Stretto, a private equity-controlled software company formerly called Bankruptcy Management Solutions Inc., beat a Seventh Circuit appeal Sept. 5 of claims that it fixed bankruptcy service prices.

The suit accused BMS, now a subsidiary of Stone Point Capital LLC and its affiliates, of conspiring with Epiq eDiscovery Solutions Inc. and TrusteSolutions, two other leaders in the bankruptcy services industry. It was filed by Chicago law firm McGarry & McGarry, which said the scheme reduced how much it got out of a creditor claim against a defunct software company.

The allegations echo those from an antitrust lawsuit filed against Stone Point by a bankruptcy trustee in June and one against BMS that the company got dismissed about a week later. The suit against Stone Point was dropped and refiled in a different court last month.

McGarry failed three times to get its arguments past a judge. A federal judge dismissed the firm’s first suit, saying it couldn’t overcome the bar on federal antitrust damages for “indirect” purchasers because it didn’t buy any services directly from BMS. Its attempt to reopen the bankruptcy case was then ruled untimely.

McGarry filed a second standalone suit alleging violations of just Illinois’s antitrust law, which permits indirect purchaser suits. A federal judge dismissed those claims too, finding that the firm hadn’t bought any bankruptcy services at all, even indirectly.

The U.S. Court of Appeals for the Seventh Circuit agreed.

Judge Diane S. Sykes, writing for the court, said creditors like McGarry can’t establish an “antitrust injury” because they don’t participate in the bankruptcy services market in any meaningful way.

“McGarry alleges that the conspiracy caused the estate to pay a higher fee for the combined banking and software services, which reduced the funds available” to pay creditors, Sykes wrote. “This alleged injury is too remote to serve as the predicate for an antitrust suit.”

Judges Amy C. Barrett and Ilana Rovner joined the ruling.

BMS was represented by Dorsey & Whitney. McGarry was represented by Dunnegan & Scileppi and its own attorneys.

The case is McGarry & McGarry LLC v. Bankruptcy Mgmt. Solutions Inc., 7th Cir., No. 18-2619, 9/5/19.