Don Smith, et al v. Sonya Slott, et al

Summarized by Paris Gyparakis , Archer & Greiner PC
8 months 6 days ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

23-12522 (11th Circuit, Jun 24,2025) Not Published

Tag(s):

Ruling:

11th Circuit affirmed the bankruptcy court’s approval of a settlement between the bankruptcy estate’s trustee and a creditor, Green Tech Development, LLC.

Procedural context:

On appeal to the 11th Circuit, appellants appeal the district court’s order affirming the bankruptcy court’s approval of a settlement between the bankruptcy estate’s trustee and a creditor, Green Tech Development, LLC.

Facts:

No Rust Rebar, Inc., a company formed to manufacture and sell rebar, contracted to buy a facility (the “Property”) for its manufacturing operations. No Rust paid a non-refundable deposit to Green Tech that allowed it to immediately occupy the Property, but ultimately “lacked the funds to close” on the Property, When Green Tech refused to sell, No Rust sued in state court, but while the state court action was pending, No Rust voluntarily filed a chapter 11 petition. No Rust removed the Property dispute to the bankruptcy court and filed a plan which “acknowledge[d] that confirmation depend[ed] entirely on No Rust’s success in the Property [d]ispute.” The bankruptcy court eventually converted the case to Chapter 7 and the trustee and and Green Tech negotiated a settlement to resolve their disputes and presented it to the bankruptcy court. The bankruptcy court approved the settlement, which allowed for the sale of the Property and for structured division of the proceeds thereof. over the objection of the Smith Entities. The district court affirmed the bankruptcy court’s order and the Smith Entities timely appealed. The 11th Circuit found that the Smith Entities have forfeited all four of their arguments: the first and second arguments that the settlement violated the Bankruptcy Code by flouting the “distribution scheme and sale procedures” in 11 U.S.C. sections 507 and 726 and that the settlement failed to disclose a]l the relevant terms, were abandoned because-despite their pages of unapplied block quotes from the Code—they fail to explain how the settlement here violated any law: "[A]t best, they make conclusory statements that the Code was violated." The Court further held that the Smith Entities likewise forfeited their third argument that “[No Rust]’s estate does not include any cognizable ownership interest in the . . . [P]roperty,” because they don’t dispute the district court’s ruling that “the [b]ankruptcy [c]ourt was entitled to assume that . . . the estate does have an interest in the Property,” especially considering that in the Property dispute, that they held an ownership interest in the Property. The Court concluded that their fourth argument that the bankruptcy court should have rejected the that settlement in favor of their counterproposal—because they fail to contend with (or even mention) the district court’s decision that the bankruptcy court “determine[d] that the settlement d[id] not fall below the lowest point in the range of reasonableness.”

Judge(s):

NEWSOM, LUCK, and ANDERSON

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