- Ritchie Capital Management LLC v. Kelley, __ F.3d __, 2015 WL 1963696 (8th CIr. May 4, 2015)
- Bankruptcy court approval of allocation of settlement proceeds was affirmed as the court did not abuse its discretion and had an adequate record to determine whether allocation was fair and in the best interests of creditors.
- Procedural context:
- Chapter 11 trustee of company that had been operated by perpetrator of a Ponzi scheme settled potential fraudulent and preferential transfer claims with one of the defendants. The trustee then sought court approval of the settlement agreement and the proposed allocation of the settlement proceeds between the bankruptcy state and receivership. Investment funds who were also named as defendants objected to allocation. The bankruptcy overruled the objection and the district court affirmed. On appeal, the Eighth Circuit ruled that the bankruptcy court did not abuse its discretion in considering the allocation and settlement agreement together, the trustee's dual roles of receiver and trustee did not render the arrangement unfair, and the bankruptcy court had an adequate record to determine whether the agreement was fair and in the best interests of creditors.
- Chapter 11 trustee who also served as receiver of the debtor and related entities which had been used in a Ponzi scheme sought to recover various alleged fraudulent ant preferential transfers from a number of defendants. One of the defendants settled with the trustee, and a motion to approve the settlement was filed with the court. Another defendant objected, albeit not to the settlement itself but rather the proposed allocation of the proceeds, under which the receivership estate would receive about 15% of the total proposed settlement of $7.5 million. The objector argued that the allocation was gratuitous, and was not in the best interests of creditors because of the trustee's dual role. The bankruptcy and district courts affirmed. On appeal, the Eighth Circuit found that there was a mathematical formula used to determine the allocation and the bankruptcy court made an informed decision about the agreement that did not fall below the "lowest point" in the range of reasonableness. Affirmed.
- Bye, Beam, and Benton
IN RE: JOHN FLISS
Summarizing by Jaden Banks
In re: ASSET ENHANCEMENT, INC.,
Summarizing by Amir Shachmurove
November Commercial Chapter 11 Filings Increase 141 Percent over 2022 Propelled by WeWork Bankruptcy
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