In re: Wayne Wright, 16-8019

Debtor Wayne L. Wright filed Chapter 7 in October 2010 and listed a personal injury claim (initially “unknown,” later amended to $21,625) but did not claim an exemption for it; he did not list a related BWC (workers’ compensation) claim.
Trustee filed a Notice of Assets and employed special counsel to pursue the personal injury lawsuit; state actions against the tortfeasor and BWC were filed in 2011–2012 and dismissed in May 2013 (refiled in 2014).
In April 2013 the trustee filed a Report of No Distribution (NDR) certifying the estate fully administered “except for a possible settlement in connection with a personal injury claim,” stating any settlement would remain estate property and the case would be reopened if funds became available.
The bankruptcy court entered a final decree closing the case in May 2013 without an express court order preserving the personal injury or BWC claims.
The trustee later moved to reopen after a settlement offer; debtor argued both claims were abandoned and objected to the trustee’s proposed compromise of $180,000 (with $21,625 to be paid to debtor). The bankruptcy court approved the compromise without taking evidence; debtor appealed.

Issue	Wright's Argument	Trustee's Argument	Held
Whether personal injury claim was abandoned at case closing under 11 U.S.C. § 554(c)	The claim was technically abandoned when the court entered the final decree because the decree contained no reservation	The trustee’s NDR expressly reserved the claim and preserved estate ownership	Reversed: personal injury claim was abandoned by operation of law because no court order "ordered otherwise" before closing
Whether unscheduled BWC claim was abandoned	Debtor argued failure to list is not dispositive and the claim should be treated as abandoned	Trustee argued unscheduled property is not abandoned under 11 U.S.C. § 554(d) and remains estate property unless court orders otherwise	Affirmed: BWC claim was not abandoned; unscheduled assets remain estate property absent court order
Whether bankruptcy court properly approved the trustee’s settlement	Trustee could not settle abandoned claim; court failed to make independent findings or consider evidence	Trustee contended record filings were sufficient and debtor offered no contrary evidence	Reversed: court abused discretion in approving settlement of an abandoned claim and made no adequate findings

Midland Asphalt Corp. v. United States, 489 U.S. 794 (U.S. 1989) (definition of final order)
Adam v. Itech Oil Co. (In re Gibraltar Res., Inc.), 210 F.3d 573 (5th Cir. 2000) (settlement order is final)
LPP Mortgage, Ltd. v. Brinley, 547 F.3d 643 (6th Cir. 2008) (applying Rule 60(b)-type analysis to revocation of § 554(c) abandonment)
Woods v. Kenan (In re Woods), 173 F.3d 770 (10th Cir. 1999) (framework for revoking technical abandonment)
Vreugdenhill v. Navistar Int’l Transp. Corp., 950 F.2d 524 (8th Cir. 1991) (unscheduled property not abandoned at closing)
Reynolds v. Commissioner, 861 F.2d 469 (6th Cir. 1988) (bankruptcy court must independently assess fairness of compromise)