counsel you may proceed good morning your honors may please the court at its core this appeal is about protecting the reasonable expectations of debtors based on unambiguous provisions of the bankruptcy  have the code that creditors have long been seeking the lower courts said that there is a loophole and the pelleas argue that there is a loophole but notably and i'll get to this momentarily the lower courts and your pelleas don't even agree on been around since the eighteen hundreds and they are in forcible in bankruptcy section five hundred and forty one c two of the bankruptcy code clearly provides that addendums interest in a spencer trust is protected and not property of  discretionary distribution when you look at the provisions that but my question is did are you saying that the district court didn't say explicitly that it was making this if you look at what the trustees asked the state court to do they asked the state court they say that's a mistake court and you need to look at the transcript those fifty pages that constitute their entire argument is that your honor if you also rise a three billion financial affairs through bankruptcy i would disagree that he tried to interfere with women a successor trustee and in fact he's been trying to get a successor trustee appointed so your honour's i just want to talk about  and forty one states are and i can't so it still seems i'm kind of back to where judge kelly got a started in this discussion which is it seems like your argument about what the dist is the state district court or didn't do is calling on this court to review what is a district court aren't those arguments more appropriately presented to your state court appeal complies with the letters money ninety three dollars that is that it's in good faith and not proposed by means forbidden by law bankruptcy courts every day review you know state law and so the state law here that we're talking about is whether there is a valid and forcible spend for prevention nothing about the state courts order precludes the bankruptcy court from actually making bad finding and in fact if you look at the state court order it's actually conditional punit it right back to the bankruptcy court and so if you approve this then i will allow a three million dollars and so i don't think there's anything improper by the bankruptcy court actually complying with its obligation to interpret of claims part of your p r r's you identified a four claims in your brief and argued that i think three of them are not part of the estate and i got that right so far ye all right did mister kearney tell the bankruptcy court in the rule two thousand and four proceedings that these claims were part of the estate not exactly he said he'd be willing to contribute forward and he actually are covered on the claims they would be willing to contribute some of the proceeds from that litigation to the to pay off his creditors and in fact in the two thousand and four proceeding the bankruptcy court over and were not property and just quickly would you agree that we're only talking about these four claims are really the three claims you're not you're not making an argument about any other claims those are the principal claims your honor thank you but i think i'd like to move it into one hundred and twelve thousand and ninety three since that was so that's that seems to be the main issue presented the plan that was proposed by the u c c very carefully separates the roles of the bankruptcy court into deciding bankruptcy issues in the state court deciding state law trust issues the state court did not rule on whether the u c c plan met the requirements of the bankruptcy code nor should it have that's that's for the bankruptcy court but the state court and the trusts and all beneficiaries before it the state court judge was very familiar with with this trust and parties and it had exclusive jurisdiction over the trust get into the the argument that the state court judge did not adequately modify the trust's that's basically that the issue you didn't do a good enough job there are at least three conclusion of law eleven that says the trusts are modified to permit the onetime distribution of three million dollars a principle to mister carney as contemplated by the u c c plan that as contemplated by the u c c plan and simply said it's modified for that purpose find the thirteen says no i'm sorry it's not finding it's conclusion of law thirty the trustees distribution of three million dollars from trust principle to be paid to mister carney and  so when a secret just is saying that the distribution of the money to that into the mister carney and then over to the creditors is not a breach of the trust these powers and duties obviously interpret inc the pumps spencer provision his and to bring the modification he has imposing it and he is finding that that distribution does not violate the spendthrift laws by clear convincing evidence he determined this was in the best interest of all parties state law allows a modification of the trusts in it for the purpose of for the purpose a set out in statute and for the purpose a set up other state court decision other bankruptcy court i think is a an indication of two things st of all the state court was not attempting to rule on bankruptcy law was not attempting to confirm the plan shown and secondly  it's a recognition that the three million dollars would be distributed in accordance with the terms of the plan and the plan provided that money goes mister carney into the creditors if the bankruptcy court appearance tempted to say oh well that modification isn't good enough it would be st of own fringing on the exclusive jurisdiction of the state court would be violating the record feldman doctrine federal courts don't we purse state court decisions and it would be it would be improper the bankruptcy court did comply with the inri harben decision out of the th circuit  which said that if there is a provision if there's a state court decision it's on appeal the bankruptcy court should look at it to see if the state court if the if the state court was likely to be state court judge did a good enough job seems to be the argument and he did he did a fine job in iraq clearly indicated and found that the plan should be confirm this reports i just ask  you to clarify one thing for me in your brief on page nineteen it says the following only once the funds are distributed to mister kearney that they become during the chapter eleven then that property becomes property of the bankruptcy estate so when the three million dollars hits mister carney's hands during the chapter eleven that three million dollars becomes property of the bankruptcy estate is under the bankruptcy courts jurisdiction and therefore it can be used for the plan the actually the spendthrift trust and becomes property of the debtor that money is free and clear of any protection from the spencer trust and underling fifteen it becomes probably the state hope that answers your question please the court i'm thomas walker for pelly unsecured creditors committee just quickly add something to what's been discussed already is common for  that make a plan effective to not come into being until the effective date of the plan when a debtor borrows money for example to fund this plan when a debtor issues new securit in order to fund this plan those things don't come into being until after the plan is confirmed and on the effective date no one is going to subscribe to new stock if there's not a confirmed plan backing it getting rid of all  getting rid of all the old problems that's how plans work they were created if they are negotiated and they get to a result like this result provides benefits to creditors and in this case tremendous benefits to this debtor he's getting a discharge he's getting eight million six hundred thousand dollars of debt discharged he is going to continue to get income for life substantial income for life based on the balance of the trust he is going to get a significant amount of his taxes paid as this court may very well be aware mister carney has tax problems he's being underlying facts and circumstances that led to him confirming this plan your standard of review for approval of a subtle man is abuse of discretion we don't get anywhere close to that in this case courts in this circuit familiar i mean the bankruptcy court exam of the complex of factors over several pages of his opinions starting on page i believe thirteen of the decision but the facts underlying the  decision and supporting his analysis on the capex of factors is the entire st part of judge them as opinion where he articulated all of the litigation that preceded the bankruptcy case in state court and the many many findings of fact that were determined there judge them on page fourteen sets out a chart of the copecks of factors and his findings that support those determinations that three out of four of the capex of factors weigh heavily in favor of the settlement the only one that didn't your honor was the possible problems in collecting the judgment because if a judgment were ever found in favor of mister carney he probably could collect a judge that went into great detail about for example the chance of success of the limitation on the merits he found that it was worth less or less than worthless why because carney had proven his ability to have attorneys fees awarded against him where what i have one question be present in time what what's the impact of the state court proceedings can we decide if these before the state court their effort to get the state court t state court of appeals i guess could reverse the state district court there's been no state or motion being before the state court based on what they claim is new evidence and i'm hearing from next week if i recall i'm not familiar with that your honor and i apologize for that as i say i'm not a party to that state court proceeding and i apologize for not being able to address that it's quite possible that mister fish could address that if you were permitted next wednesday i think they are the real answer on this is if under that harbin case th circuit they said that the right thing for the bankruptcy court to do is to look to see if it's going to be reversed on appeal and if you if you say oh what we have to wait for the state court appeals to be concluded then what you're saying is that any debt or  any creditor for that matter can stall a plane over and zation for years and years simply by filing appeals and while maybe the court could come down that way but i suggest that's a really bad way to try to get a bankruptcy system to work you're allowing somebody to throw a huge monkey wrench into the whole system what speculative but once a court has decided there really are two ways to go either say well it hasn't been stayed on appeal it hasn't been reversed on appeal we're stuck with it we're bound by it that's our normal rule  circuit said is well we're not going to do that but we are going to say bankruptcy court you have to look to see if it's going to be reversed on appeal make a you know and want to look at it review it don't decide it yourself but make a decision of whether there's a likelihood of reversal on appeal and if it's not likely to be reversed on appeal go ahead and confirm your plan and go forward with your bankruptcy plan because the creditors need to release the part of the debtor needs the release the parties need to move forward our  t of appeals is a couple of years behind and cases of that to three years to get a decision do we hold everything up for that length of time that might circuit said no the alternative i think is to just say well is the stock that there are stock in the trust there is not three million dollars and mister carney does not have three million dollars and so under fire forty one dollars seats to the the playing and is not funded by property of the estate if you believe the polies five point one six two when you're in an individual chapter eleven has no meaning because it's what they're saying is they can anticipate represented to the state court that if you do this if you allow us to make this distribution one thousand one hundred and fifteen will be the mechanism by which this becomes property if that's how it gets to creditors and you'll see that e mail from mister  mister walker explaining that that's how it becomes property of the estate he has never made the argument before today that there was a modification of the spent for trucks and in fact the state had the bankruptcy court actually contradicts itself when it's that is that there is a spencer modification because it's in the bankruptcy court order the bankruptcy court says the trust modifications will prevent future fighting while continuing the goal of providing economic protection for the debtor  now i want to briefly address this river feldman argument that counsel mentioned and you know sort of going a little bit back on what i said earlier i do think this court and is not obligated to accept any findings in conclusions by the bankruptcy court based on the state court's findings where there is an obvious sham and in this case we do have an obvious sham let's look at the transcript of the proceeding the trustee of the entire case consisted of counsel reading pleadings from the bankruptcy or case and inadmissible deposition a trial testimony from here earlier it is fifteen pages and that's it and the bankruptcy court also learned along with kearney during the bank confirmation process that the trustees failed to disclose their option to purchase the stock that they were going to sell to arco direct it right back and they did not disclose that the state court and what is the trust response when we pointed out this nondisclosure it's in their brief they say disclosure of the option was not relevant to anything before the state court now that's simply not true their brains and failure to disclose the option was brought on the sta so liquidate the trusts so that the trustees can get the assets of the trust using a straw man purchaser and obtain comprehensive releases and so that creditors can obtain a portion of the proceeds of the liquidation should this plan be upheld a good designed to fairly achieve a result consistent with the code when we have five hundred and forty one c two that explicitly excludes the spencer of trust from property of the state should we lose this case and i want to leave you with one final thought require that they use the c plan the ny confirmation they have used that to abuse the bankruptcy process and that should not be allowed thank your honour's and so can i just ask you to respond to the the  issues the judge seymour raised which has to do with whether the proceedings in the new mexico appellate process should be allowed  to be completed before this court addresses the supreme you know what your position on this i think the court can decide that now i think the court has evidence before it of an obvious sham in the state court i don't know how long it's going to take for the state court to decide that issue even if we are trying to we have a pending motion to open the evidence and reconsider the findings and conclusions even if we lose that motion the appeal is still pending i don't know how long that appeal is