Liberty Towers Realty, LLC v. Richmond Liberty LLC

Case Type:
Business
Case Status:
Affirmed
Citation:
17-2037 (2nd Circuit, May 31,2018) Not Published
Tag(s):
Ruling:
In a summary order, the Second Circuit Court of Appeals affirmed the district court’s decision, finding, among other things, that: (i) the debtors-appellants had consented to the derivative standing of defendant Richmond Liberty in the Ch. 11 bankruptcy proceeding; and (ii) parties to a settlement agreement may not unilaterally rescind settlement agreements where such approval was sought via a Rule 9019 motion.
Procedural context:
The bankruptcy court approved the settlement agreement between the debtors-appellants and defendants-appellees over the objections of another party, NCC Capital, and the debtors themselves. The debtors appealed, and the district court affirmed. The debtors appealed the district court’s decision, and the 2nd Circuit affirmed.
Facts:
On January 13, 2017, the bankruptcy court approved the settlement agreement between the debtors-appellants, Liberty Towers Realty, LLC and Liberty Towers Realty I, LLC (collectively, “LTR”), and the defendants-appellees, Richmond Liberty LLC, and WF Liberty, notwithstanding the objections of NCC Capital and LTR, who later opposed its own settlement agreement. LTR appealed, and the district court affirmed the bankruptcy court’s decision on June 20, 2017. Thereafter, LTR appealed the district court’s decision. On appeal, LTR asserted that defendant Richmond Liberty’s move for the approval of the parties’ settlement agreement in the bankruptcy court was improper under Bankruptcy Rule 9019(a) because only a trustee or debtor-in-possession can bring a Rule 9019 motion in a Chapter 11 proceeding. LTR further asserted that the bankruptcy court should have allowed LTR to rescind its support for the settlement agreement before the court approved it. Ultimately, the Second Circuit affirmed the district court’s decision, finding, among other things, that: (i) LTR had consented to the derivative standing of Richmond Liberty in the bankruptcy proceeding; and (ii) parties to a settlement agreement may not unilaterally withdraw settlement agreements where such approval was sought via a Rule 9019 motion.
Judge(s):
The Honorable Rosemary S. Pooler; The Honorable Richard C. Wesley; and The Honorable Raymond J. Lohier

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