Celotex’s share of the joint and several judgment payments from the supersedeas bonds. Section 509 allows subrogation claims against jointly liable co-defendants, but there are limitations. The bankruptcy court granted summary judgment to Celotex after finding that Fibreboard was not entitled to subrogation because it was primarily liable for the judgments. The district court affirmed the bankruptcy court’s summary judgment and Fibreboard appealed. The issue before the Appeals Court is whether a co-defendant which pays the full amount of a joint and several judgment is excluded from seeking subrogation. Courts have previously held that Section 509(b)(2) of the Code excludes primary liable parties from subrogation because they received consideration for paying the debt. Fibreboard did receive consideration for payment of the judgment in the form of release from those judgments. Therefore, the Court held that Fibreboard was precluded from subrogation because it was primarily liable for the debt at issue and it did receive consideration for paying the judgment. Ray