520 B.R. 316
Bankr. S.D. Florida2014Background
- Chapter 7 Trustee seeks approval of Amended Settlement with Sung and National Union and entry of a Bar Order; and seeks authorization to pay earned contingency fee to special counsel.
- Sung is a former officer facing D&O claims; the D&O Policy is a $3,000,000 waste policy funded by National Union.
- Securities Plaintiffs’ class action and derivative actions involve similar misstatements and omissions; they object via a limited objection to the 9019 Motion.
- An Agreed Order granted relief from stay to facilitate mediation; mediation occurred February 24, 2014 resulting in the Amended Settlement.
- The Amended Settlement increases the D&O recovery to $900,000 and conditions payment on Bar Order approval; unresolved issues remain with the Securities Plaintiffs and fee applications.
- The Court must determine whether the Amended Settlement and Bar Order meet legal standards for settlement approval and related relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Amended Settlement meets Justice Oaks II standard | Securities Plaintiffs argue bar order unfair and settlement not reasonable | Trustee argues settlement is fair, reasonable, and in creditors’ best interests | Amended Settlement approved under Justice Oaks II standard |
| Whether Bar Order satisfies Munford requirements | Bar Order improperly bars securities claims against Sung | Bar Order necessary to resolve interrelated claims and conserve assets | Bar Order approved as integral to settlement and fair under Munford |
| Whether stay relief denial is appropriate | Securities Plaintiffs seek relief to pursue actions | Stay relief limited by Agreed Order; broad stay remains | Stay relief denied except as in Agreed Order 131 |
| Whether Trustee may pay earned contingency fees | Fees should await final settlement/distribution | Fees justified by successful settlement administration | To be addressed at separate hearing/order |
Key Cases Cited
- In re Justice Oaks II, Ltd., 898 F.2d 1544 (11th Cir. 1990) (four-factor test for settlement approval in bankruptcy cases)
- In re Munford, 97 F.3d 449 (11th Cir. 1996) (bar orders; interrelated claims; public policy favors settlements)
- Apps v. Morrison (In re Superior Homes & Invs., LLC), 521 F. App’x 895 (11th Cir. 2013) (bar orders; affirmed in relevant settlement contexts)
- In re U.S. Oil & Gas Lit, 967 F.2d 489 (11th Cir. 1992) (example authority for settlement/expense considerations)
- In re S & I Investments, 421 B.R. 569 (Bankr.S.D. Fla. 2009) (court-approved settlements and related standards)