bankruptcy and reviewing the bankruptcy court court opinion the question is did this record apply the proper senator of review we do not believe that in an actuality that it did the standard overview it's quite clear from this court's decision as g'kar been in connection with a motion to dismiss is abuse of discretion the abuse of discretion standard implies that the factual findings of the bankruptcy court are to be analyze district court applied the wrong standard to you just what findings of fact were somehow not review correctly or what specific conclusions were drawn by the court because i'm not clear in considering your argument in the briefs just what specific findings of the bankruptcy course of the first there was no explicit determination or mention by the district court of any factual findings or inferences of fact drawn by the bankruptcy court with which the district court disagreed so let me it's your question specifically what the district court did was say things like the the bankruptcy court erred in finding and there was a benefit to the estate finding in finding yes  finding the bank or the district court i believe in its opinion talked about the bankruptcy court making an error with regard to the inferences that it made from factual findings for example that the district integrated telecom and also s t l and went then beyond that and i'm looking right now at j twenty three it's page ten of the district court's regional opinion and it says the bankruptcy court are in concluding that had met their burden of proving good faith now first we have the word conclusion which doesn't suggest in fact but beyond that we have clearly the reference to meeting of burden of proof which is clearly your honor what the district court did however prior to that was to make statements such as the record i'm not persuaded by the record for example that the the bankruptcy case was not simply a litigation tactic to gain an advantage in lip and litigation whereas the bankruptcy court found after the district court says that next after and it says second the it's the conclusion that there's primary objective in filing the petitions was to gain a tactical advantage in litigation except your honor that the bankruptcy court specifically found on the factual record that was a stablished after almost one year of discovery and a two day trial which there was one live witness that was the debtors representative testified that the the bankruptcy filing was not in fact a tactical  maneuver in connection with that litigation what the back of the court also found your honor was that the debtors had a good faith belief based on all the claims that were existing you have to recall that there were in addition to the tivo litigation that the district court focused on and that that co complains about the in regards to the filing a bankruptcy case there was also litigation in california there was also litigation oklahoma there were regulatory proceedings in california by these we see more in which is the major which is the more important welsh in full of the most twenty the most money i think the most the most money alleged was the tivo case but the money alleged or potentially at risk in the other actions was not insignificant was still in the millions court well what the what the district court did in airing was was come was looking at the facts as found by the bankruptcy court including the inferences drawn by the back to the top were all of those facts and adopted all of them but said basically i disagree on my review of the record instead of say a den of flying any fact that was clearly erroneous or any misapplication of facts of the law because both courts applied the same legal precepts in the same legal authority so there's no error of law either that the district court found this or quite simply said i disagree my review of the record suggests something different this your court views the bankruptcy court's decision for abuse of discretion the right did the district court say that the bankruptcy court abused its discretion in coming to  conclusions your honor i don't standing here right now i don't know if the district court use those exact words what i do know is that when you read the district court opinion there are several instances with regard to the reasons for the honor i don't believe i'm trying to answer your question as for phrase can i don't believe the district court said that but standing here right now i can't cite to a specific just just when we're when we question yes do we now review the district court's decision we review the bankruptcy court question well i think you do both i think he reviewed what the district court did and determine whether or not the district court apply the right standard in coming to the decision that it came to but we recognize that this court has an ability to look at the record and to term and based on a piece of discretion standard whether or not the bankruptcy court was correct and we think that it was based on the voluminous record that was presented including the testimony and hundreds of exhibits that were put into the record at the bankruptcy court correctly found that the the bankruptcy was not filed as a litigation tactic in light of all the other cla action right now to stand here today your honor yes i am not personally involved in the louisiana action perhaps mr heisenberg would be better able to advise the court but my understanding is that that action is in the discovery phase that it i'm not sure if there's a trial date set in that but it is proceeding in accordance with the local rules in louisiana but not being trial counsel i don't i probably don't have as up to date information on that as my understanding is that is the way that the parent company believed it was best to do that the previous spell that would be obtained by the bankruptcy that benefit from the ongoing litigations in oklahoma california and louisiana would allow that process to go forward it isn't i sn't the critically important question suggests whether it could have then performed outside of the bankruptcy rather than simply the fact have been but could it have been done as effectively and efficiently outside of bankruptcy as inside a bankruptcy where all the claims are centralized in the form in the and the breathing spell why did the bankruptcy court make any factual determination about that as opposed to merely a general finding or observation that it accomplished this as opposed to a comparative analysis as to what would it was accomplished or what would  have i don't know that the bankruptcy court directly addressed that factual think it finding but i do know that the bankruptcy court found that the bankruptcy allowed that process to go forward in an effective and efficient manner and that the debtor didn't the debtors did not have the carefully went through each of the pending that were apparently the basis that were the basis of the bankruptcy or the finding that  an area where the district court erred because it did not accept the bankruptcy courts factual findings which were to the effect that the debtors believe that they were significant and meaningful and impacted upon the decision to file in the bankruptcy court agreed  certainly there was assessments of of the debtors potential liability as i'm as a lawyer are they well the assessment was made by the persons responsible for the wind up of the debtors affairs and that impacted again and influence the decision to file for bankruptcy because there were massive claims not just from the tivo action out there that needed to be dealt with and very minimal and scarce assets to deal with them including the insurance  funding in and we have a settlement with the j s f and it is the parent companies that would put about two point eight million dollars into the case to deal with these kind of liabilities in part related is that two point eight million in the london the settlement between the debtors and the parent company that's embodied in the plan and it's reflective of the potential claim that the debtor entities might have up the stream against the parents in connection with the dissolution of santa fe project in the london market it's pending it's been pending now since the state was lifted and we believe that the state was lifted in error by judge gross that it caused due process problems in our ability to prosecute th figure we don't know what their claim is it's a strawman what with i don't understand what you're estimating why that would be a major project well because of the louisiana law they have no claim against the debtors if why are you worried about well we we weren't worried judge gross fought originally when that would have been appropriate but it's so unduly delayed the proceeding it's not going to be more than twenty million dollars right it will be no more than twenty million dollars as far as you know but we don't know and you have one insurance policy that might cover this was a substantial likelihood they would who would decide that the louisiana court or the bankruptcy court or us right now it is pending there's a suit by pepco in louisiana i know that's why i asked you what's happening on that  with yeah but who would decide whether the louisiana policies cover back goes claims at this point the only place where that is pending is in louisiana the that the well depending on what we decide that if we decide that the say should be lifted because it's only pending appeal muncy appeal is decided that's the end of it and then it goes ahead and gets decided in yeah i believe why would you why would you not want that to happen well i believe that from the standpoint of the parent companies they were of the opinion to invest in this bankruptcy that's where we're getting confused here we have a subsidiary that is a separate company and we have a ultimate parent that is financially viable but delaware law says these are separate companies and they get treated as separate for not just beppo but for all the creditors and since in troy are out there as well and they have made five million dollars claims each which are significant claims to specify claims and there was the specter of many more claims like the money for the and those claims have now been winnowed down through the through the park date where the insurance policies have been created through the investment of the administrative expenses by the parent companies and the fact that these were created in the bankruptcy and into bankruptcy no it was it was it was not so if it was no it was well the santa fe santa fe is not my client i represent global santa fe corp it was you also represent the six administrative services corporation not just your on to me yes your honor we do and the that administrative services corporation just happened to lend considerable support and aid to santa fe in the course of the pre the bankruptcy court and the banks the judge weighed that testimony he had missed the farthest thing and he was very effectively cross examined and even after that test which is why the abuse of discretion standard is in place and why you cannot substitute your inferences from finding the facts for the manx the judges which is where the error is here we know that we can do that who paid the administrative costs that you keep talking about d and the money came through global santa fe corporate services there is one of the parents which it no it's just an affiliated company that didn't exist when all this environmental  not have given that you know anything right no it absolutely had a an option for brett though to take the insurance rights or to take a million dollars that would be found in a plan and as part of that process there would be an estimation  both claims and the back to court which is done all the time in bankruptcy with claims that you don't know what their mounts are ok and because the stay was lifted and that matter is pursuing in louisiana judge gross had to june of two thousand and six the banks are filing with ten weeks later the briefs sort of put those together without any discussion and i would submit to you that mr farce testimony substantial the proposition that during those ten weeks they measured not just the beck ok or the tivo case but these other pending cases and the possibility of additional oilfield legacy cases and just how much money the parent companies would largely although not entirely complete at this point i don't have the figure with your tips as what it cost you describe just how that co has been frustrated  by the filing the bankruptcy and more recently by the staff yes your honor by the filing of the bankruptcy procedurally as your honour's and noted we were approximately two months from trial the issue  whose name santa fe disclosed it's the son dissolves that is the point isn't the best whereupon the point isn't that go inform them that they intended to pursue the parents up the chain for the liability within a few weeks that was doctor never covering that allows landowners to recover damages for the to their property that occurred in connection with mineral leases and the nuances of it are probably beyond me your honor but it is something you would that and so at that point in time that's going to take indicated its intent to proceed against the parent within two months the bankruptcy was filed that process was forestalled one of the first for the automatic state of us that was that after you had paid the twenty million and gotten the assignment at that time your honor we had not paid the twenty million the case was still scheduled to go to trial that fall and we sought to have a stay lifted at that point to bring santa fe minerals back into the litigation and also at that point we we attempted to file a third party petition against global santa fe and the insurers to bring them that the the one market policies were discovered through the insurance review project we had knowledge of certain of the insurers who we named an originally not third party position there were other insurers that have no to go into bankruptcy your claim is that the petition was filing we had faith yes your and judge love your mention the host of claims that were pending against santa fe before there were about five separate claims and there was of course  as well there were two separate investigations that santa fe was being threatened with and then there was the recent realization that it dissolution that had filed in what in wyoming maybe now they weren't all of those good reasons notion that those were good reasons to put the company into bankruptcy well in an in in fact that goes to the heart of the good faith test i mean that the jurisprudence of this circuit presents os you the debtors with with two questions that are relevant to the good faith inquiry in this is what judge robinson focused on and whether the petition serves a valid bankruptcy purpose and what that means we have said by preserving a going concern has anybody at any point attempted to s filing was an attempt to preserve a bill in concern here i don't think anybody has ever taken the position all right so it's the alternative then that the debtors have to demonstrate and that would be or maximizing the value of the debt there's a stay and i hope on rebuttal one of your colleagues on the other side will speak to that because we just didn't get time during ways that the debtors here really had three principal assets insurance the they contend the causes of action against the parent companies were state property we contend  otherwise that if she was never determined as the weather was probably a state or not by the bankruptcy court and third there's a group of of rights that we call distribution rights those distribution rights  primarily there was an already completed class action settlement that they were entitled to recover a few thousand dollars under there was a company claiming that and one or two other things but they were not substantial and i believe in total less than a hundred thousand have there may be multimillion dollars worth of damages alleged in that suit the i believe the record below shows that there are other policies that may provide coverage for that loss and you have an idea i don't know the answer to that your honor i just wonder he seemed strange to have a couple of these specific things out there well go ahead i'm sorry now that that's funny right i think it's just a stray promises liability case phase state organization that we would have the rights to pursue pursue this those are issues as the case comes before your honor's were never decided by the bankruptcy court but i think you know bore broadly when you're discussing the claims against the like that neither creditor has suggested at any point in the proceedings up to now that they were better pursued or resolved through the bankruptcy cases both those creditors were pretty prepared to pursue those on their own and fund the pursuit of those discretion standard to agree with you we would basically have to affirm the district court and the district court's conclusion bankruptcy quip use discretion so maybe you can tell me briefly how did the bankruptcy one principal way was that its articulation of what was a valid bankruptcy purpose the bankruptcy court here seem to believe that because certain things were done after the bankruptcy case was filed that that sufficed to make  on finally finding one of these claims separately so that it would not be maximizing resources for risk for the creditors certainly in a case where the debtor had substantial assets that it needed to preserve for the benefit of creditors that that argument may have some more weight your honor i think one of the things that distinguishes this particular case even you know from the other cases that this court is decided such as the skinner decision is is that  this that or really had very minimal assets there was no suggestion and i don't think there's any real suggestion in the record that creditors are competing for a limited pot of assets you have here you know basically that go  just returning to the distribution rights that i discussed briefly your honour's and i see my time is almost up here those rights the record is clear the bankruptcy court did not the debtor did not require any powers of the bankruptcy code to pursue those presented a statutory construction argument in our in our brief and i won't belabor here but that makes clear that based on the use of the third one usual circumstances that it should be clear that the bar should be quite high in circumstances you have the creditors that have the potential right against all these assets and you have the assets and what assets well there were there are there are three very valuable assets that i'll go through them there was the dividend upon dissolution from the wyoming dissolution of santa fe minerals which in the bankruptcy they found out instead of being five hundred thousand dollars was seven hundred seventy eight thousand dollars but that's in the bankruptcy and the question is a good way to go into  the good the good faith was there was at least five hundred thousand dollars that needed to be distributed to a pool of creditors and it wasn't just people with it had a right to this disc different from dissolution it was all of the other claimants that judge gross found existed at the time and that potentially existed and could come forward and put a claim in the bankruptcy other legacy environmental claimants in louisiana under the last record and they didn't address it at all at all except to say that those weren't real claims and judge gross looked at each and every one of them and thought that they had significant validity that there was a strong potential for other claims and since intro are still here with us and they will go down from five million dollars each down to two hundred fifty thousand dollars and i think that that's a very legitimate actually purpose you had the five hundred thousand dollars you had the potential for insurance rights but no administrative funds to create the london market policies they did not have the london market policies and they have good terms and conditions for environmental claims on your quick question does it disillusion issue support or decision to go into bankruptcy it absolutely how it did because there was a limited fund there was a limited for all the creditors of santa fe and so instead of having seven piecemeal actions going on each one trying to get that five hundred thousand dollars and be the first one to get there and have santa fe try to defend those with with limited resources at all you can file a bankruptcy to make everybody come to one place and you have a pool of assets that either existant or can be maximized through the banks a process through the use of administrative funding as was have you that one of your purposes was to preserve a going concern you've put your all your eggs in the basket of maximizing that maximizing value maximizing the potential insurance coverage is that were out there because they hadn't found them all yet maximizing that they found any yes they found the london market policies well but they didn't find that until after but after the insurance review they knew they would be out there they simply needed the funding through to conduct the the insurance review th mere fact that it happened doesn't really tell us a lot in the inquiry that asks whether this could have been accomplished outside yes but what just first did it really historic know but it's not historical it's actually happened during the bankruptcy judge growth as part of the process when the and original motion to dismiss was filed in october of two thousand and six judge gross order discovery and part of that discovery was the insurance and the insurance review process was the method that was conducted during the bankruptcy pursuant to judge gross's order to conduct discovery to create those and having created them  that asset and tried to run through louisiana out of the banks the court said that the debtors administratively insolvent when they have the fence cost claims so you have assets on the one hand and you have multiple creditors on the other hand  and those multiple creditors have now we know down yes we're down to two that's what happens in a bankruptcy you start with a lot of creditors you get the claims addressed and then you deal with the rest of them in the plan thank you and what happens in this court is that i see the red light and i say i'm very sorry but your red light is on thank you one hundred thank you very much thank you all the all take this matter under advisement