By order of the Bank ruptcy Appe llate Panel, the prec edential effec t of t his de c isi on is l im ite d to thec as e an d p ar tie s p ur su an t to 6th C i r
. B A P L B R 8 0 1 3 -1 (b). S

ee a l s o 6 th C i r
. B

A P L B R 8 0 1 0 -1 (c).
F ile Nam e: 08b0008n.06
BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT
I n re: ROBERT JOHN MORAN, ) ) Debtor. )

_____________________________________ ) ) W. THOMAS STARK, ) ) Appellant, ) No. 07-8035 ) v. ) ) ROBERT JOHN MORAN, ) ) Appellee

. )

_____________________________________ )

Appea l from the United States B ankruptc y Court for the N orthern D istrict of Ohio, Easter n Division, at Cleveland. No. 01-21926. Argued: Fe bruar

y 6, 2008
Dec ided and F iled: April 18, 2008
B e fo re : A UG , F UL TO N, and SCO TT , B ank

ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
ARG UED: Jose phR. Sp oo ns te r, F OR TN EY & KL I NG SHI RN , A kro n, Ohi o, fo r A pp e lla nt. Richar d A. B aumg art, DET TEL BA CH, SI CHERMAN & B AUMGART, Clevela nd, Ohio, L y

nn Row e L ar s e n , L A W O F F I CE O F T I M O T H Y F A RR E L L SW E E N E Y , Cl e v e la n d , O h io, f

or Appellee

. O N B RI E F: J os ep h R

. Spoonster, FORTNE Y & KL I NGSHI RN, Akron, Ohio, for A p p e l l an t

. Ly

n nR o w e Lar s e n , T i m o t h y F

. S w e e n e y , LA W O F F IC E O F T IM O T H Y F A R R E LL SW EENEY, Cleve land, Ohio, M ar v in A. Sicherman, D ETTEL BA CH, SI CHERMAN & BA UMGART, Cleveland, O hio, for Appe llee.2 ____________________ OP IN ION

____________________
J OSEPH M SC OTT, JR ., Ba nkrupt cy Appellate Pane l J udg e. W. Thomas Stark (the “Appe llant”), majority share holder of Airpac k, I nc., appea ls the bankruptcy court’s or der g ranting the motion of the cha

pter 7 trustee (the “Trustee” ) t o settle the estate’s claim t o the s tock of Airpa ck, I nc., by pay

ment from the debtor, Robert J

. Moran, (the Debtor” ), for less than the amount that the Appellant off

ere d to pay , and to aba

ndon the stock nunc pro tunc to the petition filing date

.

I. ISS UES ON APP EAL

1. Does the A

ppellant have standing to bring this appeal? 2. Di d t h e Ap p el l ant have standing to object to the Trustee ’s motion? 3. Did the bankruptcy court e rr in g ranting the Trustee ’s motion to authoriz e the c ompromise? 4. I f not, did the bankruptc y court err in g ranting the Trustee ’s motion to abandon the stock nunc pro tunc ?

II. JU RI SDI CT ION AN D ST AN DA RD OF RE VI EW

The B ankruptc y

Appellate Pane l of the Six t h Circuit (“B AP”) ha s jurisdiction to hear and decide this appeal. 28 U.S.C

. § 158(b)( 1). The U nited States District Court for the Nor thern District of Ohio has a

uthorized appea ls to the BAP, and neither party has t imely elec ted to have this appe al hear d by the district c ourt. 28 U.S.C. §§ 158(b)(6), ( c)( 1). A fina l order of a bankr uptcy court may be appe aled by

rig ht under 28 U.S.C. § 158(a) (1). An orde r is final if it “‘e nds the litigation on the

me r it s an d le a v e s n o th in g f o r th e c o u rt to d o b u t e xe c u te th e ju d g me n t.’ ” Midland Asphalt Cor p. v. United States , 48 9 U.S. 794, 798, 109 S. C t. 1494, 1497 (1989) (c itation omit ted). An or der approvinga propose d settlement is a final orde r. Adam v. Itec h Oil Co. ( In re Gibraltar Res., Inc.) , 210 F.3d 573, 576 ( 5th Cir. 2000). I n this c ase, the bankruptc y court’s or der to a

bandon is a fina lS in ce th e De bto r f ile d h is b ank

ru ptc y pe tit ion pr ior to O c tob e r 1 7, 20 05 , th e c a se is 1 g overne d by

the B ankruptc y

Code without r eg ard to the amendments made to the Ba nkruptcy Code by the B ankruptc y

Abuse Preve ntion and C onsumer P rotec tion Act of 2005. All statutory ref ere nces are to the Ba

nkruptcy Code, 11 U.S.C. §§ 101 to 1330 (2004), unless otherwise spe cifica lly noted. 3 order beca use it was conc lusive on the merits and be cause it was in the context of approva l of the pr op os e d s e ttl e me nt.

A bankr uptcy court’s d ec i s ion to approve or disapprove a

settlement rests in the sound discretion of the bankruptc y judge . A re viewing court will not d i s t urb or se t aside the de cision unless it achieve s such an unjust result as to amount to an a buse of discr etion. Mach. Terminals, Inc

. v. W oodward (

In re Albert-Harris, Inc.) , 313 F.2d 447, 449 ( 6th Cir. 1963) (citations omitted). “An abuse of discretion occ urs only

when the [t rial] court relies upon clea rly err oneous findings of fa ct or whe n it improperly

applies t he law or uses an e rrone ous leg al standar d.” Volvo Commerc ial Fin. LLC the Ams. v. Gasel Transp. Lines, Inc. ( In re Gasel Transp. Lines , Inc.) , 326 B.R. 683, 685 (B .A.P. 6th Ci r. 2005) ( citation omitted). The fac ts a re not in dispute he re. Conclusions of laware revie wed de novo . “De novo revie w re quires the Pane l to reviewquestions of law indepe ndent of the bankr uptcy court’s de termination.” Id. “The question is not how the r eviewingcourt would have
ru le d, bu t r a the r w he the r a re a so na ble pe rs on

c ou ld a g re e wi th t

he ban kru pt c y

c ourt ’s de c isi on ; if

rea sonable pe rsons could diffe r as to the issue, then t here is no abuse of discr etion.” Ma y or & City Counsel of Balti more, Md. v . W

. Va. ( In re Eagle-Pic her Indus., Inc .) , 285 F.3d 522, 529 ( 6th Cir. 2002) (c itations omi tted).

L ikewise, the order of abandonment will be reviewe d under a n abuse of discretion standa

rd. Viet Vu v. Kendall (

In re Vie t Vu) , 245 B.R. 644, 647 (B .A.P. 9th Ci r. 2000).

III . F AC TS

On De c e mbe r 6 , 2 00 1, the De bto r f ile d a pe tit ion fo r r e lie f un der chap ter 7 o f t he U. S. Ba nkruptcy Code; on Apr i l 25, 2002, a discha rg e orde r wa s entere d; and on May 15, 2002, the 1Ba sed on insufficie nt evidence in the rec ord, the court declined to make findings that the 2 De bto r’ s f

a ilure to d isc los e the sto c k w a s in adv ert e nt, wa s n ot i n b a d f a ith , a nd did no t r e su lt i n financ ial benef

it to the Debtor. The opinion and judg ment ref er to pa y ment by the Debtor

of $27,794.85 for

t h e stock; ho we ve r, the a mou

nt p a id b y the De bto r t o th e Tr

us te e in o rd e r t o co ve r a ll c la ims a g a ins t and a ll a dmi nis tr a tiv e c os ts o f t

he e state is $ 32 ,4 93 .5 5, sti ll l e ss t ha n the a mou

nt of fe re d by the Ap pe lla

nt. 4 Debtor’ s bankruptcy

case was c losed as a no-asse t case
. On J uly 15, 2005, the Debtor filed an a ction in state c ourt

a g a ins t th e Ap pe lla

nt a nd Ai rp a c k, I nc . ( “ Ai rp a c k” ), a lle g ingtha t he wa s w ro ng fu lly deprive d of hi s investment in and employ ment at Airpack. The Appellant then advised the Trustee

and the U. S. Tr

us te e that the De bto r h a d n ot d isc los e d h is o wn e rs hip of sto c k in Ai rp a c k d

ur inghis bankruptc y

case
. On April 12, 2006, the trustee moved to r eopen the Debtor’ s bankruptcy case . The c ase w as
re op e ne d. Af

te r i nv e sti g a tio n, the Trust ee det e rm ine d th a t th e De bto r’ s f a ilure to d isc los e his

ow ne rs hip of

sto c k in Ai rp a c k w a s n ot i n b a d f a ith , th a t he did

no t g a in f

ina nc ia l be ne fi t f

ro m hi s failure to disclosure, and that he had no motive for his failure to disclose. I ndeed, we note that no action, civil or c riminal, was broug ht ag ainst the Debtor f or fa iling to disclose the Air pack stoc k.

I n the interve ning y ear s, the stock incre ased in va lue. The dispute here cente rs ar ound the fa c t th a t th e De bto r o ff

e re d to pa

y $3 2, 49 3.55 to th e Tru ste e fo r h is m ino ri ty sh are of sto c k in Airpac k, an amount which pa y s all cl aim s ag ainst the bankruptc y estate in full, including administrative costs, and the A ppellant offe red $37,500 fo r t h e s tock, which e x cee ds the amount offe red by

the Debtor , with the excess being paid to the Debtor

.

On J anuar

y 29, 2007, the Trustee filed his motion for “A u t hority to Compromis e the Ba nkruptcy Estate’s Cl aim to the Debtor’s Equitable I ntere st in Airpac k, I nc. and to Aba ndon any Re ma in in g I n te r e s t i nA ir p a c k , I n c , ” to w h ic h th e A p p e ll an t, an d o n ly th e A p p e ll an t, f

il e d an ob je c tio n. A h e ari ngwa s c on du c te d, and on June 26 , 2 00 7, the ban kr up tc y c ourt e nte re d it s Memorandum of

Opinion and Orde r and Judgment, g ranting the Trustee ’s motion in larg e par t. As 2

conce rns the Truste e’s motion for a uthority to compromis e, t h e co urt held: “[T]he proposed5

settlement is f

air and equitable and is in the best interest of the estate, beca use a l l cr ed i t o rs and administrative expenses will be paid in full.” (Appe llant’s App. at 97.) Even though t he bankr uptcy court c oncluded that the A ppellant had f

ailed to meet his burde n of p ro o f t o s how that he ha d standing to object to the m otion, the court analy zed whether his objection was we ll-taken a nd stated:

“ [T]he e state do e s not be ne fi t by an ope n bidd ing pr oc e ss be c a us e the Mo tio n is no t a

jud ic ia l sa le and the De btor’s propose d settlement pay ment pay s all cre dit o r s a

n d a d mi n is tr a ti ve expenses in full.” (Appe llant’s App. at 100.) The court then a uthorized the trustee to aba ndon t h e Ai rpac k stock, fi nd ing that the c on se qu e nc e of a ba nd on me nt i s nunc pro tunc

. I n other wor ds, the court de termined that abandonme nt puts the parties whe re the y wer e be fo re bankruptc y , thus permitting the De btor and the Appe llant to procee d with the state cour t liti g ation unaff

ecte d by the Debtor ’s bankr

uptcy
case
.

Three day s after

entry of the c ourt’s opinion and j udg ment, on J une 29, 2007, the Appellant fi le d h is N oti c e of

Ap pe a l.

IV . D ISC USS ION
Standing to bringthis appeal
“Standing is a jurisdictional require ment and we a re unde r a c ontinuing oblig ation to verify our jurisdiction over a

particula r ca se.” Harke r v. Troutman ( In re Troutman Enters., Inc .) , 286 F.3d 35 9, 36 4 ( 6th

Cir . 2 00 2) ; accord Nat’l Org. for W omen, I nc. v. Sc heidler , 510 U.S. 249, 255, 114 S.Ct . 7 98 , 8 02 (1 99 4) ; Ab bo tt v . D aff ( In re Ab bo tt) , 183 B.R. 198, 200 (B .A.P. 9th Ci r. 1995).

I n order to have standingto appea l a bankr uptcy court orde r, an a

p p el l ant must have been “direc tly and adversely aff ecte d pecunia

rily by the orde r.” Fi de lit

y Bank, Nat’l Ass’n v. M

.M. Group, Inc

. , 7 7 F .3 d 8 80 , 88 2 (6 th Cir

. 19 96 ).

. . . “ [t]his principle, a lso known as the ‘per son ag g rieve d’ doctrine, limit s standing to persons with a financ ial stake in the ba nkruptcy court’s or der.” Id. Thus , a pa rt y may on ly a pp e a l a ba nk ru ptc y c ourt or de r w he n i t di mi nis he s th e ir pr op e rt y , in c re a se s th e ir burd e ns or

imp a ir s th e ir

ri g hts

.6

Travelers Cas. & Sur. v. Corbin ( In re First Ci n ci n n a t i , Inc.) , 286 B.R. 49, 51 (B .A.P. 6th Ci r. 2002).

The ba

nkruptcy court’s c onclusion that the Appellant did not have standing in the bankruptc y
c a se argua

bly satis fi e s thi s sta

nd ing re qu ir e me nt, in that th e or de r d oe s n ot a llo w t he Ap pe lla

nt t o acquir e the r emaini n g stock in Airpac k, thus becoming its sole shareholder . Consequently , the analy sis must turn to whether the bankr uptcy court e rre d in rea ching that conclusion.
Standing be fore the bankr uptcy court

Over the y ear s, our cases have established that the irr educible c onstitut ional minimum of standing contains three elements. F irst, the plaintiff must have suff ere d an “ inj ur y in f a c t” –a n inva sio n of a

le g a lly pr ote c te d in te re st w hic h is (a ) c on c re te and par ticularized and (b) “ac tual or i mminent, not ‘conje ctura l’ or ‘hy pothetical.’” Second, ther e must be a c ausal c onnect i o n b et ween the injury and the c onduct complained of

–the injury

has t o be “fairly

. . . trac e[able] to the challeng ed ac tion of the de fe nd ant, and no t .

. . th[e ] re su lt [o f] the ind e pe nd e nt a c tio n o f s ome thi rd pa rt y not before the cour

t.” Third, it must be “likely ,” as oppose d to merely “spec ulative,” that the injury

will be “re dresse d by

a fa vorable decision.”
L u j a n v
. D e f e n d e r s o f W ildlif e , 504 U.S. 555, 560-61, 112 S.Ct. 2130, 2136 (1992) (citations and footnote omitted).

Th e Ap pe lla

nt i s th e De bto r’ s b ro the r- in- law; ma jor ity sh are ho lde r o f Air

pa c k, a c los e ly

he ld corpor ation; a def

endant in state court litigation broug ht by the Debtor

ag ainst him and Airpac k; and a fr ustrated, c ompetitive, and superior bidder of the Debtor’ s stock in Airpac k. He is not a cre ditor of the ba nkruptcy estate. See 11 U.S.C. § 101(10). And, other than his objection to the Trustee’ s motion, he was not involved in the Debtor’ s bankruptcy case . He doe s n o t s u ff

er “invasion of a le g a lly pr ote c te d in te re st” be c a us e the ba

nk ru ptc y c ourt a pp ro ve d th e Tr

us te e ’s mot ion

to compromise and to a

bandon. Stated simply , the Appellant doe s not have any interest in the De btor’s Airpac k stock, much less an intere st that is “leg ally protec ted.” As a

result, we ne ed not addr ess the

rema ining two e lements for “ the irre ducible constitutional minim um of standing .” The Appe llant’s7

conce rn appe ars to be only that he should be the sole share holder of Airpac k, thus eliminating the De bto r f ro m the c omp any ’s bu sin e ss and thw art ing any c ha nc e that the De bto r h a s o f s uc c e e din g in the state c ourt litigation broug ht ag ainst the Appellant a nd Airpac k.
Approva l of the settlement

Re c e ntl y , th e B AP h a d an op po rt un ity to c on sid e r the sta

nd ard fo r a

pp ro va l, o r d isa

pp ro va l, of a se ttlement ag ree ment, and stated:

Rule 9019 of the F eder al Rules o f Ba nkruptcy Procedur e provide s: “On motion by

the trustee a

nd afte r notice a

nd a hea ring , the cour

t may approve a compromise or se ttlement.” The rule offe rs no g uidance as to the criter ia to be used in evaluatingwhether a s et t l ement shoul d be appr oved, but cour ts uniformly

have draw n from the languag e of the S upreme Court’s decision in TM T Tra ile r F

e rry in establishing a

“fa ir and equitable” thre shold for settlement appr oval. See Protective Comm. for Indep. Stock

holders of TMT T

railer Ferry, Inc . v. Ande rson , 39 0 U.S. 414, 424, 88 S. Ct . 1157, 1163 (1968). Althoug h the T M T T r a i l e r F e rry ca s e was de c ide d und e r t

he B ank ru ptc y Ac t, “ its pr inc ipl e s have be e n br oa dly he ld a pp lic a ble to settlements under the Ba nkruptcy Code.” 2 Norton Bankr. L. & Prac

. 2d § 41:10 (2007). Ma

ny Rule 9019 opinions have re lied on TM T Tra ile r F

e rry “both for the substantive require ment that settlement repr esent a fair c ompr o mise of disputed iss ue s, and

fo r t he re qu ir e me nt t

hat su c h s ett lem ent b e pr e c e de d b y a de qu a te inquiry .” Id.
Th e Sixth C ir c uit

Court of Ap pe a ls h a s h e ld t

hat “ the ba

nk rup tcy c ourt is c ha rg e d w ithan a ff

ir ma tiv e ob lig a tio n to a

pp ri se its e lf of the un de rl y ingfa c ts a nd to make an in de pe nd e nt j ud g me nt a s to wh e the r t he c omp ro mis e isfai r a nd e qu ita ble .” Rey nolds v. Comm’r , 861 F.2d 469, 473 (6th Cir. 1988) (empha sis a dded). The c ourt must weig h the conf

licting inter ests of all rele vant parties, “conside ring such fa ctors as the proba

bility of succ ess on the mer its, the complex ity and expense of litig ation, and the rea sonable views of c reditors.” Bauer v. Commerce Union Bank , 859 F.2d 438, 441 (6th Cir. 1988) (c itation omit ted). “A bankruptc y judge need not c onduct a min i

- t r i a l o r w r i t e an e xt e n s i v e o p i n i o n e v e r y t i m e h e a

p p r o v e s o r d i s a

p p r o v e s a settlement. The judg e need only be apprised of the rele vant fac ts a nd law so that he can ma ke an inf ormed a nd intelligent de cision and set out t he re asons for that decision.” Fi

sh e ll v . S oltow ( In re Fi sh e ll) , 4 7 F .3 d 116 8, 19 95 WL 66 62 2, a t *3 ( 6th C i r. Fe b

. 1 6 , 1 9 9 5 ) ( u np u b l i s h edt ab l e d ec i s i o n ) ( qu o t i n g LaSalle Nat ’l Bank v

. Holland ( In re Am . Reserv e Corp.) , 841 F .2 d 159 , 163 (7 th Cir . 1 98 7) ); se e als o TMT8

Tra ile r F e rry , 3 90 U. S. a t 43 7, 88 S. Ct. 11 57 (h old ing that ba nk ru ptc y c ourt mus t have the fac ts in order to make an informe d and indepe ndent dec ision).
Al tho ug h p ub lis he d Si xth Cir c uit c a se law o n Ru le 90 19 se ttl e ments is relatively sp ar s e, in unpublished decisions the Court of Appea ls and Ba nkruptcy Appellate Pane l have c onsiste n t l y rea ffirme d their adhe renc e to the “f air a nd equitable” standard. Se e Ly nd on Pr op . I

ns . Co . v . Ka tz , 196 Fed

. Ap p x . 383, 387 (6 th C ir . 2 00 6) ; Bard v. Siche rman ( In re Bard) , 49 Fe d. Appx. 528, 530 (6 t h C i r. 20 02 ); In re Fi

sh e ll , 47 F.3d 1168, 1995 WL 66622, at *3 (6th Cir. Fe b. 16, 1995) (u np ub lis he d ta

ble de c isi on ); Cook v. Terlec ky ( In re Cook) , 3 3 6 B

. R. 6 0 0 , 2 0 0 6 WL 13 11 4, a t *3 (B .A .P. 6th Cir . Jan . 4 , 2 00 6) (u

np ub lis he d ta

ble de c isi on ); Porter Drywall Co. v. Have n, Inc. ( In re Hav en, Inc .) , 326 B.R. 901, 2005 WL 927666, at *3 (B .A .P. 6th

Cir . Apr il 7 , 2 00 5) (u

np ub lis he d ta

ble de c isi on ). F ur

the r, the va st ma jor ity of a pp e llate c ourt s th a t ha

ve a dd re sse d th e iss ue have re lie d up on the same or similar criter ia. No appellate court has reje cted, either expressly or implicitly , the eff icac y of this approa ch.

. . . I n summary , the bankr uptcy court wa s b o u n d by

the “f air a nd equitable” standard e stablished by

the Six th Circuit Court of Appeals in Rey no lds and Bauer , a st andar d that is in harmony with the BA P’s own, alb e it un pu bli sh e d, de c isi on s in H a v en and Cook , and with the we ight of judicial authority

expressed by

numerous oth e r c ir c uit s.
Olson v. Anderson (

In re Ande rson) , 377 B.R. 8 6 5 , 8 7 0 -7 2 (B .A.P. 6th Ci r. 2007) ( footnotes omitted).

I n th e c a se be fo re the Pane l, t he ba nk ru ptc y c ourt state d, a ft e r c on sid e ri ngB ank ru ptc y Rul e 9019(a) and TM

T Tra ile r F

e rry , tha t the pr op os e d settle me nt wa s “f a ir and e qu ita

ble ” a s we ll a s “ in the be st i nte re st o f t

he e state ,” be c a

us e a ll c re dit or s a

nd a dmi nis tr a tiv e e xpe ns e s wo uld be pa id i n full. The cour

t discussed whethe r the Appe llant h ad s t anding to object to the Trustee ’s motion, conclude d that he did not, then stated that even if the Appellant ha d standing , “the e state does not benef it by an open bidding proc ess bec ause the Motion is not a judicial sale and the De btor’s proposed settlement pay

ment pay s all cre ditors and administrative expenses in full.” (A ppellant’s App. at 100.) A lthough discusse d in its analy sis of whether t h e Ap pellant had standing , the bankruptc y

court did dete rmine that ac cepta nce of the Appellant’s offe r of a highe r purc hase pr ice9

wo uld no t be ne fi t th e e state , b e c a us e any a mou nt a bo ve the De bto r’ s o ff

e r wou ld re su lt o nly

in surplus back to the D ebtor a nd no additional pay

ments or bene fits to the cre ditors.

The Tr ustee’s motion was f

or authority to compromise a dispute be tween the Trustee and the Debtor reg arding entitlement to the appreciation in value of the s tock, not a mot ion to sell an asset of the e state. The Trustee asser ted that the appre ciation was an asset of the bankruptc y estate, a nd the De bto r a sse rt e d that he wa s e nti tle d to the a pp re c ia tio n. Th e ba

nk ru ptc y c ourt did no t di sc us s thi s issu e , but did c on c lud e that the Tr us te e ’s mot ion wa s to com pr omi se a dis pu te and

no t to se ll pro p e rty

. F u rth e r

mo r e , in b r ie f

in g b e f o r e th is Pa

n e l, th e A p p e ll an t d id n o t a d dr e s s th e is sue of entitlement to appre ciation in value of the st o ck

. The Appe llant merely asser ted at ora l argument that the bankruptcy court’s “cha rac terization” was wrong
. We ag ree with the bankruptcy court that this was settlement of a g enuine c ontroversy , not a judicial sale.

I n sum, the bankruptcy

cour t d i d n o t err

in approving the proposed se ttlement. After adequate inquiry , and lookingto the corr ect leg al standard, the bankruptc y court deter mined that the compromise wa s a fa ir one.

Abandonment
The Appe llant alleg es that the ba nkruptcy court ex cee ded its authority in approving the compromise nunc pro tunc to the petition filing date

.

1 1 U

. S

. C

. § 5 5 4 , “ A b an d o n m e n to f p r o p e rt y o f

t h e e s t a t e , ” r e a d s , i ni t s e n t i r e t y:
(a) After notice and a

hear ing, the trustee may

abandon a

ny proper ty of the e state that is burdensome to the e state or that is of inconse quential v al u e and benefit to the estate. (b) On r equest of a

party in interest and a fter notice and a he aring , the cour t may order the trustee to a

bandon any

p ro p er t y o f t he estate that is burdensome to the estate or that is of inconseque ntial value and be nefit to the estate

.10

(c) Unless the cour

t orders othe rwise, a

ny proper ty schedule d under section 521(1) of thi s ti tle no t ot

he rw ise a dmi ni st ered a t th e tim e of the c los ingof

a c a se is abandone d to the debtor a nd administered f

or purpose s of sec tion 350 of this ti tle. (d) Unless the court orde rs otherw ise, proper ty of the e state that is not abandone d under this sec tion and that i s n o t administered in the ca se re mains proper ty of the estate.
Pur su ant s ub se c tio n ( d) , s inc e the De bto r fa ile d to lis t the Ai rp a c k sto c k in h is o ri g ina l Sc he du le s, the stock re mained prope rty of his bankruptc y

estate until it co u l d b e administered by the Trustee

u p o n re opening of the c ase. I f the stock ha d been sc heduled, it would have passed to the De btor throug h abandonme nt pursuant to subsection (c ). See Cun lif f v . Cu nli ff ( In re Cun lif

f) , 227 B.R. 476, 478-79 (B .A.P. 6th Ci r. 1998).

Th e e ff e c t of a ba nd on me nt i s summa

ri zed a s f oll ow s:
[U] pon abandonme nt under section 554, the t rustee is simply divested of c ontrol of the prope rty

beca use i t is no longe r part of t he estate. Thus, abandonme nt constitutes a divesture of all of the estate ’s intere st in the property . Property abandone d under section 554 reve rts to the debtor, and the debtor’s rights to the property are treate d as if no bankruptcy petition was fil ed

.

5 C o l l i er o nBa n kru p t cy

- 1 5 t h E d i t i o n R ev
. ¶ 5 5 4

. 0 2 [ 3 ] , ci t i n g In re De wsnup , 908 F.2d 588, 590 (10th Cir. 1990), aff’d , 502 U.S. 410, 112 S. C t. 773 (1992) (e mphasis added)

.

There fore , the bankr

uptcy court did not err

in orderingthat abandonme nt of the prope rty be nunc pro tunc . Howeve r, bef ore or deringabandonme nt, a bankr uptcy court must find either

that the proper ty is burdensome to the e state or that it is of inconseque ntial value and benef it to the estate. Morgan v. K.C. Mac h. & Tool Co. ( In re K.C. Mach. &Tool Co.) , 816 F.2d 238, 245 ( 6th Cir. 1987). Although the court he re did not di rec tly addre ss whether abandonme nt was proper because the stock

wa s b ur de ns ome to t

he e state or

of inc on se qu e nti a l va lue and be ne fi t to the e state , th e c ourt did state that th e se ttl e me nt w a s in the be st i nte re st o f t

he e state be c a

us e it w ou ld p ay

a ll c re dit or s in

fu ll.11

The de cision of the bankr uptcy court c an be a ffirme d if corr ect for any rea son, even one not considere d by

the bankr

uptcy court. Gibson v. G i b s o n ( In re Gibson) , 2 19 B .R. 19 5, 20 0 ( B .A .P. 6th Cir. 1998). An overr iding pur pose of ba

nkruptcy liquidation i s equality

of distribution of the debtor’s proper

ty among cre ditors similarly situated. Kot

he v . R.C. Tay lor

Tru st , 280 U.S. 224, 227, 50 S. Ct. 142, [143] (1930). Aba ndonment serve s this purpose. K.C. Mac h. & Tool Co. , 816 F.2d at 246. The Appellant is not a cre ditor of the debtor . Fur thermore , as sug g ested by the bankr uptcy court, a n outsider to the Debtor ’s ca se should not be able to become the sole share holder of A irpac k

mere ly by virtue of the De b t o r fili ng for ba nkruptcy . Abandonment of the stock to the De btor returne d the Debtor and the Appellant to their prebankruptc y status as co- owner s of the stock, whic h allows them to resolve in state c ourt any dispute betwee n them conce rning the stock.

V. CO NC LU SION

F o r th e f o r e g o in g r e a s o n s , th e b an kr u p tc y c o u rt’ s o r d e r a

u th o r iz in g s e tt le me n t b e tw e e n the De bto r a nd the Tr us te e of the ir dis pu te and

a ba nd on ment of th e Airp a c k s toc k to the De bto r i s AFF I RMED.