SEC, et al v. Stanford International Bank, et a

Case Type:
Business
Case Status:
Reversed and Remanded
Citation:
No. 17-10663 (5th Circuit, Jun 17,2019) Published
Tag(s):
Ruling:
Based on the nature of in rem jurisdiction and the limitations on the court’s and Receiver’s equitable power, the Fifth Circuit concluded that the district court lacked authority to approve the Receiver’s settlement to the extent it (a) nullified the coinsureds’ claims to the policy proceeds without an alternative compensation scheme; (b) released claims the Estate did not possess; and (c) barred suits that could not result in judgments against proceeds of the Underwriters’ policies or other receivership assets.
Procedural context:
The appeal arises from the district court's approval of a global settlement agreement between Ralph Janvey, the equity receiver appointed by the district court to oversee the liquidation of the Stanford International Bank and related entities, and various insurance company underwriters.
Facts:
The settlement yielded $65 million for the Receiver’s claims against the insurance policy proceeds, but it wiped out, through “bar orders," claims by co-insureds to the policy proceeds and their extracontractual claims against the underwriters even if such claims would not reduce or affect the policies’ coverage limits. Among the parties whose claims were barred are Appellants comprising (a) two groups of former Stanford managers and employees; (b) Cordell Haymon, a Stanford entity director who settled with the Receiver for $2 million; and (c) a group of Louisiana retiree-investors.
Judge(s):
Before JONES, CLEMENT, and SOUTHWICK, Circuit Judges.

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