Judge: Ron Clark
Holding: Order Approving Proposed Settlement Agreement Affirmed
Following more than three years of bankruptcy proceedings, the bankruptcy court approved a proposed settlement agreement between the bankruptcy trustee on behalf of the bankruptcy estate with two claimants against the estate. Another claimant appealed the order to district court, asserting that the bankruptcy court erred in approving the trustee's proposed settlement when the trustee offered no evidence in support of the settlement at the hearing (there was alleged to be evidence in the record from previous proceedings, and to be fair - they did hand up a notebook) and in approving the settlement under the applicable factors.
Judge Clark began by noting that the bankruptcy court's findings of fact were reviewed under the clearly erroneous standard and its conclusions of law de novo, with its decision to approve the settlement reviewed under an abuse of discretion standard.
After reviewing the underlying facts, the Court concluded that the bankruptcy court did not abuse its discretion in approving the settlement despite the fact that evidence was not offered at the hearing, noting that the case already had more than 1,200 entries on its docket sheet, and the bankruptcy court had already held a lengthy trial on contested claims in the case. At the hearing on the settlement agreement, the trustee requested that the Court take notice of the record, and no party objected to the Court relying on that prior evidence presented to it as the basis for its determination of the settlement agreement – in fact counsel for the objecting claimant was the only counsel to appear by phone rather than in person, and did not offer any evidence or witnesses in opposition to the settlement agreement.
With respect to whether the bankruptcy court abused its discretion in approving the settlement under the relevant factors, the Court concluded that after reviewing the lengthy record, considering the bankruptcy court's wealth of experience with the parties to the appeal and to the settlement agreement, the Court could not say that the bankruptcy court abused its discretion in approving the settlement agreement under the applicable factors.