Supersedeas Bond
A bond posted by a judgment debtor to suspend (supersede) execution of the judgment during the pendency of appeal. Texas supersedeas is governed by Tex. R. App. P. 24 and Tex. Civ. Prac. & Rem. Code § 52.006. The bond amount typically equals the judgment plus interest and costs, capped under § 52.006 at the lesser of (a) 50% of the judgment debtor's net worth or (b) $25 million. Constitutional and statutory net-worth caps protect against confiscatory bonds.
A supersedeas bond is a bond posted by a judgment debtor to suspend (supersede) execution of the judgment during the pendency of appeal. Without supersedeas, the judgment creditor can execute on the judgment immediately upon entry, garnishing accounts, foreclosing on assets, conducting turnover sales, even if appeal is pending. The supersedeas bond is the price of staying execution during appeal. Texas supersedeas practice is governed by Tex. R. App. P. 24 and Tex. Civ. Prac. & Rem. Code § 52.006, with statutory net-worth caps protecting against confiscatory bond requirements.
Standard supersedeas amount
Rule 24.2(a)(1) sets the standard supersedeas amount at the sum of: (1) the amount of compensatory damages awarded; (2) interest for the estimated duration of the appeal (statutorily set at 1 year of post-judgment interest); and (3) costs awarded. Punitive damages are excluded from the calculation. The bond may be in the form of cash deposit, surety bond, letter of credit, or alternative security approved by the court. Most commercial supersedeas is by surety bond, substantially less expensive than cash deposit.
Statutory net-worth cap, § 52.006
Section 52.006 imposes a critical cap on supersedeas amounts: the bond may not exceed the lesser of (a) 50% of the judgment debtor's current net worth or (b) $25 million. This statutory cap protects against confiscatory bond requirements that would prevent appeals by judgment debtors with limited net worth. The judgment debtor must affirmatively invoke the cap by motion supported by financial evidence; the trial court determines current net worth. The judgment creditor may challenge the net-worth determination, sometimes leading to evidentiary hearings on debtor financial condition.
Reduction motions
The judgment debtor may seek further reduction of the supersedeas bond by motion under Rule 24.2(b). The trial court may reduce the amount upon a showing that posting the standard amount would cause "substantial economic harm." Substantial economic harm typically means inability to operate the business, loss of going-concern value, or other irreversible consequences disproportionate to the protection of the judgment creditor. The trial court has discretion to set alternative security, collateral with a value supporting the judgment, ongoing payment commitments, or cash deposits in lower amounts.
Trial court vs. appellate court jurisdiction
Supersedeas determinations are typically made initially by the trial court, with the trial court retaining limited jurisdiction over supersedeas issues during the pendency of appeal. The appellate court has authority to modify supersedeas requirements on motion under Rule 24.4. The trial court's determination of net worth is typically final unless clearly erroneous; reduction motions and modifications are reviewed for abuse of discretion.
Effect of supersedeas
Once supersedeas is posted in proper form and amount, the judgment creditor cannot execute on the judgment during the pendency of appeal, no garnishment, no turnover, no foreclosure. Post-judgment interest continues to accrue at the rate determined under Tex. Fin. Code Ch. 304. If the judgment is affirmed on appeal, the bond is paid to the judgment creditor (up to the bond amount) on the affirmance becoming final. If the judgment is reversed, the bond is released. Partial reversals or modifications result in pro rata satisfactions.
Strategic considerations
Supersedeas is a critical strategic decision in post-judgment posture: (1) cost-benefit analysis, surety bond premiums (typically 1-2% of bond amount per year) plus collateral requirements vs. risk of execution during appeal; (2) likelihood of reversal, supersedeas makes most sense when the judgment debtor has substantial appellate prospects; (3) asset protection, supersedeas prevents the judgment creditor from reaching assets during appeal, even if the debtor ultimately loses; (4) settlement leverage, debtors who can post supersedeas often negotiate from stronger positions than those who cannot. Inability to post supersedeas can effectively force settlement on terms unfavorable to the judgment debtor.
For Texas judgment debtors contemplating appeal, the supersedeas calculation is the threshold financial decision. Best practice: (1) obtain net-worth analysis from financial professionals before judgment to enable rapid bond determination; (2) maintain banking relationships with surety markets, having a surety lined up enables prompt bond posting; (3) consider letter-of-credit alternatives if surety is unavailable or expensive; (4) prepare net-worth-cap motion contemporaneously with notice of appeal; (5) for closely-held businesses, careful pre-judgment net-worth structuring (consistent with not committing fraud) can reduce ultimate supersedeas requirements. For judgment creditors, contesting net-worth determinations and challenging form-of-security alternatives is an important post-judgment strategic activity, pressure on supersedeas often produces settlement opportunities.