Friday, May 15, 2009

Another Published Bankruptcy Decision from the Eleventh Circuit

In Elizabeth Chira v. Jose Saal (07-15897), the Eleventh Circuit issued a 17 page published opinion written by Judge Dubina affirming the district court and the bankruptcy court. Patrick S. Scott of GrayRobinson, P.A. was counsel of record for the appellee so I will only quote the court's opinion:
Denis and Elizabeth Chira acquired the Sheldon Beach Hotel in 1978 and operated the hotel together for over 20 years. In 1999, the couple decided to part ways, and for the past 10 years, Denis and Elizabeth have been locked in bitterly contested litigation over control of the hotel in both state and federal court. The Chiras’ state court divorce proceeding resulted in the formation of a contract for purchase of the hotel between a divorce court-appointed receiver and José Saal. Before this purchase contract was executed, the Chiras found themselves in federal court by way of Denis’s Chapter 7 bankruptcy case. The bankruptcy court approved a settlement agreement between José Saal and the Trustee of Denis’s bankruptcy estate, which calls for the performance of the Saal purchase contract, and the district court affirmed the bankruptcy court’s order. For the reasons that follow, we affirm the district court’s judgment affirming the bankruptcy court’s approval of the sale of the hotel to José Saal.


Bankruptcy Rule 9019(a) provides that “[o]n motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement.” In this circuit, a bankruptcy court evaluating a proposed settlement must consider:

(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; (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises. In re Justice Oaks II, Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990) (quoting Martin v. Kane (In re A & C Prop.), 784 F.2d 1377, 1381 (9th Cir. 1986)). Courts consider these factors to determine “the fairness, reasonableness and adequacy of a proposed settlement agreement.” In re A & C Prop., 784 F.2d at 1381.

Although the bankruptcy court did not explicitly consider all four of the Justice Oaks factors in its order approving the settlement agreement, we conclude that the bankruptcy court did not abuse its discretion by approving the settlement agreement.


Post a Comment