Eliminator Custom Boats, Inc. v. Rosenstein & Hitzeman, AAPLC (In re Eliminator Custom Boats)

Case Type:
Case Status:
Reversed and Remanded
CC-19-1003-KuFL (9th Circuit, Sep 23,2019) Not Published
A bankruptcy court could not approve a post-confirmation settlement agreement that modified the terms of the confirmed chapter 11 plan without complying with section 1127(b) or voiding the plan under section 1144. The bankruptcy court did not do so. The bankruptcy court thus erred in approving the portions of the settlement agreement that modified the confirmed chapter 11 plan. In addition, the appeal was not equitably moot because, on remand, the bankruptcy court could fashion relief that did not affect the rights of third parties.
Procedural context:
The bankruptcy court approved a post-confirmation settlement under Rule 9019 that modified the terms of a confirmed, but uneffectuated, chapter 11 plan.
The appellants were counsel for the corporate and personal debtors. The debtors' chapter 11 plan were confirmed but never effectuated. A turnaround president for the corporate debtor subsequently negotiated a settlement with, among others, the appellees. The settlement specifically modified the confirmed chapter 11 plan, without complying with Bankruptcy Code section 1127(b), in a manner that adversely affected the rights of the appellants under the plan.

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