4873-2571-5693

Jason S. Brookner (Texas Bar No. 24033684)

Aaron M. Kaufman (Texas Bar No. 24060067)

Lydia R. Webb (Texas Bar No. 24083758)

Emily F. Shanks (Texas Bar No. 24110350)

GRAY REED

1601 Elm Street, Suite 4600

Dallas, TX 75201

Telephone: (214) 954-4135

Facsimile: (214) 953-1332

Email: jbrookner@grayreed.com 

akaufman@grayreed.com

lwebb@grayreed.com

eshanks@grayreed.com

Counsel to Mark E. Andrews, 

Chapter 11 Trustee

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

§

In re: § Chapter 11

§

TOMMY’S FORT WORTH, LLC., et al.,

1 § Case No. 24-90000 (ELM)

§

Debtors. § (Jointly Administered)

§

MOTION FOR ENTRY OF AN ORDER

(I) AUTHORIZING AND APPROVING THE SETTLEMENT BY AND BETWEEN

THE TRUSTEE AND MALIBU BOATS; AND (II) GRANTING RELATED RELIEF

IF YOU OBJECT TO THE RELIEF REQUESTED, YOU MUST RESPOND IN 

WRITING. UNLESS OTHERWISE DIRECTED BY THE COURT, YOU MUST 

FILE YOUR RESPONSE ELECTRONICALLY AT 

HTTPS://ECF.TXNB.USCOURTS.GOV/ NO MORE THAN TWENTY-FOUR (24) 

DAYS AFTER THE DATE THIS MOTION WAS FILED. IF YOU DO NOT HAVE 

ELECTRONIC FILING PRIVILEGES, YOU MUST FILE A WRITTEN 

OBJECTION THAT IS ACTUALLY RECEIVED BY THE CLERK AND FILED ON 

THE DOCKET NO MORE THAN TWENTY-FOUR (24) DAYS AFTER THE DATE 

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, are: Tommy’s Fort Worth, LLC (3473); Tommy’s Holding Company, LLC (2662); Tommy’s Grand Rapids, 

LLC (9224); Tommy’s Castaic, LLC (7501); Tommy’s Lewisville, LLC (4750); High Country Watersports, LLC 

(6160); Walloon Lake Village Marina, LLC (0277); MKB Florida Holdings, LLC (5698); Tommy’s Detroit, LLC 

(5242); Tommy’s California Fresno, LLC (8597); Tommy’s Phoenix, LLC (3036); Tommy’s Las Vegas, LLC (7721); 

Tommy’s Chattanooga, LLC (0839); Tommy’s California Ventura, LLC (5149); Tommy’s Rancho Cordova, LLC 

(1070); Tommy’s Stockton, LLC (1338); and Tommy’s Knoxville, LLC (8052).

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THIS MOTION WAS FILED. OTHERWISE, THE COURT MAY TREAT THE

PLEADING AS UNOPPOSED AND GRANT THE RELIEF REQUESTED.

A HYBRID HEARING WILL BE CONDUCTED ON THIS MATTER ON 

OCTOBER 31, 2024 AT 1:30 P.M. (CT) IN ROOM 204, U.S. COURTHOUSE, 501 W. 

TENTH STREET, FORT WORTH, TEXAS 76102. YOU MAY PARTICIPATE IN 

THE HEARING IN PERSON OR BY AUDIO AND VIDEO CONNECTION.

AUDIO COMMUNICATION WILL BE BY USE OF THE COURT’S DIAL-IN 

FACILITY. YOU MAY ACCESS THE FACILITY AT 1.650.479.3207. VIDEO 

COMMUNICATION WILL BE BY THE USE OF THE CISCO WEBEX 

PLATFORM. CONNECT VIA THE CISCO WEBEX APPLICATION OR CLICK 

THE LINK ON JUDGE MORRIS’S HOME PAGE. THE MEETING CODE IS 473 

581 124. CLICK THE SETTINGS ICON IN THE UPPER RIGHT CORNER AND 

ENTER YOUR NAME UNDER THE PERSONAL INFORMATION SETTING.

VIRTUAL HEARING APPEARANCES MUST BE MADE ELECTRONICALLY IN 

ADVANCE OF ELECTRONIC HEARINGS. TO MAKE YOUR APPEARANCE, 

CLICK THE “ELECTRONIC APPEARANCE” LINK ON JUDGE MORRIS’S 

HOME PAGE. SELECT THE CASE NAME, COMPLETE THE REQUIRED 

FIELDS AND CLICK “SUBMIT” TO COMPLETE YOUR APPEARANCE.

Mark E. Andrews, as the chapter 11 trustee (the “Trustee”) appointed in the abovecaptioned chapter 11 bankruptcy cases of Tommy’s Fort Worth, LLC and its debtor affiliates 

(together, the “Debtors”), respectfully states the following in support of this motion 

(this “Motion”):

Preliminary Statement

1. The Debtors commenced these chapter 11 cases in the face of two separate lawsuits 

pending with the Debtors’ primary supplier (Malibu Boats) and their senior secured lender 

(M&T Bank). These pre-bankruptcy disputes found their way into the Bankruptcy Court in the 

first few weeks of the bankruptcy cases in the form of multiple contested cash collateral hearings 

with M&T Bank and an emergency hearing on the Debtors’ motion to enforce the automatic stay 

against Malibu Boats. After evidentiary hearings on the Debtors’ emergency motions, this Court 

ultimately denied the Debtors’ requested relief, and the Trustee was subsequently appointed to 

manage the Debtors’ affairs and the administration of these bankruptcy estates. 

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2. Against this backdrop, the Trustee and his team worked quickly and diligently to 

maximize value for the Debtors’ bankruptcy estates and their creditors. Those efforts included, 

among other things, consensual use of M&T Bank’s cash collateral and Court authorization to 

conduct value-maximizing dealership liquidation sales. 

3. After an extensive investigation of the Debtors’ claims against Malibu Boats and a

robust settlement process mediated by a retired federal judge with active participation from the 

Debtors’ key creditor constituencies, the Trustee has negotiated a fair settlement with Malibu 

Boats. Under the Settlement Agreement (defined below), Malibu Boats will pay $3.5 million and 

withdraw the Malibu Claim (defined below) to settle all estate causes of action asserted or 

assertable against Malibu Boats. Malibu Boats will also have an option to step into the Debtors’ 

Knoxville dealership location in exchange for Malibu Boats paying the cure costs due to the 

landlord and paying the Trustee for the cost value of the personal property maintained at that 

location. As discussed further herein, the Trustee believes the settlement negotiated through the 

mediation process is fair and reasonable and in the best interest of the Debtors’ bankruptcy estates 

and creditors. 

Relief Requested

4. By this motion, the Movants seek entry of an order, substantially in the form 

attached hereto (the “Proposed Order”): (a) authorizing entry into and approving the settlement

agreement on substantially on the terms attached as Exhibit 1 to the Proposed Order 

(the “Settlement Agreement”), by and among the Trustee, on the one hand, and Malibu Boats, Inc. 

and Malibu Boats, LLC (collectively, “Malibu”), on the other hand, and (b) granting related relief. 

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Jurisdiction and Venue

5. This Court has jurisdiction over the subject matter of this Motion pursuant to 

28 U.S.C. § 1334. This is a core matter pursuant to 28 U.S.C. § 157(b). Venue is proper pursuant 

to 28 U.S.C. §§ 1408 and 1409.

6. The statutory bases for the relief requested in this Motion are sections 105(a), 

363(b), 541(a), and 1107 of title 11 of the United States Code (the “Bankruptcy Code”), and rules 

9014 and 9019(a) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

Background

7. The Court is familiar with the Debtors’ litigious history with Malibu, having heard 

much of the following facts during a lengthy evidentiary hearing on June 6, 2024. The following 

serves to refresh the Court of the relevant facts. 

8. The Debtors filed these cases after defaulting to their prepetition secured creditor, 

M&T Bank (“M&T Bank”), to whom they were indebted approximately $105 million on a floor 

plan financing arrangement that began in May 2023. For reasons not directly relevant to this 

Motion, the Debtors struggled to remain in compliance with their loan agreements with M&T Bank

since the inception of the loan. Within months of closing on the new loan, M&T Bank notified 

the Debtors that they had sold boats out of trust. The Debtors were able to cure these “sales out of 

trust” issues several times over the course of 2023, but the ongoing audits by M&T Bank presented 

problems for the Debtors in negotiating new dealership agreements with their primary 

manufacturer, Malibu. 

9. Ultimately, on February 27, 2024, M&T Bank notified the Debtors that they were 

in default under their loan agreements. Malibu thereafter confirmed with the Debtors that Malibu 

would no longer consider renewing dealership agreements for the new model years, and Malibu 

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further terminated the Debtors’ multi-year dealership agreements for the Texas locations. On 

March 29, 2024, M&T Bank notified the Debtors of its intent to exercise remedies as a result of 

the ongoing defaults and made demand for repayment of the loans in full. 

10. On April 1, 2024, M&T Bank commenced a collection action and receivership 

action against the Debtors in the State of Michigan, Circuit Court for the County of Kent 

(the “Michigan Litigation”). Additionally, M&T Bank brought a cause of action against Mr. 

Borisch, personally, to recover alleged damages under certain guarantees. The Debtors and Mr. 

Borisch ultimately consented to the appointment of a receiver, who attempted to operate the 

Debtors’ business for a brief period until Mr. Borisch caused the Debtors to commence these 

bankruptcy cases, as discussed below.

11. On April 10, 2024, Mr. Borisch caused the Debtors to file a Verified Complaint (the 

“Debtors’ Complaint”) against Malibu in the U.S. District Court for the Eastern District of 

Tennessee (the “Tennessee Court”), which action was captioned Tommy’s Castaic, LLC et al. v. 

Malibu Boats, Inc. et al., Case No. 3:24-CV-00166-KAC-JEM. The Debtors’ Complaint alleged 

various bad acts by Malibu, including:

a. Malibu’s alleged false representations and false promises to the Debtors, 

including that Malibu allegedly misrepresented market demand for Malibu 

boats;

b. Malibu’s alleged false promises to enter into a repurchase agreement with 

M&T Bank;

c. Malibu’s alleged false promises to renew the Debtors’ dealership 

agreements for Model Year 2024; and

d. Malibu’s alleged false promises to pay certain rebate and incentive 

payments. 

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12. The Debtors’ Complaint asserted the following causes of action against Malibu:

Counts I-III Breach of Contract

Count IV Quantum Meruit

Count V Unjust Enrichment

Count VI Promissory Estoppel

Count VII Intentional Misrepresentation/Fraud

Count VIII Negligent Misrepresentation

13. The Debtors alleged that Malibu’s misrepresentations and false promises induced 

Mr. Borisch and the Debtors to take actions, including increasing the size of their floor plan with 

a new lender in M&T Bank, and ordering and accepting delivery of a volume and mix of Malibu 

boats that were not suited to the Debtors’ needs, which resulted in the Debtors’ incurrence of 

unnecessary interest expense. The Debtors’ Complaint contended that this increased financial 

burden, together with Malibu’s failure to pay incentives and perform its alleged promises, caused 

the Debtors to default to M&T Bank, bringing about the end of the Debtors’ ordinary operations.

14. The Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy 

Code on May 20, 2024 (the “Petition Date”). On June 3, 2024, the Debtors filed the Debtors’ 

Emergency Motion to Enforce Automatic Stay and Punitive Damages for Willful Violations of the 

Automatic Stay Against Malibu Boats, Inc. and Malibu Boats, LLC [Docket No. 107] (the 

“Debtors’ Stay Motion”). Mr. Borisch filed a declaration in support of the Debtors’ Stay Motion

[Docket No. 113] (the “Borisch Declaration”), which included 51 exhibits. Mr. Borisch made 

several of the same arguments in support of the Debtors’ Stay Motion that the Debtors previously

alleged in the Debtors’ Complaint against Malibu in the Tennessee Court.

15. On June 6, 2024, the Court conducted an evidentiary hearing on the Debtors’ Stay 

Motion and the following day, on June 7, 2024, issued its findings of fact and conclusions of law 

denying the Debtors’ Stay Motion. In that same ruling, the Court denied the Debtors’ motion for 

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use of cash collateral, concluding among other things that the Debtors had not demonstrated how 

M&T Bank would be adequately protected. 

16. The following week, the Debtors consented to the appointment of a chapter 11 

trustee, and on June 17, 2024, the Court approved the appointment of the Trustee. The Trustee 

thereafter elected to nonsuit the Debtors’ Complaint against Malibu without prejudice to pursuing 

those claims at a later date. As this Court will recall, the Trustee resolved Malibu’s objections to 

the Trustee’s dealership liquidation procedures through very carefully negotiated terms, which 

included provisions for Malibu to repurchase approximately $2.5 million of the Debtors’ inventory, 

agreed-upon procedures for obtaining customer acknowledgements for warranty purposes, and an 

agreed-upon mediation process to occur within 45 days of the order. See Docket No. 364, ¶¶ 33–

38. That order was entered on August 9, 2024. 

17. One week later, on August 16, 2024, Mr. Borisch filed a new complaint 

(the “Borisch Complaint”) against Malibu in the Tennessee Court. There are few substantive 

differences between the Borisch Complaint and the Debtors’ Complaint. In short, the Borisch 

Complaint alleges all of the same facts, adds a few more, and asserts the following four causes of 

action, which are substantially the same as those asserted just four months earlier in the Debtors’ 

Complaint. Below is a comparison of the two complaints:

Cause of Action

Debtors’ 

Complaint

Borisch 

Complaint

Breach of Contract Counts I-III Count III

Quantum Meruit Count IV n/a

Unjust Enrichment Count V Count IV

Promissory Estoppel Count VI n/a

Intentional Misrepresentation/Fraud Count VII Count I

Negligent Misrepresentation Count VIII Count II

18. By separate motion filed contemporaneously with this Motion, and as a condition 

to the Settlement Agreement, the Trustee is seeking a determination that the claims asserted in the 

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Borisch Complaint are property of the Debtors’ bankruptcy estates that are being settled pursuant 

to this Motion (the “Estate Claims”). To ensure the effectiveness of the settlement negotiated by 

the parties, the Trustee asks this Court to enjoin Mr. Borisch from pursuing the Estate Claims so 

that the bankruptcy estates and their creditors may all benefit from the settlement, including the 

full release of those claims. 

19. On September 30, 2024, Malibu filed proof of claim number 42, asserting a nonpriority general unsecured claim of no less than $9,606,044.00 against the Debtors’ bankruptcy 

estates (the “Malibu Claim”).

20. On October 1, 2024, the Trustee, Malibu, M&T Bank, and the Official Unsecured 

Creditors’ Committee (the “Committee”) attended a 14-hour mediation (the “Mediation”) with the 

Hon. Nancy F. Atlas (ret.). As a result of the Mediation, the Trustee has negotiated the Settlement 

Agreement and hereby seeks approval thereof. 

Pre-Mediation Investigation of Claims

21. When the Trustee was first appointed in mid-June, his initial priorities were to 

negotiate consensual use of cash collateral and begin orderly value-maximizing liquidation sales 

for the hundreds of new and used boats held by the Debtors. The Trustee’s efforts in this regard 

have been successful. This Court entered the appropriate orders authorizing use of cash collateral 

and approving liquidation sale procedures. See Docket Nos. 272 & 364.

22. As noted above, the liquidation procedures order, which was entered on August 9, 

2024, directed Mediation with Malibu, the Committee, and M&T Bank, which the parties 

scheduled for October 1, 2024. That left the Trustee and his professionals over seven (7) weeks to 

complete their investigation of the Debtors’ claims and causes of action against Malibu before the 

Mediation. Mr. Borisch and the Debtors had given the Trustee’s team a head start, having filed the 

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Debtors’ Complaint and the Borisch Declaration. The Trustee and his professionals reviewed all 

public and non-public documents provided to Debtors’ counsel in preparation for the hearing on 

the Debtors’ Enforcement Motion. Such information included hundreds of e-mails and 

corresponding attachments. The Trustee and his professionals also reviewed the dealership 

agreements and incentive programs in effect during the relevant time periods, as well as the prior 

years’ materials, to understand the Debtors’ working history and course of dealing with Malibu. 

The Trustee’s team then interviewed potential witnesses with knowledge of the facts and 

circumstances alleged in the Debtors’ Complaint and the Borisch Declaration. 

23. Based on this extensive review and analysis, the Trustee believes he and his 

professional team were adequately prepared to identify the strengths and weaknesses of potential 

Estate Claims to be addressed during Mediation.

Defenses and Settlement Considerations Supporting the Settlement

24. While the Trustee had identified and analyzed the potential Estate Claims against 

Malibu and was confident that colorable claims could be asserted against Malibu, the Trustee was 

cognizant of the potential weaknesses of such claims, as well as Malibu’s potential defenses and 

counterclaims that may be asserted. The Estate Claims against Malibu are fact intensive. For 

example, the Debtors had identified nearly $13 million in potentially unpaid incentives, as 

summarized on pages 11–12 of the Borisch Declaration:

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25. The Trustee is aware of Malibu’s factual and legal defenses to these claims. Among 

other things, Malibu contends that the Debtors did not actually earn these incentives for the 2022 

or 2023 model years, and the Debtors could not have earned incentives for the 2024 model years 

without signed dealership agreements. Malibu has also noted that the dealership agreements 

provide Malibu with a degree of discretion to pay incentives, presenting another potential defense 

for Malibu. Similarly, while the Debtors had previously alleged fraud and misrepresentation by 

Malibu, the Trustee was less confident in the likely success of such claims for several reasons. 

26. While the Trustee could not have reviewed every document relevant to the dispute 

or interviewed every witness with potential knowledge of the dispute with Malibu, the Trustee has 

considered enough potential evidence to understand the strengths and weaknesses of such claims. 

As part of the Mediation, the Trustee was also able to consider additional facts and circumstances 

relevant to the merits of the Estate Claims and Malibu’s defenses thereto. Since accepting the 

settlement terms with Malibu, the Trustee has received no new evidence that would alter his views 

of the relative merits of the Estate Claims and the benefits of the settlement. It is also reasonable 

to conclude that Malibu would present vigorous defenses of these claims, making litigation a 

protracted and expensive endeavor with no certainty of success on the merits. Any litigation of 

these claims would likely require the engagement of one or more experts on the issues of boat 

dealership incentives and/or business valuations. These costs would be incurred by the estates or 

the liquidating trust with no guaranteed path to reimbursement.

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27. Prior to the Mediation, the Trustee analyzed all claims identified by the Debtors in 

the Debtors’ Complaint, as well as the Trustee’s own alternative legal theories. As noted above, 

the Trustee considered the evidentiary support necessary to prevail on such claims, the potential 

damage models associated with such legal theories, the strength and weaknesses of those claims 

(including likely evidentiary burdens and defenses), and other considerations important to the 

analysis, such as administrative costs and the length of potential litigation. The Trustee calculated 

a settlement range based on all of these factors before and throughout the Mediation.

28. Finally, the Trustee evaluated the Malibu Claim, which Malibu filed alleging that it 

is owed nearly $10 million relating to unpaid accounts receivable, as well as other counterclaims 

relating to the Debtors’ prepetition conduct. While the Trustee believes that the estates have 

meritorious objections and defenses to the Malibu Claim, the costs associated with objecting to 

the Malibu Claim or litigating those counterclaims absent a settlement could add to the expenses 

and reduce positive recoveries that might otherwise be realized from further litigation with Malibu. 

Malibu’s agreed withdrawal of the Malibu Claim benefits the Debtors’ estates by removing nearly 

$10 million from the general unsecured claims pool.

29. On the whole, the proposed settlement falls within the range of what the Trustee 

determined to be reasonable, based on his independent pre-mediation investigations and analyses, 

as discussed above.

The Settlement

30. Following extensive negotiations as part of the Mediation, the Trustee and Malibu 

entered into the Settlement Agreement, a true and correct copy of which is attached to the Proposed 

Order as Exhibit 1. 

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31. The Trustee firmly believes that the settlement memorialized in the proposed 

Settlement Agreement maximizes the value of the estates for the benefit of all creditors, including 

Mr. Borisch (to the extent his claims are allowed). The Settlement Agreement is an outcome that 

provides significant value to the Debtors’ bankruptcy estates, and eliminates the risks associated 

with years of protracted legal proceedings which, even if successful, would significantly reduce 

any recovery by the costs of such litigation. Accordingly, the Trustee strongly believes the 

Settlement Agreement meets the standard of reasonableness under rule 9019(a) of the Federal 

Rules of Bankruptcy Procedure and should be approved. 

32. As described herein, the Settlement Agreement resolves all of the aforementioned

Estate Claims, and grants releases to Malibu and its officers and directors. The releases included 

also would encompass additional claims the bankruptcy estates may have beyond those outlined 

above.

33. The key terms of the settlement are as follows:2

a. Settlement Payment. Malibu shall pay to the Trustee in good funds the 

sum of Three Million, Five Hundred Thousand U.S. Dollars 

($3,500,000.00) (the “Settlement Payment”), within three (3) business days 

after the Effective Date.

b. Knoxville Lease Assignment. In addition to the Settlement Payment and 

Malibu’s releases set forth in Paragraph 7 of the Settlement Agreement, the 

Trustee will seek to assume and assign, or modify its master lease to allow 

for such assignment of, the Debtors’ lease rights in the Debtors’ Knoxville 

dealership location; provided that Malibu shall: (i) pay all cure amounts due 

to the applicable landlord pursuant to section 365 of the Bankruptcy Code 

in connection with such assumption, assignment or modification (the “Cure 

Amounts”) and (ii) purchase from the Trustee, at the Debtors’ cost, any and 

all FF&E, merchandise, and service parts maintained by the Debtors at the 

Knoxville location (the “Purchase Price” and, collectively with the Cure 

Amounts, the “Knoxville Payments”); provided further that Malibu shall 

2 The summary contained in this Motion is qualified in its entirety by the provisions of the Settlement Agreement. To 

the extent anything in this Motion is inconsistent with the Settlement Agreement, the terms of the Settlement 

Agreement shall control.

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only be obligated to make the Knoxville Payments if Malibu successfully 

negotiates a new or modified lease with the applicable landlord. If Malibu 

is unwilling or unable to negotiate a new or modified lease with the 

applicable landlord by December 1, 2024, the Trustee, in his discretion, may 

assign such lease rights and sell the applicable personal property to other 

third parties.

c. Cooperation of the Parties. The Parties agree to cooperate with one 

another to provide information necessary to obtain entry of an order 

approving the Settlement Agreement.

d. Mutual Releases. The Trustee and Malibu provide mutual releases to one 

another, including Malibu’s release of the Malibu Claim, and the Trustee’s 

release of the Estate Claims, as set forth more fully in Paragraphs 7 and 8 

of the Settlement Agreement. 

34. The Trustee believes entry into the Settlement Agreement is in the best interests of 

the Debtors, their bankruptcy estates, and each of their respective stakeholders (including all 

general unsecured creditors). First, the Settlement Agreement resolves significant disputes 

between the Debtors and Malibu, the outcome of which is inherently uncertain, and resolves a 

number of material open issues in this case, including plan funding and the release of a substantial 

general unsecured claim asserted by Malibu. Second, the Settlement Agreement provides certainty 

because it provides a substantial recover that can be used toward plan funding and provides a path 

to finalizing the liquidation and wind-down of the Debtors’ bankruptcy estates. Third, the 

Settlement Agreement avoids costly, risky, and protracted litigation that would be required to 

resolve the outstanding issues. Fourth, the Settlement Agreement is supported by the estates’ 

largest stakeholders, including M&T Bank and the Committee.

35. The Trustee has concluded in his sound business judgment that settlement of the 

outstanding issues with Malibu as contemplated by the Settlement Agreement is in the best 

interests of the Debtors’ bankruptcy estates and all parties in interest. Accordingly, the Trustee 

seeks authorization to enter into the Settlement Agreement and implement its terms as set forth 

therein and in the Proposed Order.

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Basis for Relief Requested

I. Settlements Are Favored in Bankruptcy, and the Trustee’s Business Judgment Is 

Given Significant Deference. 

36. Bankruptcy Rule 9019(a) provides, in relevant part:

On motion by the [debtor in possession] and after notice and a hearing, the court 

may approve a compromise or settlement. Notice shall be given to creditors, the 

United States trustee, . . . as provided in Rule 2002 and to any other entity as the 

court may direct.

Fed. R. Bankr. P. 9019(a).

37. “To minimize litigation and expedite the administration of a bankruptcy estate, 

compromises are favored in bankruptcy.” Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d 

Cir. 1996) (internal citation and quotation marks omitted); In re Idearc Inc., 423 B.R. 138, 182 

(Bankr. N.D. Tex. 2009), aff’d, 662 F.3d 315 (5th Cir. 2011). Settlements are considered a “normal 

part of the process of reorganization” and a “desirable and wise method[] of bringing to a close 

proceedings otherwise lengthy, complicated, and costly.” Rivercity v. Herpel (In re Jackson 

Brewing Co.), 624 F.2d 599, 602 (5th Cir. 1980) (citations omitted) (decided under the Bankruptcy 

Act).

38. A bankruptcy court may, after appropriate notice and a hearing, approve a 

compromise or settlement so long as the proposed settlement is fair, reasonable, and in the best 

interest of the estate. See Official Comm. of Unsecured Creditors v. Moeller (In re Age Refin. Inc.), 

801 F.3d 530, 540 (5th Cir. 2015). Ultimately, a decision to accept or reject a compromise or 

settlement is within the sound discretion of the Court. United States v. AWECO, Inc. (In re 

AWECO, Inc.), 725 F.2d 293, 297 (5th Cir. 1984) (citing Rivercity v. Herpel (In re Jackson Brewing 

Co.), 624 F.2d 599, 602–03 (5th Cir. 1980)); In re ASARCO LLC, No. 05-21207, 2009 WL 

8176641, at *10 (Bankr. S.D. Tex. June 5, 2009). 

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39. Generally, the role of the bankruptcy court is not to decide the issues in dispute 

when evaluating a settlement. Watts v. Williams, 154 B.R. 56, 59 (S.D. Tex. 1993). Instead, the 

court should determine whether the settlement as a whole is fair and equitable. Protective Comm. 

for Indep. S’holders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968).

40. Furthermore, a proposed settlement “need not result in the best possible outcome 

for the debtor, but must not fall beneath the lowest point in the range of reasonableness.” In re 

Idearc Inc., 423 B.R. at 182 (quoting Vaughn v. Drexel Burnham Lambert Grp., Inc. (In re Drexel 

Burnham Lambert Grp., Inc.), 134 B.R. 499, 505 (Bankr. S.D.N.Y. 1991) (internal quotation marks 

omitted)). “Basic to” the process of evaluating proposed settlements, then, “is the need to compare 

the terms of the compromise with the likely rewards of litigation.” TMT Trailer Ferry, Inc., 390 

U.S. at 425.

II. The Settlement with Malibu Satisfies the Three-Factor Test Courts in the Fifth Circuit 

Employ to Analyze Proposed Settlements. 

41. To determine whether a settlement is fair and equitable, this Court should consider 

and evaluate the following factors: “(1) [t]he probability of success in the litigation, with due 

consideration for the uncertainty in fact and law, (2) [t]he complexity and likely duration of the 

litigation and any attendant expense, inconvenience and delay, and (3) [a]ll other factors bearing 

on the wisdom of the compromise.” Official Comm. of Unsecured Creditors v. Cajun Elec. Power 

Coop., Inc. (In re Cajun Elec. Power Coop., Inc.), 119 F.3d 349, 356 (5th Cir. 1997) (citing In re 

Jackson Brewing Co., 624 F.2d at 602); Connecticut Gen. Life Ins. Co. v. United Cos. Fin. Corp.

(In re Foster Mortg. Corp.), 68 F.3d 914, 917 (5th Cir. 1997); In re Wright, 545 B.R. 541, 561 

(Bankr. S.D. Tex. 2016); see also TMT Trailer Ferry, Inc., 390 U.S. at 424–25 (providing that in 

determining whether a settlement is fair and equitable, a court should consider “the probabilities 

of ultimate success should the claim be litigated...[,] the complexity, expense, and likely duration 

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of such litigation, the possible difficulties of collecting on any judgment which might be obtained, 

and all other factors relevant to a full and fair assessment of the wisdom of the proposed 

compromise.”).

42. Factors “bearing on the wisdom of the compromise” include: (a) “the paramount 

interest of creditors with proper deference to their reasonable views”; and (2) “the extent to which 

the settlement is truly the product of arms-length bargaining, and not of fraud or collusion.” In re 

Foster Mortg. Corp., 68 F.3d at 917–18; Cajun Electric, 119 F.3d at 356; In re Wright, 545 B.R. 

at 561. 

43. In Foster Mortgage, the Court of Appeals for the Fifth Circuit vacated and 

remanded a bankruptcy court’s approval of a debtor’s settlement with its parent company where it 

concluded that the bankruptcy court failed to take into consideration “that nearly all creditors in 

interest opposed this settlement and that the settlement was reached between insiders without the 

participation of the creditors.” See In re Foster Mortg. Corp., 68 F.3d at 918. Thus, when 

considering creditors’ paramount interests and the process by which the settlement was reached, 

this Court should recognize that the settlement has the support of the estates’ most significant 

creditor (M&T Bank) and the statutory body appointed to represent the interest of all general 

unsecured creditors. As such, the Trustee believes that the settlement is fair, equitable, in the best 

interest of the Debtors’ bankruptcy estates, and meets each of the Jackson Brewing factors as well 

as the heightened standards espoused in Foster Mortgage. 

A. The Trustee is not Certain to Succeed in Litigating the Issues with Malibu. 

44. The claims and causes of action resolved as part of the Settlement Agreement are 

complex, and the risks of litigation are high. As detailed above, there are few settled issues of fact 

or law in connection with such claims and causes of action. If the parties litigated these claims 

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and causes of action, Malibu has made clear that it would deny and defend liability, leading to 

uncertainty as to how such claims would be resolved. In addition, Malibu has indicated it would 

assert counterclaims (as demonstrated by the Malibu Claim). While the Trustee believes the estates 

have meritorious objections to the Malibu Claim, the added complexity of these issues creates 

substantial uncertainty as to whether the Trustee (or his successor in interest) would prevail if such 

claims were litigated in or outside of this Court. The Settlement Agreement provides certainty

where success in any litigation with Malibu would be far from certain. Accordingly, the Settlement 

Agreement satisfies the first factor of the Jackson Brewing test.

B. Continued Litigation with Malibu Would Be Complex, Costly, and 

Inconvenient.

45. As discussed above, the issues involved with the released claims and causes of 

action are extremely complex. There are numerous disputed issues of law and fact that are unlikely 

to be resolved quickly by any court or through any singular pre-trial filing. Moreover, the Trustee

believes that Malibu may have valid defenses to some or all of these claims. Litigation of the 

disputes raised at the Mediation would be lengthy and costly, and the bankruptcy estates lack the 

necessary funding to pursue litigation in connection with these issues. Although the Trustee and 

the Committee have considered contingency counsel to take such claims to trial, the Trustee 

recognizes that contingency counsel would reduce any potential recoveries, which may take years 

to realize, if ever. 

46. In contrast, the Settlement Agreement provides a quantifiable and certain resolution 

of all outstanding issues related to claims against Malibu, and ensures that the estates will realize 

at least $3.5 million immediately (and more upon assumption and assignment of the Knoxville 

lease). The Trustee does not believe that expending time or resources litigating claims against 

Malibu would materially further the interests of the bankruptcy estates or their creditors, 

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considering the inherent risk of nonrecovery and the benefit of a comprehensive settlement that 

promotes closure. Accordingly, the Settlement Agreement satisfies the second factor of the 

Jackson Brewing test.

C. The Settlement is in the Best Interests of Creditors and was Conducted at 

Arms-Length, in Good Faith and with Participation by the Estates Primary 

Creditors.

47. The settlement is in the best interests of creditors, as evidenced by, among other 

things, the Committee and M&T Bank’s active participation, negotiation, and support thereof. The 

Committee represents the interests of, and is mindful of its fiduciary obligation to act in the best 

interest of, all general unsecured creditors. M&T Bank on the other hand is likely to be the single, 

largest general unsecured creditor whose $105 million secured claim will not be paid in full from

the liquidation sales of its collateral. Not only were M&T Bank and the Committee present at the 

Mediation, but the Trustee considered their reasonable views before pursuing the settlement.3

48. The Settlement Agreement maximizes recovery to the bankruptcy estates from the 

Malibu claims and provides certainty while avoiding the risks, costs, and delays associated with 

litigation. In addition, the Settlement Agreement provides significant benefit to the bankruptcy 

estates by bringing in an immediate cash payment of $3.5 million, release of a significant general 

unsecured claim (nearly $10 million), and realization of additional benefits from the assignment 

of the Knoxville lease and sale of personal property therein. It is thus in the best interest of the 

Debtors’ estates, considering creditors’ reasonable views.

49. Additionally, the settlement with Malibu provides the Trustee with additional cash 

to contribute toward a confirmable a plan of liquidation. Without sufficient cash reserves to fund 

3 The Trustee contacted counsel for Mr. Borisch in advance of the Mediation to obtain his reasonable views of a 

potential settlement. Mr. Borisch’s counsel indicated Mr. Borisch’s belief that all claims belonged to Mr. Borisch, 

and that he would oppose any settlement with Malibu that precluded him from pursuing such claims on his own. 

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a plan, these cases would have to convert to chapter 7, which could delay recoveries for creditors. 

Approval of the Settlement Agreement provides much-needed closure to numerous disputed issues 

and represents the best possible path to reach a successful conclusion to this chapter 11 case for all 

stakeholders. 

50. Furthermore, the Settlement Agreement is the product of arms-length negotiations, 

and there was no fraud or collusion by or among the Trustee, the Committee, M&T Bank, or 

Malibu. Accordingly, the Settlement Agreement satisfies the third factor of the Jackson Brewing

test.

51. Based on the foregoing considerations, the Trustee respectfully submits that the 

Settlement Agreement with Malibu represents a fair and reasonable compromise that is in the best 

interest of the Debtors’ bankruptcy estates. Pursuant to the Proposed Order, the Trustee will be 

able to avoid the expense, delay, and distraction of further litigation with Malibu and resolve 

significant material issues standing in the way of proposing a confirmable plan of liquidation. 

Accordingly, the Trustee respectfully requests that the Court authorize him to enter into and 

implement the terms of the Settlement Agreement as such action is a reasonable exercise of the 

Trustee’s business judgment and in the best interest of its bankruptcy estates.

WHEREFORE, the Trustee respectfully requests that the Court enter the Proposed Order, 

granting the relief requested herein and such other relief as the Court deems appropriate under the 

circumstances.

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Respectfully submitted this 7th day of October, 2024.

GRAY REED 

By: /s/ Aaron M. Kaufman

Jason S. Brookner

Texas Bar No. 24033684

Aaron M. Kaufman

Texas Bar No. 24060067

Lydia R. Webb

Texas Bar No. 24083758

Emily F. Shanks

Texas Bar No. 24110350

1601 Elm Street, Suite 4600

Dallas, Texas 75201

Telephone: (469) 320-6050

Facsimile: (469) 320-6886

Email: jbrookner@grayreed.com

akaufman@grayreed.com

lwebb@grayreed.com

eshanks@grayreed.com

Counsel to Mark E. Andrews,

Chapter 11 Trustee

Certificate of Service

I certify that on October 7, 2024, I caused a copy of the foregoing document to be served 

by the Electronic Case Filing System for the United States Bankruptcy Court for the Northern 

District of Texas.

/s/ Aaron M. Kaufman

Aaron M. Kaufman

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