Nuevo Pueblo, LLC v. Napolitano (In re Nuevo Pueblo, LLC)

Summarized by Wayne Greenwald , Jacobs, PC, Greenwald, P.C.
10 years 10 months ago

Citation:

2015 U.S. App. LEXIS 7391

Tag(s):

Ruling:

Summary order affirming the district court affirming the bankruptcy court approving a settlement over one debtor’s objection.

Procedural context:

Appeal from order approving a settlement.

Facts:

District court affirmed the bankruptcy court approving a settlement over one debtor’s objection. An adversary proceeding concerning the validity of a mechanic’s lien against the debtor’s property was settled for $450,000. The debtor said the bankruptcy court abused its discretion in approving the settlement. Its contended: a.) the trustees overpaid to settle a meritless action; b.) supporting testimony was hearsay; and c.) it should have resolved a pending objection to another secured creditor’s claim. The court found the bankruptcy court applied properly the factors stated in In re Iridium Operating LLC, 478 F.3d 452, 462 (2d Cir.20 2007)* The settlement avoided expensive and protracted litigation with insignificant benefits. The action was the main impediment in the bankruptcy cases’ progress. The settlement was in the creditors’ best interests and without their objection. It was negotiated at arm’s length by experienced attorneys. The settlement did not impair the Debtors' pending claim objection which had no impact on the Iridium factors fn* The factors are: (1) the balance between the litigation’s possibility of success and the settlement’s future benefits; (2) the likelihood of complex and protracted litigation; (3) the degree to which creditors either do not object to or affirmatively support the proposed settlement; (4) whether other parties in interest support the settlement; (5) the competency and experience of counsel supporting the settlement; (6) the nature and breadth of releases to be obtained by officers and directors; and (7) the extent to which the settlement is the product of arm’s length bargaining. Id.

Judge(s):

Dennis Jacobs, Rosemary S. Pooler, Peter W. Hall,

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