CTA Reversal Reversed! Fifth Circuit Vacates Its Own Stay, Restores District Court’s Injunction of CTA

Continuing a series of rapid-fire legal developments regarding the Corporate Transparency Act (CTA), on Dec. 26, 2024, in an unusual action, the U.S. Court of Appeals for the Fifth Circuit vacated its own stay that its motions panel had issued on Dec. 23. To recap recent developments:

• Dec. 3, 2024 - U.S. District Court for the Eastern District of Texas issued a nationwide injunction on enforcement of the CTA, suspending all reporting obligations under the act
• Dec. 23, 2024 - The motions panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court injunction. The stay by the Court of Appeals restored the initial CTA filing deadlines for reporting companies of Jan. 1, 2025. Following the stay, the Financial Crimes Enforcement Network (FinCEN) issued an alert extending the reporting rule’s initial deadline to Jan. 13, 2025.
• Dec. 26, 2024 - The merits panel of the Fifth Circuit vacated the stay issued by its own motions panel, restoring the district court’s injunction, so all reporting obligations under the CTA are again suspended pending resolution of the appeal.

The Fifth Circuit, in its brief order, indicates its action is appropriate to preserve the status quo while the court considers the parties’ substantive arguments. The court ordered, “that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.”

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