i took to heart that comment you made beforehand about at the high points and i know you guys are well prepared and this is actually a pretty straightforward issue dealing with the three sixty three in a ninety eight hundred motion so let me just hit think you find some merit in what we have to say in these briefs i'm simply put here's what happened was the trustee files a combination three sixty three ninety one thousand motion to self defense of appellate rights and  connection with that they are both basically selling for seventy five hundred dollars the defense of the poet rights and at that time they already knew that the fees that they'd incurred to try to sell this already exceeded the amount of the recovery that would be obtained and in fact judge smith stated numerous times during the hearing this is going to be a diminished miss return doesn't matter if wo sale for the seventy five hundred dollars my client the debtor who had great interest in proceeding with that appeal came in and submitted over bids up to ninety five hundred dollars in connection with that over bed it's also undisputed in the record that he stated i will pursue that appeal or free to no expense to the bankruptcy estate what did the trustee do the trustee agreed and judge smith approved a sale for ten thousand dollars  five hundred dollars more than his bid but what did that also include by doing so it also ratified the amount of a million dollar claim against the bankruptcy estate and potentially also saddled my client with  dischargeable judgment because in the pleadings themself and this is the point i get to in a moment as the trustee specifically stated that woodlawn is going to dismiss the appeal and then attempt to use the appeal to provide for finality of the state court judgement and saddled the debtor with a nondestructive of so in some concede that is if the appeal is done then that is it on issue preclusion no that's not a final decision y t we have some there are arguments but that was what they intended in that their their own motion they specifically stated and woodlawn went to great lengths and the pleadings in the order that judge smith that they could dismiss the appeal is going to be final and that the result of this is going to be that there will this will be caught at that's clearly their position and the trustee was basically advocating it  know i represent trustees and i can understand their position some time but the what they did with here was such a sellout for refer no benefit to the bankruptcy estate i understand that they need to look out for creditors and creditors got nothing there is some duty i know it's typically in a surplus to state to the gutter but there is some duty in an equitable situation not just to basically say hey you know what we don't care we'll take an extra five hundred dollars from this creditor we're going to ratify a million dollar claim and  what all that affects us from out of correct but causes great problems but i think this is the case where and i don't want to use too much like equitable but it was just it was just the trustee goes to liquidate an asset pursue litigation you've got to look to see what will be eventual recovery to the estate and they knew that that seventy five hundred dollars was going to get eaten up completely in administrative claims i'm not saying the trustee was beholden to this creditor but this creditor was putting a lot of heat on the trustee and was buying other assets and doing other things and basically the trust blinded herself as to really  what was the outcome to the bankruptcy estate and just said no i just want to get this deal done this creditor what if you are successful on appeal what impact would that have on his statement was still being a de minimus recovery well and appeal should be abandoned back to the debtor to allow him to proceed which could have two corresponding benefits one is is it could reduce substantially the claims in this bankruptcy estate i mean this claim eats up you know ninety five percent of all the creditors in this bankruptcy case and it would give him the benefits of pursuing an appeal to potentially avoid the collateral estoppel effect of the final judge with the state court but it would be commitments under both circumstances wouldn't i mean there still isn't going to be a large return to creditors under way this case comes out is that i think i think that's a fair statement and so the benefit that the judge identified was simply that it's going to come to a conclusion under this resolution right at that but that doesn't mean that you had to administer the asset though i mean that's the point the asset did not need to be administered especially under these circumstances i never point i wanted to make and i think our papers touched on it but i want to hammer the freedmen decision which talks about where the trustee was trying to settle and where was going to end up with the same result and then the four by could potentially impact the debtors discharge and they cited to section five twenty four c and a big deal been made about this saying well this isn't a reaffirmation agreement in a light and that doesn't have any put billet here but i was further reviewing the the bab's decision and where basically a debtor can waive it's just charge and that's under seven twenty five some twenty seven eight ten where they can stipulate to the waiver of the discharge and then of course under five twenty four twenty four fifty four of the hayhoe decision after discussing pre partition waivers and how congress it only set forth two different ways and which a debtor could waive its discharge and i quote the language here and i think it's pretty important it doesn't focus on five twenty four c reaffirmation a focuses on five twenty four d your general discharge provisions and it says section five twenty four d have been applied strictly by the courts to carry out focus on the debt or entering into an agreement it just says any sort of an agreement that is entered that could have the purpose of trying to evade the rights of a debtor to a discharge should not be in force  so you know in some your honor it's just you're back to there was no benefit to the estate to this compromise but there was all kinds of downside not only to my client but also to the creditors why would the trustee agree to accept a mere five hundred dollars more of an over bed at the same time stipulate to a million dollar claim and at the same time could have the cases on this issue but there's cases that are around this issue that say that actions are agreements that have the impact upon a debtor's discharge should not be enforceable and we request that the bankruptcy judges order be reversed thank you colors who you are who you represent glad to and good morning and if it please the court i am howard did not i am the attorney for woodlawn colonial woodlawn colonial wears a number of hats in this case  we are the single largest creditor of this estate we are the approved court approved by her of the defense of appeal rights where also the court approved buyer of the personal property assets of the estate for which my client paid seventy five thousand dollars plus waived and a priority administrative claim of some eight thousand dollars and when i listen to mr goh he seems to forget that we started all of this with a no asset filing by the debtor and the reason that we're here is because my client  willing throughout this to put its money where its mouth is if you will and step forward to purchase assets which we felt were undervalued in the schedule my client has stepped forward  and by the way that sale was approved and was not challenged not on appeal my client stepped forward to object to an exemption claim of the debt or the exemption  disallowed and then also was not appeal but i want to start my argument this morning by talking about her just mentioning in a lengthy record that we have case there is one there's three lines in the reply brief that the appellant submitted that i think really influence pretty much everything and every issue that we have that's been raised in this appeal and on page five lines five or seven of the reply brief the debtor states delano is not challenging the bankruptcy courts finding regarding the likelihood of success primarily because of the difficulty in prevailing on such an argument on appeal so we have the debtor concede consequently i should this question because i think it's the big question which is as i understand counsel's argument i implicates the debtors to charge in fresh start in other words is a public policy is to promote a fresh start people are permitted to file bankruptcy and if if word determining discharge ability or not just charge ability then that ought to be permitted to play it out and simply by selling the appellate rights to terminate that litigation is something we shouldn't be doing what you understand his argument to be that's exactly what i understand his argument to be and i think that argument is contrary to established precedent but more importantly going to the policy is it's only an issue because of that quirk in california law that says  to either abandon or to it administer the reality is that in this case the court has made a specific finding a specific ruling that the case law and i think the public policy is that if you hang of met the requirements of both three sixty three and of nine hundred nineteen that it's perfectly appropriate in fact it's an obligation of the trustee to sell the defensive rights because they are admittedly assets of the estate and here where you have a finding that there is little likelihood of success on the merits of the appeal the court's findings court use the words such as longshot quote unquote highly unlikely quote unquote where the findings of the court that there would be an appeal that there would be a reversal or certainly a complete reversal and so where you have an asset that is essentially worthless isn't the policy to allow the trustee and encourage the trustee to negotiate with a potential buyer i mean what we did here is the usual process this is the way the system is supposed to work the trustee has an asset buyers expresses an interest you have a buyer stepping forward you can call my client a stalking horse we expected overbidding there was o we have a debtor was perfectly capable of overbidding more and chose not to this is the way the process is supposed to work in fact that the trustee did obtain value significant value if you look at forget that what happened in this case is we had the well the the question is ultimately but why not let the debtor prosecute the appeal by paying one  hundred dollars less than my client bit and doing the appeal for for that question was posed by the court to trustees counsel at the hearing it's specifically in the transcript  at docket one thousand dash twelve starting on page sixty three that's pacific question was closed and the trustees council came up with five different reasons one was the lack of likelihood of success on appeal the other was the directive given trustees to expedite closing of the state's certainly important public policy the third is the additional expense including bank fees etc of delaying the process and the closing in the distribution administration for what would undoubtedly be a couple years the trustees council also raised a fourth issue having to do with issues involving retaining counsel there was no application for this mr scharf to be to be employed as coun for the estate and there's a potential liability issues the trustee had concerns having a lawyer who the trustee didn't know and those kinds of issues but oh and ultimately as the court noted that the real issue here is that  maybe maybe the overriding issue is that since there's going to be a de minimus a minimal recovery under any circumstances the creditors would just assume get their money now then later ok the simple reality is the estate with with the approved bid will have about eighty five thousand dollars in cash administrative expenses or about thirty grand the debtor got his moneys twenty thousand dollars or so for his exemption so there's thirty five thousand dollars available for distribution t creditors about twenty thousand dollars of that goes to a priority i r s crime centrally paying the debtors taxes tax liability which leaves about fifteen thousand dollars rough numbers to go to unsecured creditors and the trustees conclusion was it certainly makes more sense we believe that for all of those reasons and including the fact that somebody who's go one cent on the dollar doesn't want to wait around for a couple years because they might get what five cents on the dollar given that the total distribution is going to be fifteen thousand dollars the policy of having a states open to do that simply doesn't make sense let me also address counsel's argument that the that the administrative expenses  fees that were incurred in connection with the sale of the appeal rights not so and if you scrutinize the trustees fee declaration which by the way is interesting also maybe a technical point of law the debtor did not oppose the fee declaration and if he's really worried about the effect on the creditors the effect on the body why didn't he oppose the fee declaration but the fee declaration which is  record twenty three says the total fees incur for both sales the real property sale of and of the personal property sale and the sale of the appeal right were sixteen thousand three hundred forty nine dollars now rightly or wrongly the trustee didn't break out that category of quote sale between the two sales and when i went through and looked at the line item in trees on the bills the actual fees charged by the trustee for the appeal right sale were four thousand four hundred ninety three  all the hearings together but the bottom line is that we have about five thousand dollars in fees incurred to sell an asset on a stocking or spaces because that subject over bid for seventy five hundred dollars and ultimately was sold for ten thousand dollars so i think the argument that the egg and the t v and all that we've distinguished that in the papers but the argument that we didn't get enough value for this and therefore it should have been abandoned to the debtor of course the debtor once it abandoned the debtor didn't want anything to go to his creditors he filed a no asset case in the first place the other thing i want to know is that the debtor stopped the bidding it ninety five hundred dollars that was his choice the record indicates that he has five thousand dollars a month of disposable income over and above all of his expenses including entertainment whatever it doesn't include his wife's income sixty seventy thousand dollars a year that doesn't include the twenty thousand dollars that he received for his exemptions if the debtor wanted to bid more which is what the process is i mean the best way to figure the value of an asset is what we do all the time in bankruptcy court which is somebody steps forward trustee agrees to sell it to that person and then we have an auction that's what we have and if the debtor chose to stop the bidding at ninety five hundred dollars which he did i would submit he stuck with that decision and i w submit that his decision not to bid more and i was in very clear on the record i said my client will bid more just like i was clear candid with the bankruptcy court and said my client's intention is to if we're the successful better  dismiss the appeal and then bring the preclusion issues back to the bankruptcy court but we were candid with the court about that i think that what the debtors done here is really an attempt to manipulate in some senses the bankruptcy process and the bidding process and the procedure that we're using i think the debtors arguments on this appeal are really feigning they're really crocodile tears feigning an interest for the creditors where he doesn't care about the creditors he filed a chapter seven claim the exemption that he wasn't entitled to stop bidding when he just decided it looked good or it felt good to him and of course he did not object to the attorney i think what we have here are your honors is a well read is a reasonable discretion by the trustee deference given to that discretion by the the bankruptcy court but beyond that we have a bankruptcy court that really dug deep into this case we have a long record it's a thousand plus pages we have a bankruptcy court that really understood the issues analyzed the issues was remember with the issues and exercised her discretion and properly in approving the sale of the appeal rights to my clients less the court as an end the questions that would conclude my argument thank you thank you filed a case in the trustee determine whether or not those assets and was no seven twenty seven action filed all assets were disclosed and the like you know i think that goes back to the same point the records clear regardless of whether or not there was you me a de minimus distribution of the estate that's not the focus under caveat and the other decision to that that it's the issue of whether or not the particular asset is going to provide a meaningful recovery to the estate and this asset did not provide any recovery to the estate let alone one that's meaningful and at the same time precluded an appeal from going forward and potentially as a as your honour's pointed out potentially there's public policy issues with regard to the discharge issue which mr bittman makes clear that they fully intend to use this final judgment for nonstarter ability purposes so that's why i have your honor thank you can thank you very much this matter is game submitted