# U ni te d S ta te s B an kr up tc y A pp el la te P an el For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _
No. 1 6- 60 09

__ __ __ __ __ __ __ __ __ __ __ __ __ _
In re: Mi ch ael Ro be rt Wig le y

ll ll ll ll ll ll ll ll ll ll l Deb to r

----- ----- ----- ----- ----- -----

Barb ara Wig le y

ll ll ll ll ll ll ll ll ll ll l In te re st ed

pa rt y - App el la nt

v.

Mi ch ael Ro be rt Wig le y

ll ll ll ll ll ll ll ll ll ll l Deb to r - Ap pe ll ee

Lari at Co m

pa ni es , Inc

.

ll ll ll ll ll ll ll ll ll ll l Cr ed it or

- App el le e

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s B an kr up tc y Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __
Su bm it te d: Aug us t 1 2, 2 01 6 Fil ed : Se pt em

be r 21 , 20 16

__ __ __ __ __ __ Befo re SC HERMER, NAIL an d S HODEEN, Ban kr up tc y Ju dg es

.

__ __ __ __ __ __SCHERM ER, Ban kr up tc y Ju dg e

Barb ara W ig le y ap pe al s fro m th e ba nk ru pt cy co ur t’s : (1 ) Nov em be r 18
, 20 15 1

or de r de nyin g co nf

irmatio n of Ro be rt W ig le y ’s (Deb to r) se co nd m od ifi ed Ch ap te r 11 pl an , es ta bl is hi ng de ad li ne s f o r t h e Deb to r to fil e a m od ifi ed pl an , an d ob ta in

co nf irmatio n of it, an d d en y in g Lar ia t Co m pa ni es , In c.’s (Lari at ) req ue st to di sm is s th e Deb to r’s Ch ap te r 11 cas e or to co nv ert th e cas e to Ch ap te r 7; (2 ) Feb ru ary 18
, 2
20 16 ord er co nf

irming th e Deb to r’s fo ur th m od ifi ed Ch ap te r 11 pl an ; an d (3 ) or de r
gr an ti ng rel ie f fro m th e au to m at ic st ay to al lo w Lari at to ex erci se i t s r ig ht s an d

rem ed ie s ag ai ns t Barb ara W ig le y in st at e co ur t li ti ga ti on

. Fo r th e reas on s th at fo ll ow,

we di sm is s th is ap pe al ba se d on la ck of st an di ng

. To th e ex te nt th at Barb ara W ig le y ha s st an di ng to br in g th is ap pe al
, we ha ve juri sd ic ti on ov er th is ap pe al fro m th e fin al

or de rs of t he ba nk ru pt cy

co ur t an d we a ffi rm

. Se e 28 U.S.C. § 1 58 (b ). 3

IS SUES Th e th res ho ld is su e is whe th er Barb ara W ig le y ha s st an di ng to br in g t h i s
ap pe al

. W e ho ld th at sh e do es no t an d we di sm is s th is ap p e a l

. To th e ex te nt th at Barb ara W ig le y ha s st an di n g t o br in g th is ap pe al
, we ad dr es s th e two rem ai ni ng is su es on ap pe al
, whe th er th e ba nk ru pt cy co ur t erre d whe n it : (1 ) de ni ed ap pr ov al of

a se tt le m en t in th e Deb to r’s Ch ap te r 11 pl an , res ul ti ng in th e de ni al of co nf irmatio n of th e pl an an d con fir m at io n of a la te r pl an wit h a pr ov is io n st at in g th at th e Deb to r

The Hon or ab le Kath eri ne A. Co ns ta nt in e, Uni te d S t a t e s Ban kr up tc y 1 Ju dg e fo r th e Dis tri ct of M in ne so ta

.

B a r b ara W ig le y ’s ap pe al on ly co nc ern s th e po rti on s of th e o r d e r 2

co nc ern in g de ni al of co nf irmatio n of th e Deb to r’s se co nd m od ifi ed Ch ap te r 11 pl an

an d e st ab li sh in g d ead li ne s i n c on ne ct io n t he rewi th

.

W e rev i e w t h e Nov em

be r 18
, 20 15 or de r in co nn ect io n wit h th e 3 Feb ru ary 18
, 20 16 or de r, whi ch is a fin al or de r. W e ha ve juri sd ic ti on ov er “ th e ev en ts

an d ru li ng s le ad in g to a fin al or de r.” Za hn

. Fin k (In re Za hn ), 52 6 F.3 d 11 40
, 11 43 (8 th Cir . 20 08 ).

-2

-wou ld no t pu rs u e a n y a vo id an ce act io ns ag ai ns t hi s wife ; an d (2 ) en te red th e st ay

rel ie f or de r. W e fi nd no erro r by the ba nk ru pt cy co ur t.

BACKGRO UND
Ext en si ve li ti ga ti on pr eced ed th e fil in g of th e Deb to r’s Ch ap te r 11 ba nk ru pt cy

cas e, in cl ud in g a la wsu it ho ld in g th e D e b t o r li ab le as th e gu aran to r of a le ss ee’s ob li ga ti on s un de r a real pr op ert y le as e an d rel a t e d p ro ceed in gs , an in vo lu nt ary Ch ap te r 7 ba nk r u p t c y of th e Deb to r, a Ch ap te r 11 ba nk ru pt cy of th e le ss ee, an d frau du le nt tra ns fer pro ceed in gs ag ai ns t th e Deb to r an d hi s wife

. The di sp ut e in th is

ap pe al fo cu se s on th e frau du le nt tra ns fer act io n. A s ba ck gr ou nd
, we ou tl in e th e
pr oc eed in gs rel at in g t o t he gu aran te e jud gm en t ag ai ns t t he Debt or

.

Lari at , th e le ss or un de r a le as e fo r whi ch th e Deb to r pe rs on al ly gu aran te ed th e ob li ga ti on s of th e le ss ee (an LLC th at he ha d fo rm ed ) ob ta in ed a st at e co ur t jud gm en t

ex ceed in g $2 .2 m il li on ag ai ns t th e Deb t o r an d th e LLC. Non -b an kr up tc y at te m

pt s by th e Deb to r to av oi d co ll ect io n of th at jud gm en t pr ov ed un su cces sf ul

. The Deb to r

un su cces sf

ul ly br ou gh t a st at e co ur t l a w s u it se ek in g rel ie f fro m th e gu aran te e jud ge men t

. The Deb to r’s la wsu it ag ai ns t Lari at was di sm is se d bu t th e Deb to r
ap pe al ed th e di sm is sa l or de r, whi ch rem ai ns pe nd in g du e to th e Deb to r’s ba nk ru pt cy

. A se pa rat e at te m

pt by th e Deb to r in th e LLC’ s ba nk ru pt cy cas e to en joi n Lari at fro m

en fo rci ng th e gu aran te e jud gm en t was al so un su cces sf ul

. Ult im at el y , Lari at ob ta in ed

a st at e co ur t o rd er (wh ic h was st ay ed by the Debt or ’s Cha pt er 1 1 fil in g) al lo win g it

to li qu id at e th e Deb to r’s no n- ex em pt ass et s t o s at is fy

th e g ua ran te e jud gm en t.

Lari at (to ge th er wit h ot he r cred it or s) co m m en ced a pr e-p et it io n frau du le nt
tra ns fer act io n ag ai ns t th e Deb to r’s wife in st at e co ur t, an d la te r ad de d th e Deb to r as

a co -d efen da nt

. Ult im at el y , th e Deb to r an d hi s wife were he ld joi nt ly an d sev eral ly li ab le to Lari at fo r frau du le nt tra ns fers to ta li ng ap pr ox im at el y $8 00 ,00 0. The Deb to r

an d hi s wife la te r m ov ed in th e st at e co ur t fo r am en de d fin di ng s in th at a c t i o n

. On th e pe ti ti on da te of th e Deb to r’s Ch ap te r 11 cas e, th e st at e co ur t ha d no t ru le d on th e

-3

-m ot io n fo r am en de d fin di ng s an d th e Deb to r be li ev ed th at th e au to m at ic st ay ap pl ie d

to th e fra ud ul en t t ran sf

er p ro ceed in g.

The Deb t o r fil ed hi s ba nk ru pt cy pe ti ti on on Feb ru ary 10
, 20 14

. On hi s

sc he du le s, th e Deb to r l i s t e d a ss et s ex ceed in g th e am ou nt of hi s li ab il it ie s. Lari at ’s
gu aran te e jud gm en t was cap pe d un de r Ban kr up tc y Co de § 50 2( b) (6 ). The Deb to r 4
f i l e d h i s Seco nd Mo di fie d Pl an of Reo rg an iz at io n (Sec on d Mo di fie d Pl an ), whi ch

pr op os ed to rel eas e hi s wife
, Barb ara W ig le y , fro m al l cl ai m s he ld ag ai ns t he r by th e Deb to r or th e es ta te (el im in at in g th e frau du le nt tra ns fer ju d g ment ag ai ns t he r) in

ex ch an ge fo r he r se tt le m en t pa y m en t (Set tl em en t). Sp eci fic al ly, th e Seco nd Mo di fi ed Pl an st at ed :

I. DEFINED TERMS

“ Barb ara W ig le y Set tl em en t Pay m en t” m ean s th e su m of $3 50 ,00 0.0 0, to be pa id pu rs ua nt to Sect io n 4 .3(A) of t he Pla n.

4.3 . Pla n P erfo rm an ce

A. Plan Fu nd in g. In ex ch an ge fo r th e rel eas e pr ov id ed fo r in Sect io n 4.4 of th e Pl an , on
or be fo re th e Effect iv e Date
, Barb ara W ig le y sh al l rem it th e Barb ara W ig le y S et tl em en t Paym en t to th e Deb to r, an d th e Deb to r sh al l di st rib ut e on e hu nd red pe rce n t o f s u ch fu nd s to th e ho ld ers of Cl as s 1 [g en eral un se cu red ] cl ai m s pu rs ua nt to th e te rm s of th e Pl an

. The Deb to r sh al l be res po ns ib le fo r pa y m en t of al l ot he r am ou nt s du e an d pa y ab le

un de r th e Pl an

.

Lari at ap pe al ed th e ba nk ru pt cy co ur t’s or de r cap pi ng it s pr oo f of cl ai m 4

un de r § 50 2( b) (6 ). W e affi rm ed in pa rt, rev ers ed in pa rt an d rem an de d to th e ba nk ru pt cy co ur t fo r fu rth er pr oc eed in gs

. Fo ll owi ng ou r op in i o n, th e ba nk ru pt cy
co ur t ent ered an or de r al lo win g Lariat ’s cl ai m in an am ou nt cert ai n. Tha t ord er has

no t b een ap pe al ed

.
-4

-4.4 . Set tl em en t an d R el eas e o f Cl ai m s Ag ai ns t Ba rb ara Wig le y

Co nf irmatio n of th e Pl an sh al l co ns t i t u t e ap pr ov al of a se tt le m en t ag reem en t un de r whi ch al l cl ai m s th at th e Deb to r or an y ot he r rep res en ta ti ve of th e es ta te co ul d ha ve as se rte d ag ai ns t Barb ara W ig le y
as of th e Co nf

irma t i o n Date
, in cl ud in g bu t no t li m it ed to Avo id an ce Acti on s, sh al l be rel eas ed i n e x c h a ng e fo r pa y m en t of th e Barb ara W ig le y Set tl em en t Paym en t, whi ch sh al l be du e no l a t e r th an th e Effect iv e Date

. The se tt le m en t and rel eas e pr ov id ed fo r he rei n sh al l be bi nd in g on al l cred it or s an d ot he r pa rti es [s ic ] in te res t, whe th er or no t

en ti tl ed to rece iv e p ay m en ts or o th er d is tri bu ti on s u nd er t he Pla n.

The Seco nd Mo di fie d Pl an pr op os ed to pa y Lari at (an d al l al lo wed cl ai m s in Lari at ’s cl as s of un se cu red cred it or s) in fu ll wit h in te res t. The ot he r c l as se s un de r th e pl an

were n ot im

pa ire d.

Lari at ob jecte d to th e Seco nd Mo d ifi ed Pl an an d fil ed a m ot io n se ek in g di sm is sa l or co nv ers io n of th e Deb to r’s cas e to Ch ap te r 7 (s pe ci fy in g a pr efer en ce fo r di sm is sa l ov er co nv ers io n) fo r ba d fai th

. On Nov em be r 18
, 20 15
, t h e ba nk ru pt cy

co ur t e n t e r e d an or de r de nyin g Lari at ’s m ot io n to di sm is s or co ve rt, de nyin g

co nf irmatio n of th e Seco nd Mo di fie d Pl an , an d es ta bl is hi ng de ad li ne s fo r th e Deb to r
to fil e a m od ifi ed pl an an d o bt ai n c on fir m at io n o f it (Nov em be r 18 , 20 15 Orde r).

The Deb to r pr op os ed a Fo ur th Mo di fie d Pl an of Reo rg an iz at io n (Fo ur th
Mo di fie d Pl an ), whi ch ag ai n pr op os ed fu ll pa y m en t to un se cu red cred it or s, an d al so in cl ud ed a pr ov is io n st at in g th at th e Deb to r w i l l n o t p ur su e an y av oi da nc e act io ns
ag ai ns t h is wife . Spe ci fic al ly, th e Fo ur th Mo di fie d P la n s ta te s:

4.4 Res erv at io n o f Ri gh ts , Powe r an d J ur is di ct io n
A. Rig ht s an d P owe rs

Afte r co nf

irmatio n o f th e Pl an , th e Deb to r wil l re ta in au th or it y to :

-5

-. . .

(3 ) Pu rs ue an y cl ai m s ag ai ns t an y th ird pa rti es ; pr ov id ed
, ho wev er, th at th e Deb to r (wh et he r as Deb to r in Po ss es si on , p re- or po st co nf irmatio n Deb to r, or an y Ch ap te r 11 tru st ee, ag en t, or co m m it te e) sh al l no t pu rs ue

an y Avo id an ce Acti on s ag ai ns t Barb ara W ig le y , ex ce p t a s m ay be pe rm it te d p ur su an t t o fu rth er Co ur t o rd er;

. . . .

Ove r Bar ba ra Wigl ey ’s ob

jecti on , th e Fo ur th Mo di fie d P la n was co nf irmed.

Fo ll owi ng co nf

irmatio n of th e Fo ur th Mo di fie d Pl an an d up on Lari at ’s m ot io n, th e ba nk ru pt cy co ur t gr an te d li m it ed r e l i e f fro m th e au to m at ic st ay (St ay Ord er),

st at in g th at “ [t]he au to m at ic st ay , if an y , im po se d by 11 U.S.C. § 36 2( a) is te rm in at ed

su ch th at [Lari at ] m ay ex erci se it s rig ht s an d rem ed ie s un de r ap pl ic ab le

no nb an kr up tc y la w wit h res pe ct to c on ti nu in g th e pe nd in g frau du le nt co nv ey an ce
act io n

. . . ag ai ns t Barb ara W ig le y ba se d on pr ep et it io n ev en ts .” W e de ni ed a m ot io n b y B arb ara W ig le y fo r a st ay pe nd in g ap pe al of th e St ay Ord er. At or al arg um en t,

co un se l ad vi se d us th at sh e pl an ne d to pa rti ci pa te in an Aug us t st at e co ur t he ari ng in th e fra ud ul en t t ran sf

er ac ti on

.

STANDARD OF REVIEW The b a n k r u p t c y co ur t’s fin di ng s of fact are rev ie wed fo r cl ear erro r an d it s

co nc lu si on s of l a w a r e r e v i ewed de no vo

. Lo op Co rp

. v. U.S. Tr us te e (In re Lo op Co rp .)
, 37 9 F.3 d 51 1, 51 5 (8 th Ci r. 20 04 ) (ci ti ng Ced ar Sh or e Reso rt

, In c. v. Mue ll er (In re Ced

ar Sh or e Reso rt

, In c.)
, 23 5 F.3 d 37 5, 37 9 (8 th Ci r. 20 00 )). “ A ba nk ru pt cy

co ur t's ap pr ov al of a se tt le m en t wil l no t be se t as id e un le ss t h ere is pl ai n erro r or ab us e of di sc ret io n.” Tr is ta te Fin an ci al

, LLC v. Lo va ld

, 52 5 F.3 d 64 9, 65 4 (8 th Ci r. 20 08 ) (q uo ti ng Mar ti n v. Co x (In re Mar ti n)
, 21 2 B.R. 31 6, 31 9 (8 th Ci r. BAP 19 97 ) (ci ta ti on om it te d) ). We r e vi ew fo r an ab us e of di sc ret io n th e de ci si on whe th er to
gr an t or de ny rel ie f fro m th e au to m at ic st ay un de r Ban kr up tc y Co de § 36 2( a). W il ey v. Har tz le r (I

n r e W il ey ), 28 8 B .R. 81 8, 8 21 (B.A.P. 8t h C ir. 2 00 3)

.

-6

-DISCUSS IO N

Barb ara W ig le y ch arac te riz es th e m at te r be fo re us as in vo lv in g is su es rel at ed

to de ni al of ad m in is tra ti on of an av oi da nc e act io n (p art ic ul arl y reco ve ry un de r § 55 0)

an d th e rig ht s of Lari at an d th e Deb to r wit h res pe ct to th at act io n. W e d i s a g r ee. It is no th in g m or e th an a m at te r co nc ern in g th e p r o p r i et y of th e ba nk ru pt cy co ur t’s de ni al of th e Set tl em en t pr op os ed in t h e S e co nd Mo di fie d Pl an , whi ch le d to

co nf irmatio n of th e Fo ur th Mo di fie d Pl an

. W e al so rev ie w th e ba nk r u p t c y c o u rt’s
gr an t to Laria t of reli ef from th e au to m at ic st ay to pu rs ue it s cau se of act io n aga in st Barb ara Wig le y

in th e fra ud ul en t t ran sf

er s ta te co ur t ac ti on

.

Sta ndi ng

Ban k r up tc y ap pe ll at e st an di ng is na rro wer th an Arti cl e III st an di ng

. Opp or tu ni ty Fin an ce, LLC v. Kel le y , 82 2 F .3d 45 1, 4 58 (8t h Cir. 20 16 ) (ci ti ng O&
S Tr uc ki ng

, In c.v. Mer ced es Ben z Fin

. Sv s. USA (In re O& S Tr uc ki ng , In c.)
, 81 1 F.3 d
10 20
, 10 22 –2 3 (8 th Ci r. 20 16 )). To ha ve st an di ng to br in g th is ap pe al
, Mrs

. W ig le y

m us t be a “ pe rs on ag gr ie ve d.” Id

. at 45 7 (d ecl in in g req ue st to reco ns id er th e “ pe rs on
ag gr ie ve d” st an da rd ). The “ pe rs on ag gr ie ve d” do ct rin e “ li m it s st an di ng to pe rs on s wit h a fin an ci al st ak e in th e ba nk ru pt cy co ur t's or de r, m ean in g th ey were di rect ly an d ad ve rs el y affe ct ed pe cu ni ari ly by th e or de r.” Id

. at 45 8 (qu ot in g Peo pl es v. Rad lo

ff (In re Peo

pl es )
, 76 4 F.3 d 81 7, 82 0 (8 th Ci r.20 14 )). “ An ap pe ll an t is a pa rty
ag gr ie ve d ‘if th e ba nk ru pt cy co ur t ord er dim in is he s th e pe rs on 's pr op ert y , in crea se s th e pe rs on 's bu rd en s, or im pa irs th e pe rs on 's rig ht s.’ ” Id

. (q uo ti ng W il li ams v. Mar la r (In re Mar la r)
, 26 7 F.3 d 74 9, 75 3 n. 1 (8 th Ci r.20 01 )); O& S Tr uc ki ng , In c. , 81 1 F.3 d

at 10 23 (“ th e ap pe ll at e ha s th e bu rd en to de m on st rat e ‘the ch al le ng ed or de r di rect ly

an d ad ve rs el y affe ct [ed ] hi s pe cu ni ary in te res ts .’ ”) (q uo ti ng Sp le nl in ha ue r v. O’Don ne ll
, 26 1 F.3 d 11 3, 11 8 (1 st Ci r. 20 01 )). “ The [p ers on ag gr ie ve d] do ct rin e is de si gn ed ‘to pr ev en t ba nk ru pt ci es fro m be in g ne ed le ss ly pr ol on ge d by pa rti es who se in te res ts are no t cen tra l to th e pr oc es s.’” Id

. at 45 9- 6 0 (q uo ti ng In re Ern ie Hai re For d, In c. , 76 4 F .3d 13 21 , 13 27 (11 th Cir . 20 14 )).

-7

-Mrs

. W ig le y la ck s st an di ng to br in g t h i s a p p e al be cau se sh e is no t a pe rs on

ag gr ie ve d. Sh e co m

pl a i n s a bo ut th e ba nk ru pt cy co ur t’s de ni al of ap pr ov al of th e 5
Set tl em en t of th e frau du le nt tra ns fer ru li ng th at wou ld ha ve be ne fit te d he r, an d whi ch le d to co nf

irmatio n th e Deb to r’s Fo ur th Mo di fie d Pl an

. It is iro ni c th at Mrs

. W ig le y
ap pe al ed a de ci si on to co nf irm he r hu sb an d’s F o u rth Mo di fie d Pl an whe n he
, th e Deb to r, di d no t. Mrs

. W ig le y su bm it s t ha t i f th e Set tl em en t had be en ap pr ov ed an d th e Fo ur th Mo di fie d Pl an ha d no t be en co nf irmed, sh e wou ld ha ve ret ai ne d he r in te res t in th e tra ns ferr ed pr op ert y in ret ur n fo r th e Set tl em en t pa y m en t an d sh e wou ld

no t ha ve to pa rti ci pa te in fu rth er st at e co ur t li ti ga ti on

. Sh e al so co m pl ai ns th at Lari at sh ou ld no t ha ve be en gr an te d rel ie f to pr oc eed wit h th e st at e co ur t frau du le nt tra ns fer

act io n a ga in st he r.

“ Gen eral ly, a ba nk ru pt cy co ur t or de r al lo win g li ti ga ti on to pr oc eed ag ai ns t an ad ve rs ary d ef

e n d a n t do es no t m ak e th at de fen da nt a pa rty ag gr ie ve d.” Opp or tu ni ty Fin an ce, LLC, 82 2 F.3 d at 45 8 (ci ta ti on om it te d)

. Thi s pr in ci pl e ap pl ie s ev en whe re

“ li ti ga ti on ha s al read y be gu n ag ai ns t th e de fen da nt , an d th e po ss ib il it y of li ab il it y is

m or e th an th eo r e t i c al .” Id

. The fact th at Mrs

. W ig le y is no t a pe rs on ag gr ie ve d is

ap pa ren t he re whe re on th e pe ti ti on da te , th e st at e co ur t ha d al read y ru le d in fav or of Lari at in th e f

r a u d u l e n t tra ns fer act io n (s ub ject on ly to a m ot io n to am en d an d a
p o s s i b l e ap pe al ). The ba nk ru pt cy co ur t’s de ci si on s di d no t ch an ge Mrs

. W ig le y ’s rig ht s or in te res ts in th e st at e co ur t act io n. In ad di ti on , th e st ay rel ie f or de r do es no t

m ak e Mrs

. W ig le y a “ pe rs on ag gr ie ve d” si nc e th e st ay di d no t ap pl y to th e act io n by Lari at ag ai ns t Mrs

. W ig le y

. The re is no di rect pe cu ni ary ha rm to Mrs

. W ig le y fro m th e b an kr up tc y

co ur t’s o rd ers

.

Earl ie r in th is ap pe al
, Lari at fil ed a Mot io n to Dis mis s App ea l
, which w as 5 ba se d pr im ari ly on la ck of st an di ng

. W e de ni ed th at m ot io n be cau se we wan te d to

m ak e a fu ll pl en ary rev ie w of t he is su es

. -8

-Ev e n i f Mrs . Wig le y he ld a di rect fin an ci al in te res t, sh e wou ld la ck st an di ng

be cau se he r in te res t in se tt li ng he r frau du le nt tra ns f e r l ia bi li ty on he r own te rm s,
rat he r th an faci ng th e ru li ng en te red ag ai ns t he r in st a t e co ur t, is no t an in te res t
pr ot ect ed by th e Ban kr

up tc y Co de

. W

es tl b AG v. Kel ly
, 53 1 B.R. 78 3, 78 9 (D. Mi nn

. 20 15 ) (ci ti ng Ern ie Hai re For d, In c. , 76 4 F.3 d at 13 27 ) (“ Eve n whe n an ap pe ll an t ha s

a di rect pe cu ni ary in te res t in a ba nk ru pt cy -co ur t or de r, he m ay n ev ert he le ss la ck

st an di ng to ap pe al t h a t or de r if th e in te res t he se ek s to vi nd ic at e is no t on e th at is

pr ot ect ed by the Ban kr up tc y Co de .”), af

f’d 82 2 F .3d 45 1 (8 th Cir . 20 16 ).

Ove ral l, Mrs

. W ig le y ’s ap pe al am ou nt s to no th in g m or e th an an ex pr es si on of h er di ss at is fact io n wit h th e fai le d at te m pt by h er hu sb an d in hi s ba nk ru pt cy cas e to
p r o t e c t he r fro m th e st at e co ur t’s ru li ng

. Her in te res ts are no t cen tra l t o t h e ba nk ru p t c y pr oc es s an d sh e is no t a pe rs on ag gr ie ve d. Opp or tu ni ty Fin an ce, LLC
, 82 2 F.3 d at 46 0 (n o st an di ng whe re ap pe ll an ts ’ in te res t were n o t c e n t r a l to th e ba nk ru pt cy

pro ces s)

.

Bec au se Barb ara W ig le y la ck s st an di ng , di sm is sa l of th is ap p e a l i s pr op er. Howev er, to th e ex te nt sh e ha s st an di ng , we ad dr es s th e m eri ts of th e rem ai ni ng is su es

.

Pla n Con fir m at io n

The ba nk ru pt cy co ur t di d no t ab us e it s di sc ret io n whe n i t d en ie d a pp ro va l of

t h e Set tl em en t in th e Deb to r’s Seco nd Mo di fie d Pl an an d co nf irmed th e Deb t o r ’
Fo ur th Mo di fie d P la n.

Ban kr up tc y Co de § 11 29 se ts fo rth th e req ui rem en ts fo r co nf irmatio n of a pl an

. Sect io n 11 29 (a)( 1) req ui res th at a pl an co m pl y wit h th e ap pl ic ab le pr ov is io ns of th e Ban kr up tc y Co de

. Ban kr up tc y Co de § 11 23 (b )(3 )(A) st at es th at “ a pl an m ay pr ov id e f o r th e se tt le m en t

. . . of an y cl ai m

. . . be lo ng in g to th e de bt or or to th e es ta te

. ”

“ [T]he st an da rd s fo r ap pr ov in g se tt le m en ts as pa rt of a pl an of reo rg an iz at io n are th e

-9

-sa m e as th e st an da rd s fo r ap pr ov in g se tt le m en ts un de r Fed

. R. Ban kr .P. 91 09 .” In re

Nu tr it io na l So ur ci ng Co rp

. , 39 8 B.R. 81 6, 83 2 (Ban kr

. D. Del. 20 08 ). Ru le 90 19 (a)

st at es th at “ th e co ur t m ay ap pr ov e a co m pr om is e or se tt le m en t.” F E D

. R. B A N K R

. P. 90 19 (a).

In th e Eig ht h Ci rcu it
, th e st an da rd fo r ev al ua ti on of a se tt le m en t “ is whe th er th e

se tt le m en t i s fai r an d eq ui ta bl e an d in th e be st in te res ts of th e es ta te .” Tr is ta te Fin an ci al

, LLC, 52 5 F.3d at 65 4 (cit in g Mar ti n , 21 2 B.R. at 31 9 (in te rn al qu ot at io n

m ark s an d ci ta ti on om it te d) (rel y in g, in pa rt, on Pro te ct iv e C o mm. fo r In de p. St oc kh ol de rs of TMT Tr ai le r Ferr y, In c. v. And er

s o n , 3 9 0 U

. S

. 41 4, 42 4, 88 S.Ct

. 11 57
, 20 L.Ed.2 d 1 (1 96 8) ). A se tt le m en t ne ed no t be pe r f e c t

. I n st ead
, th e ba nk ru pt cy co ur t m

us t “ de te rm in e th at th e se tt le m en t do es no t fal l be lo w th e lo wes t
po in t i n th e ran ge of

reas on ab le ne ss .” Id

. at 6 54 . To de te rm in e th e rea so na bl en es s of a se tt le m en t, we lo ok at wha t are kn own as th e Fl i g h t Tr an sp or ta ti on or Dre xel fact or s. In te rl ac he n Har ri et In ves tmen ts Lt d. v. Kel le y (In re Pett er

s Co

., In c.)
, 45 5
B.R. 16 6, 17 5 (B.A.P. 8t h Ci r. 20 11 ) (“ Alt ho ug h th es e ref er to di ffer en t cas es , th e fact or s are th e sa m e, Fli

gh t Tr an sp or ta ti on si m

pl y qu ot es Dre

xel .”); Dre

xel Bur nh am La mbe rt Co rp

. v. Fli

gh t Tr an sp

. Co rp

. (In re Fli gh t Tr an sp

. Se c. Li ti

ga ti on )
, 73 0 F.2 d
11 28 (8 th Ci r.19 84 ); D r e x el v. Lo omi s , 35 F.2 d 80 0 (8 th Ci r.19 29 ). The co ur t

rev ie win g a set tl em en t:

must co ns id er al l fact or s be ari ng on th e fai rn es s of th e se tt le m en t , in cl ud in g

“ (a) The pr ob ab il it y of su cces s in th e li t i g a t i o n; (b ) th e di ffi cu lt ie s, if

an y , to be en co un te red in th e m at te r of co ll ect io n; (c) th e co m pl ex it y of
t he li ti ga ti on in vo lv ed
, an d th e ex pe ns e, in co nv en ie nc e an d d e l a y
ne ces sa ril y

att en di ng it ; (d) t he pa ram ou nt in te res t o f th e cre di to rs an d a p ro pe r de fere nc e to th ei r rea so na bl e v ie ws i n t he pre m is es .”

Fli gh t Tr an sp . Cor

p. , 73 0 F .2d at 1 13 5 (q uo ti ng Lo omi s , 35 F.2d at 8 06 ).

-1 0-Th e ba nk ru pt cy co ur t fo un d th at th e fir st th ree Fli gh t Tr an sp or ta ti on fact or s di d no t fav or ap pr ov in g th e Set tl em en t be cau se th e li ti ga ti on of th e fraudule nt tra ns fer

act io n was co m

pl et e ot he r th an a pe nd in g m ot io n fo r am en d e d fin di ng s an d an y
ap pe al

. It al so st at ed th at th ere is no di ffi cu lt y wit h co ll ect io n fro m Mrs

. W ig le y

. On

ap pe al th e pa rti es ha ve no t fo cu se d on th es e fin di ng s by th e ba nk ru pt cy co ur t, an d we

se e n o e rro r wit h t he m

.

The co ur t’s ex am in at io n o f La r ia t’s in te res t un de r th e fo ur th fact or (th e
pa ram ou nt in te res t of t he cred it or an d a pr op er de fere nc e to th ei r reas on ab le vi ews in th e pr em is es ) an d it s de te rm in at io n th at th e pr op os ed Set t l e men t pr ejud ic ed th e in te res t of Lari at , were ap pr op ria te

. The ba nk ru pt cy co ur t reco gn iz ed th at al th ou gh
La ria t’s al lo wed cl ai m wou ld be sa ti sf ie d in fu ll un de r th e pl an , th e S e t t l e men t
pr ejud ic ed Lari at be cau se it was an at te m p t b y t h e Deb to r to co nt ro l Lari at ’s st at e

co ur t frau du l e n t t r a n sf

er jud gm en t ag ai ns t Mrs

. W ig le y

. Thi s fin di ng was fir m ly

su pp or te d b y

th e rec or d a nd is un de ni ab le

.

We s e e no erro r in th e ba nk ru pt cy co ur t’s de te rm in at io n th at th e pr op o s e d
Set tl em en t was no t “ fai r an d eq ui ta bl e an d in th e be st in te res ts of th e es ta te .” Tr is ta te Fin an ci al

, LLC, 52 5 F.3 d at 65 4 (ci ta ti on om it te d)

. A ba nk ru pt cy co ur t ha s “ th e rig ht

to ap pr ov e se tt le m en ts , and m ay do so , in a pr op er ca se , ov er t he ob jecti on of s om e
pa rti es , so lo ng as a se tt le m en t i s f o u n d t o b e in th e be st in te res ts of th e es ta te as a who le .” Fli

gh t Tr an sp

. Co rp

. , 73 0 F.2 d at 11 38

. The ba nk ru pt cy co ur t ap pr op ria te ly de te rm in ed th at th e Set tl em en t sh o u l d n ot be ap pr ov ed be cau se Lari at wou ld be ha rm ed whi le th ere wou ld b e n o b e n e f it to th e es ta te

. As it st at ed , t he on ly b en efi t

wou ld be to Barb ara W ig le y (o bv io us ly an in si de r). It is un di sp ut ed th at th e Deb to r

co ul d fu ll y fu nd th e p l a n w i t ho ut th e Set tl em en t pa y m en t fro m Mrs

. W ig le y

. The

pr op os ed Set tl em en t pr ov id ed fo r Mrs

. W ig le y ’s pa y m en t of 44 % (o f th e am ou nt of th e jud gm en t ag ai ns t he r) in sa ti sf act io n of Lari at ’s frau du le nt tra ns fe r ju dg m en t
ag ai ns t he r. The am ou nt of th e of fer do es no t ch an ge th e fact th a t t h e r e w a s no be ne fit to th e es ta te

. Mrs

. W ig le y co ul d ha ve of fere d 1% or 99 %. It wou ld no t ha ve

-1 1-m at te red si nc e no am ou nt of se tt le m en t m on ey w a s n e e d e d to fu nd th e pl an

. In a

su rp lu s cas e li ke th is whe re th e Deb to r co ul d fu ll y fu nd th e pl an an d th e cred it or ha s red uc ed it s cl ai m to jud gm en t, we do ub t th at th e fo ur th f a c t o r o f th e Fli

gh t Tr an sp or ta ti on tes t i s re le va nt

.

Bec au se we fin d th at th e Set tl em en t pa ss es th e Fli gh t Tr an sp or ta ti on te st , we

ne ed no t d is cu ss th ird -p art y rel eas es un de r Ban kr up tc y Co de § 5 24 (e).

Sta y Rel ie f Ord er

The st ay rel ie f or de r ap pe al ed by Mrs

. W ig le y st at es th at “ [t]he au to m at ic st ay , if a ny, im po se d b y 11 U.S.C. § 3 62 (a) i s t erm in at ed su ch th at [Lari at ] m ay ex erci se it s rig ht s a n d r e medi es un de r ap pl ic ab le no nb an kr up tc y la w wit h res pe ct to

co nt i n u i ng th e pe nd in g frau du le nt co nv ey an ce act io n

. . . ag ai ns t Barb ara W ig le y ba se d on p r e p e t i t io n ev en ts .” The ba nk ru pt cy co ur t di d no t ab us e it s di sc ret io n in

en te rin g th is or de r be cau se th e st ay di d no t ap pl y in th e fir st in st an ce to th e act io n by Lari at (a cred it or ) ag ai ns t Barb ara W i gl ey (a no n- de bt or ). No or de r was en te red

ex te nd in g th e au to m at ic st ay to Mrs

. W ig le y

. At or al arg um en t, Lari at co nc ed ed th at it bro ug ht th e st ay

rel ie f m ot io n a s a c au ti on ary m eas ur e.

CONCLUSI ON Fo r th e reas on s st at ed
, th is ap pe al is di sm is se d ba se d on Barb ara W ig le y ’s la ck of st an di ng

. To th e ex te nt Ba r b a r a Wi g le y ha s st an di ng , th e de ci si on s of th e ba nk ru pt cy

co ur t ar e aff

irmed.

-1 2-