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Re: None

Tuesday, 03/16/2010 1:12:52 AM

Tuesday, March 16, 2010 1:12:52 AM

Post# of 729746
Sticky?

This post is from the "other board" but I think it is extremely relevant and really sheds a light on what is going on right now and what we can expect. It was posted by avmx7.

To clarify Jorian Rose's (EC Lawyer) query to WMI if the settlement agreement will be a 9019 or simply incorporated into the POR. Rosen's reply was both; the agreement will be "hand and glove working with each other in a 9019, and the concepts of the settlement will be folded into the Plan at the same time."

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Rule 9019 of the Federal Rules of Bankruptcy Procedure provides in subsection (a):
"On motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement. Notice shall be given to creditors, the United States trustee, the debtor, and indenture trustee as provided in Rule 2002 and to any other entity as the court may direct."

The rule, which is substantially the same as its predecessor (Bankruptcy Rule 919) under the Federal Bankruptcy Act1, provides the bankruptcy court no applicable standards for compromise and settlement approval. Consequently, Rule 9019 has been interpreted as giving the bankruptcy judge substantial discretion in determining whether a proposed compromise or settlement is proper, with court-made standards providing a general framework.

The policy behind Rule 9019, as articulated by several courts, is to prevent debtors from entering into secret agreements and to provide interested creditors the right to weigh and review the proposed settlement and, if necessary, object. See id., citing Columbia Gulf Transmission Co. v. Louisiana Natural Gas Pipeline, Inc., 1994 WL 693361 at * 3 (E. D. La. 1994); In re Masters, Inc., 141 B.R. 13 (Bankr. E.D.N.Y. 1992) (stating that the “clear purpose
of Rule 9019 is to prevent the making of concealed agreements which are unknown to the creditors and unevaluated by the court.”).

At a minimum, the 9019 Motion should: (i) describe the general terms of the settlement or compromise, usually attaching the actual settlement agreement; (ii) discuss the relevant standards for approval (see below) and the reasons the settlement or compromise meets such standards; and (iii) request bankruptcy court approval of the settlement or compromise.

In addition, in a case under Chapter 11 of the Bankruptcy Code, a proposed compromise or settlement agreement can be incorporated into and approved pursuant to the terms of a plan of reorganization.

Whether the settlement is proposed by motion or through a plan, parties opposing the proposed settlement or compromise should file and serve an objection in accordance with applicable Rules. The filing of an objection, in turn, initiates a contested matter governed by Rule 9014 of the Federal Rules of Bankruptcy Procedure.



My thoughts:
I believe there is no way THJMW will approve this settlement. She just recently allowed the formation of an Equity Committee despite the strong objection by Weil. Approving a settlement where equity wasn't even consulted would be like contradicting herself. It would be total submission to Weil. There is no way that will happen.


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