Allen v. Rainsdon (In re Allen)

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
12 years 2 months ago

Citation:

BAP No. ID-13-1107-JuKiKu (unpublished) (Dec. 9, 2013)

Tag(s):

Ruling:

BAP affirmed approval of compromise under FRBP 9019 between Chapter 7 Trustee and Secured Creditor in the amount of $550,000, holding that the bankruptcy court's findings that the settlement was fair and equitable and in the best interest of the estate were not clearly erroneous. The compromise was approved over the objection of the Debtor who claimed that the lowest reasonable compromise amount was $3 million.

Procedural context:

Bankruptcy court held an evidentiary hearing to evaluate the Trustee's proposed compromise and the Debtor's objections. The bankruptcy court approved the compromise and made findings evaluating (a) the probability of success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection; (c) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; and (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises. See Martin v. Kane (In re A & C Props.), 784 F.2d 1377, 1381 (9th Cir. 1986). The Debtor appealed, and the BAP affirmed the bankruptcy court order.

Facts:

Debtor alleged that he had entered into an agreement with his secured creditor Zions First National Bank to purchase a lot owned by the Debtor, and have Debtor construct a Zions branch and ATM kiosk on it on a cost plus ten percent (10%) basis. Zions acknowledged negotiations but denied that negotiations had ripened into a contract. Debtor filed a chapter 11 case which was converted to Chapter 7 case. The Chapter 7 trustee hired special counsel who entered into a settlement agreement with Zions.

Judge(s):

JURY, KIRSCHER, and KURTZ

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