Iberiabank v. Geisen (In re FFS Data, Inc.)

Summarized by Paul Avron , Berger Singerman LLP
11 years 1 month ago

Citation:

Case No. 14-11473 (11th Cir. Jan. 23, 2015)

Tag(s):

Ruling:

A general release provision in a confirmed chapter 11 plan which explicitly identified the 100% stockholder of the Debtor by name applied to the lender's state court claim on the stockholder's guaranty (and not solely in the stockholder's capacity as an officer or director of the debtor as urged by the lender as those terms were descriptive only). The confirmation order, final for purposes of appeal, was entitled to re judicata effect given that the confirmation order and the lender's guaranty claim arose out of the same transaction or transactions. Finally, the court declined to adopt a series of Fifth Circuit cases imposing the requirement that a confirmation order is only entitled to re judicata effect if the release of the guarantor is "sufficiently specific," noting that these cases predated controlling case law from the Supreme Court (Travelers Indemnity Co. v. Bailey), and in any event the plan provisions met that standard.

Procedural context:

The lender appealed the U.S. District Court's affirmance of the U.S. Bankruptcy Court's order conclusion that the lender's state court guaranty claim against the debtors' 100% stockholder was released.

Facts:

Appellant Iberiabank's predecessor loaned $10.6 million to Siena Realty, which loan was guaranteed by the debtor (FFS) and its 100% stockholder (Geisen). Geisen owned a 48% interest in Siena which put up collateral (real property) to secure the loan. FFS filed for chapter 11 protection; shortly before the filing the loan was in default. Given FFS' guaranty Iberiabank became a creditor of FFS for the full amount of the loan. A forbearance agreement provided for a sale of the property and authorization for Iberiabank to proceed on its guaranty claims. FFS filed an amended chapter 11 plan, after which an agreement was reached giving Iberiabank a $2 million claim in FFS' case, but there was no mention of the guaranty claim against Geisen. Iberiabank filed suit in state court for the resulting deficieny after the property had been sold; however, after reopening the chapter 11 case the bankruptcy court concluded that Iberiabank's claim against Geisen was within the scope of a release in the amended plan which was confirmed without objection by Iberibank and as to which no appeal was taken.

Judge(s):

Tjoflat, Pryor and Cox

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