In Re Cockhren, 468 B.R. 838

Debtors James and Margaret Cockhren filed a Chapter 7 case to stop a second foreclosure and related lender-liability claims against MidWestOne Bank; the property includes their residence and a commercial lot.
The dispute spans state court lender-liability actions and foreclosure proceedings beginning in 2007, with multiple filings and dismissals, stays, and counterclaims by the Debtors.
The Debtors proceeded pro se and, in Schedule B, listed counterclaims against the Bank as assets valued at zero.
The Trustee sought approval of a settlement under Rule 9019, based on an offer to purchase all Debtors’ claims against the Bank and related parties for $5,000.
The Bankruptcy Court approved the compromise, finding the Debtors’ claims were speculative, estate assets, and that the settlement was within a reasonable range.
The Debtors appeal and request oral argument; the panel denies oral argument and affirms the Bankruptcy Court’s order.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 9019 settlement was an abuse of discretion	Cockhrens contend settlement undervalues possible claims and is not in creditors' best interests	Trustee acted within broad discretion; claims were speculative and settlement was reasonable	Settlement approved; within range of reasonable compromises
Whether denial of a continuance violated due process	Debtors claim due process was violated by denial and proceeding in their absence	Court properly exercised discretion under local rules; continuance denied for lack of good cause and notice	No abuse of discretion; continuance denial affirmed
Whether Debtors’ lender-liability and related claims were property of the estate	Debtors maintained they had rights to pursue claims beyond the estate or exemptions	All claims arose pre-petition and belonged to the estate; Debtors had no exemptions	Claims are assets of the bankruptcy estate
Whether dismissal or deficiencies in filing justified dismissal or affected the case	Debtors argued procedural missteps should lead to dismissal for cause	Court did not have an obligation to dismiss and acted in creditors’ best interests	Not an abuse; Court’s handling consistent with law and priorities for creditors

In re Racing Services, Inc., 332 B.R. 581 (8th Cir. BAP 2005) (four-factor test for approving settlements under Rule 9019)
In re Flight Trans. Corp. Sec. Litig., 730 F.2d 1128 (8th Cir. 1984) (standard for evaluating compromise and reasonableness)
In re Asbury, 423 B.R. 525 (8th Cir. BAP 2010) (preconditions and considerations for bankruptcy dismissals and relief)
In re Martin, 212 B.R. 316 (8th Cir. BAP 1997) (reasonableness standard for settlements and creditors’ interests)
United States v. Young, 943 F.2d 24 (8th Cir. 1991) (discretionary decisions on continuances exercised with restraint)