Opinion ID: 4534281
Heading Depth: 2
Heading Rank: 2

Heading: Proposed Settlement

Text: We now address whether the Bankruptcy Court erred in approving the Proposed Settlement. Appellant makes two main arguments on appeal. First, that the Bankruptcy Court erred in mechanically applying the standard for evaluating a settlement without balancing the equities. Second, that Trustee failed to meet his burden of proof of showing by a preponderance of the evidence that the Proposed Settlement 30 Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S. Ct. 696 (2020). 31 Id. at 701 (citation and internal quotation omitted). 32 Id. at 700–01 (citation and internal quotation omitted). - 10 - is in the best interest of the estate because he did not plead or prove anything about the Claim’s value. Although Appellant raises several distinct arguments, there is only one issue for us to decide—whether the Bankruptcy Court abused its discretion or committed plain error in approving the Proposed Settlement. The standard for evaluating a settlement is “whether the settlement is fair and equitable and in the best interests of the estate.” 33 A settlement is not required to achieve the “best result obtainable.”34 Instead, the party seeking approval must show that the settlement “does not fall below the lowest point in the range of reasonableness.”35 In the Eighth Circuit, courts consider the four Lovald factors in determining whether a proposed settlement fits within the range of reasonableness. 36 The Lovald factors are: 1) the probably of success in the litigation; 2) the difficulties, if any, in the manner of collection; 3) the complexity of the litigation and the attending expense, inconvenience, and delay; and 4) the paramount interest of creditors and proper deference to their reasonable views about the litigation. 37 A bankruptcy court abuses its discretion in approving a settlement if it fails to make findings of fact and conclusions of law addressing the Lovald factors. 38 Here, the Bankruptcy Court applied the correct legal principles in evaluating the Proposed Settlement and did not base its ruling on an erroneous view of the law. 33 Lovald, 525 F.3d at 654 (citation and internal quotation omitted). 34 Id. (citation and internal quotation omitted). 35 Id. (citation and internal quotation omitted). 36 Id. 37 Id. 38 Velde v. First Int’l Bank & Tr. (In re Y-Knot Constr., Inc.), 369 B.R. 405, 408 (B.A.P. 8th Cir. 2007). - 11 - The Bankruptcy Court correctly stated that the “best result obtainable” is not required in order for Trustee to meet his burden of proof. The Bankruptcy Court conducted a thorough analysis of the Lovald factors and made detailed findings of fact and conclusions of law. The Bankruptcy Court held that three of the Lovald factors weighed in favor of the Proposed Settlement— the probability of success, the complexity of the litigation, and the interest of creditors—and one factor weighed slightly against the Proposed Settlement— difficulties in the manner of collection. The Bankruptcy Court applied the correct legal principles and conducted a thorough analysis of the Lovald factors, and did not commit plain error or abuse its discretion in approving the Proposed Settlement.