or before we started to have a threshold question for you and that is could you tell me what it is you want to do in terms of a you're looking for a remained on this record a reversal on this record and if you're looking for eit counsel with with our law firm who will properly litigate the case you will recall on this record we requested over and over again that we be permitted to litigate the case at no charge to the  state judge surely in the st hearing where he rejected the st proposed settlement said i may be inclined to do that it's clear to me that we just haven't been given a fair shake all the players here and i think on this record i would order in order to make a determination as to whether this deal was fair to all creditors there needed to be a full and complete record and there wasn't and let let's walk through the four points of what judge sure was a back to the judge had before him when he concluded that the a stripping of the determination of venture agreement potentially would result in a cessation of the income the  value if you were selling or on a continuous income basis what the value to the state would be the answer was no to everything and it was no knowing that we had already submitted in the record our own expert m and insurance expert who certified that there will be future commissions of between lives and ninety thousand dollars or so in the context of what we were pushing for which is get an expert please do your job it was never done quite the contrary let's let's go to the trust supplemental certification he said that's a supplemental certification which excludes basically omitted any reference at all and that is  in the marketplace today books of commission income or poison sold every day it was never an attempt to do that here and the reason was is because this really was a this was an inside creditor deal with his colleague and close friend whose personal relationship here to basically strip the assets and circular get it back in his pocket which he did and what was amazing to me is that even with those facts everybody was straight faced the trusted counsel blistery face came to court on two separate cases and said hey let's get this deal done mr mr nagle but that's only the case if we accept you've got some arguments between except that mr levy didn't need to do anything to maintain this book a business right if he if if he if it depended on his wining and dining in continuing to cultivate existing clients then there's a reason for not just putting this out in  why because the the the income flow the commission flow and i say this because i grew up i grew up in insurance a family my father sold insurance for fifty years the reality is any commission float can be sold that was not looked get to that if that were the case judge bemis would we not expect to have mr levy himself say unless i am personally involved in the future i don't agree in szell i'm going to ask your opposing counsel about supple appendix to paragraph six but right now i'm just saying that's a distinct factual question that's the reason why one might not just put this out in the marketplace again i disagree because because commission flows in the future are sold without the input of the originating broker it happens all the time you can see what i don't know what in the record tells us that the the v ordinary prudent reasonable way to do this that the district that it was an abuse of discretion for the bankruptcy judge not to require that well and that's a great question and here's the answer incredibly during the trustee's council argument trustees counsel during colloquy during the argument said it we we submit is certifications that affect now mr mr peterson who is an expert in insurance submitted a two page expert report for the trustee that is devoid of any analysis of the two critical issues a the value today of selling it he left it alone and be whether or not there would be an attrition in the future and the value of the cash flow in the future he specifically did not do it what he did do which i thought was important on exhibit a he prepared a chart which is in the record here and there i don't have the his exhibit a basically said that based upon an income flow of a couple one hundred thousand dollars there would be a one dollar multiplier he gave us a valuation for one year he gave it to us in exhibit a and in the colloquy judge sure would have also said many times about the value and nobody picks the value the trustee didn't do it nor did mr peterson so now i'm going to go i'm going to go to the the th point we have mr levy who doesn't say a word about value and doesn't say a word about losing business in the future or he doesn't say anything about service in account what he does say which is critical he says and he admits three of m employees were hired by this early firm to service and please respectfully don't overlook the fact the circle it firm was getting fifty five percent of the commission flow they were not supporters here they were crawford and from this arrangement mr levy was getting forty five percent back which under his own certification was twenty percent more than what the marketplace would generally do when you sign your commissions this was not an unusual situation again levy himself says when you generally is sign your commission flow yet twenty five percent i'm getting forty five percent so you had research which is silent on losing the commission flow in the event the assignment was forwarded you have the bigger recent report which is completely silent you have the trusty supplemental certification which is completely silent and you have the trustees testimony there  trustee didn't do it nor did his expert mr peterson number two nobody says if we void this assignment you're going to lose your cash flow nobody does it and i'll tell you here's the icing on the cake judge not saying and by the way by the way all parties you fail to rebut what the naval rice firm put in the record you did not reply but that i want to know why that was never you know what i'm really concerned about losing it the only place in the record you're going to find this idea of if you sign it is void and we're going to lose the cash flow is in a hypothetical in the argument of m rubin which he says during the argument it's my common sense it's my view that if this doesn't go through he's going to lose this commission the future because he won't be involved he says it not mr levy not the trustee and not mr peters and so there is no deception but the disc the judge said that the trustee had expressed this view you're saying that judge was just a mistake in his rule when he said trustee has looked into this we asked them every direct question on this issue and he said over and over again i did not look into anything i did not make an analysis i did not quantify and if you want i can even quote or not you should conduct an analysis as to what the true net present value of those commissions are is answer no ok if you ever do you ever determine how much money that could thirteen anyone in quote if you've got any analysis to determine the potential for future earnings as to these exact commissions answer all right i did not do any analysis because i don't believe a company would stay in business that while there is no basis for that he did no analysis whatsoever and judge sure with the back of the judge walk he obviously was given great deference to try to enforce settlements and i understand that there's a policy that we should get cases settle on that argument that but there's even a greater policy that or creditors should be treated fairly and that's the law and where we ask them direct questions if you look at the future no you do any analysis at all no you do it at present value no well i'll pose this hypothetical question if we're concerned about maximizing the acid in the state and everybody agrees there's a net present value including the beaters company why wasn't quantified why was that not in the record why was it ignored why is there no finding was or no finding of fact by judge sherwood the net present value of those commissions as of today is  and i think it's fair to settle he never did that because he didn't have the facts you cannot create conclusions without a factual record i don't think i'm stating anything that's stretching the law i think i'm stating something that  poison pill you haven't been able to point us towards any authority that's even analogous here what have you found any since then is there is anything you can cite the answer is i haven't i haven't pointed to that because our search of our search of the country is that quite frankly it's not done it well let's ask another question surely there are some legitimate bases on which the appeal would affect the outcome the most obvious one is you're an unsecured creditor ok if they get the money back from levy it's just you and you will eat up so the costs of the appeal are going to come out somewhere and your pocket right you did this money is not coming out of the trustees priority claim for administrative fees or anything else so if the amount of a poison pill were proportionate to the cost there's an appeal up to the district court then there's an appeal up to us if the cost of that appeal is is in the neighborhood of a one hundred thousand dollars or something then this is just a like a liquidated damages not a penalty would that poison pill and shows are interferes with the poet race or any creditor i believe that that supersedes the good but you can't cite anything to me that goes that far that says you can't even charge you for the appellate rights i can't cite anything and the reason is there isn't a single case except this one that finally tees the issue up and in the two issues where appellate rights will interfere with the cases one is a supreme court case and the other is the th circuit that that analogy up the reasons why dispose until i think is is invalid of what is a matter of law because it quite frankly chills the appellate rights not i don't know the proportionality argument that was just raised b but the reality is it shall we have to think twice now in this case judge the vince and gent who are in this case if the panel remands and opens everything up then the poison pill issue theoretically is moot sort of scenario the answer is in this particular case and i'm going to call a someone off because the facts your are are really so so disturbing and so out of the ordinary in this case the answer is yes because we supporting what we consider to be clearly inappropriate improper and bit these so there are there is grounds to appoint us again it's not every day that a creditor comes in and says appoint us as we have a claim as well but in this case was with the sol creditor we really are the only the only party has got interest in making this a full and complete record and getting fairness will include all creditors so we will litigate this case and to the extent that we have the ribbon was firm stay on board remember they have attempted to rubber stamp to bid deals the st it was one hundred thousand we were getting twenty five where were the in start a creditor was getting multiples of his for eleven multiples and then he bit what came back to france and have a brand new deal at one hundred and twenty thousand and despite our repeated requests to be part of that negotiating process were excluded twice when they finally filed the fortunately conveyance action the abas are proceeding against mr levy they did it under seal with absolutely no justification why in the world why the world would you file an adversary and i'm going to use the st part of my time to divest two issues that the court raised in its february th letter and then if there is some remaining time i'd like to address the other issues that have been raised  on the appeal but before i do that mr dingell has made a point and i just so we don't lose sight of it at this like to respond briefly to that quite the denial of retention of the nigger eyes from a special counsel is not an appeal to this court it was an appeal to the district court that hasn't been appealed to this court and there is a direct conflict of interest so i just want the record to reflect that if i can judge judges two issues were raised in the letter one is and mr nagle uses the term poison pill i would prefer to the letter asked us to address that in light of the lindsey case and the clarke case and also to address the issue that that the court has spent some time with this nigga on this morning and that is the issue of note and i recognize that there was a preference for courts to get to the merits and avoid procedural arguments but i would just point out that this issue with regard to the enforceability was not raised below in pleadings or in statements of the issues on appeal it was raised in oral argument before the bankruptcy court and there are constitutional issues that have now been raised that have not been statement of big issues on appeal which is different it's a different procedure then than other kinds of appeal but i recognize the desire to go to the merits so that i can see what happened here it ministry of creditors who didn't and so you didn't give up for nothing you gave it up to make the settlement happen you got your family and close it now rather than litigating it for years so that this wasn't a racket out of the goodness of your heart understood but but but that's not to suggest gets are always given simply for alchemists purposes in the bankruptcy context when senior creditors gift to junior creditors they're not doing it because their charitable institutions are not doing it because they're i know they're doing it because there is they weren't done just to stick it to nail rice and embarrass some way there are out rights which i don't think they were an error but that wasn't the reason that it was done it was done for those legitimate administrative and business reasons in the interest of judicial army and so we did gift we gifted substantial funds just for the record to reflect the total administrative expenses today are over two hundred and eighty thousand onder stand is in contract law liquidated damages or fined penalties art is there any basis for putting this on the liquidated damages side of the line is there any basis for in the record that said in the piece all the time the expense of the appeal going to come out to the neighborhood of fifty or one hundred thousand dollars but the there was nothing discussed like that at the at the bankruptcy court was there well there was a discussion as well the total of administrative expense could estimated to be there's no discussion there was no discussion with regard to identifying what the cost of an appeal was and give more information to the court today knowing what the cost of the appeal and you give me a ballpark understanding that this is just off the cuff ballpark an order of magnitude as to what the cost of the appeal to the just the court and then the cost of the appeal of this court has in the spirit it is a ballpark  know the difference is another one hundred and fifty thousand dollars of these have been incurred to get us to this point time can i directly say to the court that every dollar of that additional one hundred and fifty thousand dollars i some fraction of those fees went to other things other than the appeal but that gives us a ballpark to work with and judge me but if i can if i can address i don't think it's a liquidated damages penalty and was the fact is that it's permissible yes thing and in fact a rd party can say i will do something to facilitate this settlement but i will do it on the condition the conditions here were you decide what conny that was the condition that was imposed for giving this gift to make this settlement happen and close this case except it's not styled as gift it's part of the bank bit of confirmation of a plan a distribution of assets to the court is approving you're not doing this outside of court the court is making you do something like this and so well the i don't know that the court made us do something like this we did it in the interest of judicial economy to get this case closed yes the court made a comment earlier that it would not approve a settlement that provided thirty one percent distribution to nickel rice which was better than any other general unsecured credit was getting it was better then it ministry of creditors were getting it was better than what all under feldman and secured claim was getting so so  we went a long way to try to be mindful of the court's comment that it was not going to approve a settlement that simply benefited administrative expenses here but in the absence of some authority this court has identif two lines of cases which i think are both factually and legally distinguishable what are the lynsey was an equal protection analysis and i think that an equal protection basis it's distinguishable but lindsay also was clear that it was concerned about indigent litigants who had an economic barrier to pursuing their appeal rights and they relied upon a number of cases i think there were four cases if my memory is correct that were instances where criminal defendants prisoners who were indigent wanted to file a writ of habeas corpus and in fact couldn't afford the transcript that was required but couldn't get and there was no economic barrier that they had to pay out of pocket in order to appeal and in fact the repeal rights have not been prejudiced why they get the deal there is an appeal today and what happens with regard to the outcome of that appeal there are two possible outcomes they win that in which case their rights are not prejudice because we now are back in a litigation mode and they share the risk like everybody else in this case is going to share the risk or they lose in which case this court has determined that the settlement is appropriate so so there is they have their rights of their rights have not been foreclosed they have in fact appealed and because of those two the only two potential outcomes there their rights have not been  economy it's not a liquidated damages or it could be a look at the damages but it's not a penalty provision it's reasonable under the circumstances and it didn't impair negra rises right to appeal so let's talk about the nd issue analysis in approving said it said that i estimate a litigation recovery of five hundred thousand dollars and then from that litigation recovery went through a series of analyses to determine that analysis or the starting point with regard to the now office is was it reasonable was there a factual basis for the court to say five hundred thousand dollars was a number at that point in time four hundred and eleven thousand dollars had been received  expense to maintain a book that a license broker was necessary to retain the book and that there was attrition over time with regard to the book what do i mean by attrition over time that these premiums are not automatically be nude over time for various reasons the amount of commissions go and people choose not to renew pricing changes they go to another broker people whatever the number reasons are lottery question a lot here is going to depend on what the broker what had to be done to maintain so agreement with america's insurance agreed to reimburse for travel entertainment expenses there would be records of reimbursement i've not seen any records or reimbursement and i thought that levy didn't maintain in suffolk after two paragraphs six that there weren't any expenses levy is just booking against this personal fraction of his rent an overhead for secretaries and stuff there's nothing specifically alcohol to the need to maintain these accounts so what basis is there to say that he had to take affirmative steps and invest time or money in maintaining the accounts well one of the primary things he had st of all what in the record respectfully the allocation the method of which he calculated the expense was an allocation formula but we can quibble as to whether he should have put in the cygnet spence's rather than allocating some general overhead but in fact that's the methodology that was used ok but he's not our keating a fraction of time or entertainment or other things that would indicate he had to invest work here number  i see was the original party to the j d s it was a license broker and did a substantial portion of or a portion of the servicing ai see under the order to maintain that book a business has to be a license or ok ok now you argument and consistent with your earlier argument now is he just had the license but that anyone with a license would have sufficed why does it have to be an insider who suspect with a li earlier argument was and the argument on which the bankruptcy court relied was that levy had to put substantial work into making this happen now you're postulating that the looks being don employees and that it's just a broker's license that does it does that you're defending the reasoning the result will all on the ground different from the reasoning on which the bankruptcy court relied on your honor  supports any facts to support that future commissions would stop absent levy's investing time and effort set aside for license for a minute point need to walk in the record ok so outside the broker's license i'm satisfied the trustee has looked into this issue which mr nadler attacked with some vigor and i want to hear your response to it and you know if i had to handicap it i'm not convinced that if mr levy walked away from this business deal with your lip and walked away from the policyholders the clients that this income stream would continue indefinitely so you are not able to point me to any facts on the record that said levy in particular as opposed to any licensed broker is necessary to keep the income stream running to its natural conclusion your honor the difficulty with the argument is you can't separate out the license roker component from anybody else substituting in for a levy to provide that service and function so let's just play out ok one what in the record point me to something in the record that supports the district court's reasoning for the district courts result the district courts judge the doesn't have to be we have cited case law in our brief there doesn't have to be a specific factual finding for everything that goes chapter seven est one of the obligations under the j which was before the court ok one of the obligations of the j b s is that the counter party you know because it owns the book of business  never gave up ownership that book has to be a license broker a i c is no longer a license broker the trustee is no longer a licensed broker the really what this comes down to is d after years of litigation litigation expense assuming we win at that point in time the trustee which could be five years down the road three years down the road the trustee has to run around and find somebody a license broker to substitute in  let me ask maybe to maybe that's your answer to my next question but i want to hear about this let's assume that we squint and we say look you're you just admitted there's nothing specific in the record about future commissions stopping if we re manned is that what you're going to rest your head on if we remand for new evidence about why levy is adding value here that justifies it is it just you need a license or is there anything more that you would offer to  given account we could do that on remand but to me the strongest argument here and i reiterate is that a license has to be maintained and there is no license that exists would regard to this book of business in the ability is in the record or not you can argue maybe it's not but if if if you don't have a basis to say is not right if he's right he also says and again i'm not sure what to do with this he says the going rate in his experience is twenty five percent there are other brokers willing to do this for twenty five percent and levy got forty five percent what do you say about that is he wrong is it that he's just making this stuff up or raising it for the st time on appeal if you had to remain and go back on that is that an issue you do with too little too late is essentially my answer to that he had an opportunity over several years to raise all these issues and on the eve of the approval of the  amendment he submitted say to page net opinion which wouldn't survive d'albert as the only thing he's never controverted or anything in the record to support any of these statements  that he's dead today with regard to appeal i can't address them i don't know but the fact of the matter is that in the nd party has some burden of proof both legally and factually to support their objection and other than the present value discounting valuation of the income stream and what does what does it say it says back then it was worth seven thousand and seven one hundred and eighty dollars that's what the opinion s relied upon counsel and i relied upon my forty years plus and experience as a but as a panel trustee so so picking and choosing cherry picking statements as to whether he physically did the analysis he did rely upon there was due diligence done and he did rely upon a report and so what does this say again appearing a j a seventeen o two he says back then there was a phantom a proposal thirty grand nothing came to my attention what's critical here is this is not some sentiment and this court can tell from this record this is not some settlement that was rammed through there is basically were two years and there were countless mediations and every time mr nagle says he wasn't part who work on the news accounts so why didn't he at in the record what record evidence is there that levy had to invest significant time or did invest significant time in servicing these going forward because i got i got the it does not establishing is that he did travel entertainment he says specifically didn't bill for teaching he's not wining and dining the clients here i've not seen anything in the record that supports that even though that's what the district court cite well again the bigger t court as you say bankruptcy court i'm sorry no problem no problem but again what you're as you cited earlier in the j v agreement he did have a right to charge for it he just didn't do it in it and now if he is and again there was not a when this is being done when this certification is being put there it is exactly the reason that your i referred earlier what they're trying to do is understand the math and understand the math as to how much had been collected have to figure out the probability is if the home run best case scenario is no better for him right yes it could have found there's only a five percent chance of that and that would be a different argument but here it's all riding on whether the home run is in fact i've one hundred thousand income stream running and i'm not seeing record citations that say he had to invest marginal time effort to get any things like that and i don't you see any exactly the analysis but that's one analysis we're judge is doing kind of in an overall check and balance he's not discounting all the hurdles and he does say specifically here you gotta wonder like your honor said it correctly so that's a homerun and again he doesn't sit there and say you've got a five percent chance of support for the for the here's what the home run would be as opposed to you don't get to the whole run because you're going to be you know tagged out at st or nd big argument but it's a different argument when the district the bankruptcy court rested then over a period of a few years it's already winding down this is not like life insurance this is after i don't know any businesses don't go around so you can't you can't you can't criticize the bankruptcy court and more and the trustee for saying hold it now you know the whole system recognizes that we've got to try to get a yes and it does matter how long bankruptcy cases last these cases will be going on as you know since two thousand ten not just in the bankruptcy case but going back to when mr nagle represented a i see so every time he said this was an insight deal and certain assets and all of that that color it does not take the court to what was before opinion where at page thirty at eight thousand and ninety three dollars he talks about a potential value in excess of eight hundred thousand dollars if we were to in any way capture five years in the future and this rabinowitz never will get thirty percent so that's number one number two you've heard district tell you oh there is no rd party really says what he didn't tell you is a judge sure would has ruled that our state court claims against mr serve that and the lawyer for partaking in a scheme to strip and divert assets has been bored he argued that is to rid of so he knows that we as of now and he knows that that's an appeal to the district judge judge or a leo so when he says there's no rd party releases he's got complete descends you know has been bart and that's another way it's obvious what he also didn't tell you is you know how many years it took us to get information from him and his client you know many times we ha everything possible to disrupt this and make sure his client as facts would never get on the table and we finally got the table your judge previous as to question during colloquy about the forty five percent or twenty five percent judgment as i did not create that from whole cloth that's specifically set forth in paragraph fourteen of the b b serve a commission i see receives a forty five percent share of the gross commissions generated by his book a business which is higher than the normal twenty five percent share human to property and casualty insurance producers so that is exe i'd took that directly from paragraph were t v so that answers that question understand would mr trent tell you we were involved in the deal the deal so they made their deals we were told about it then called gesture was it your chair with it this is no better than the st one hundred thousand our deal is no better than anything we should be involved we should have our input and by the way if there points i definitely do want to hear do you have any basis to dispute what mr bennett said that the cost of this appeal maybe it's not a full one hundred and fifty thousand but that's a that's a ballpark no i do and i'm going to let me give you the answer having started my career  would be studied quite frankly it tell you that if we have more than twenty five thousand dollars time between the bankruptcy appeal and this appeal i would be stunned it was one of the not on my books records we keep computerized  many rd circuit appeals and this was quite frankly one of the easiest appeals to put together because all of the work was already done so again even if it's twenty five thousand dollars you have a penalty factor too don't one is a penalty but there were two levels it it's in the record year to year it generated huge income and it hasn't stopped it keeps going so to get to the point when we were asked to do what's in the record certainly i it's in the pocket of mr levy who came up with his lawyer is phenomenal scheme years ago and now circular and right into his pocket that's where it is so tax that it still continues and there's no proof otherwise except our our expert who says it has and will continue so that i hope i did five minutes thank you sir excellence of counsel let me go back to your comment about common sense for a minute given the fees in this case and the playing field wouldn't it make sense to try to resolve this by way of settlement and the one i'm going to suggest before you say no is that maybe joe torre a grocer from the circuit to judge sure would to try to get it settled priority before judge morton and i am dying to get this this heading done and one of the ways we can get it done is it is if they allow us to go against the others i z you on board your honor yes the trustee has participated in every negotiating session every mediation and has demonstrated good faith by virtue of see where you go you go forward i want to ask that you know the you folks split the cost of the transcript the cost of the transcript in this case but i'm not going to ask that you spend any money until you in the hopes that you can resolve it with mr terry gross