United States Bankruptcy Appellate Panel of the Eighth Circuit
Submitted: August 12, 2016
from United States Bankruptcy Court for the District of
Minnesota - Minneapolis.
SCHERMER, NAIL and SHODEEN, Bankruptcy Judges.
SCHERMER, BANKRUPTCY JUDGE.
Wigley appeals from the bankruptcy court's: (1) November 18,
2015 order denying confirmation of Robert Wigley's
(Debtor) second modified Chapter 11 plan, establishing
deadlines for the Debtor to file a modified plan, and obtain
confirmation of it, and denying Lariat Companies, Inc.'s
(Lariat) request to dismiss the Debtor's Chapter 11 case
or to convert the case to Chapter 7; (2) February 18, 2016 order
confirming the Debtor's fourth modified Chapter 11 plan;
and (3) order granting relief from the automatic stay to
allow Lariat to exercise its rights and remedies against
Barbara Wigley in state court litigation. For the reasons
that follow, we dismiss this appeal based on lack of
standing. To the extent that Barbara Wigley has standing to
bring this appeal, we have jurisdiction over this appeal from
the final orders of the bankruptcy court and we
affirm. See 28 U.S.C. § 158(b).
threshold issue is whether Barbara Wigley has standing to
bring this appeal. We hold that she does not and we dismiss
this appeal. To the extent that Barbara Wigley has standing
to bring this appeal, we address the two remaining issues on
appeal, whether the bankruptcy court erred when it: (1)
denied approval of a settlement in the Debtor's Chapter
11 plan, resulting in the denial of confirmation of the plan
and confirmation of a later plan with a provision stating
that the Debtor would not pursue any avoidance actions
against his wife; and (2) entered the stay relief order. We
find no error by the bankruptcy court.
litigation preceded the filing of the Debtor's Chapter 11
bankruptcy case, including a lawsuit holding the Debtor
liable as the guarantor of a lessee's obligations under a
real property lease and related proceedings, an involuntary
Chapter 7 bankruptcy of the Debtor, a Chapter 11 bankruptcy
of the lessee, and fraudulent transfer proceedings against
the Debtor and his wife. The dispute in this appeal focuses
on the fraudulent transfer action. As background, we outline
the proceedings relating to the guarantee judgment against
the lessor under a lease for which the Debtor personally
guaranteed the obligations of the lessee (an LLC that he had
formed) obtained a state court judgment exceeding $2.2
million against the Debtor and the LLC. Non-bankruptcy
attempts by the Debtor to avoid collection of that judgment
proved unsuccessful. The Debtor unsuccessfully brought a
state court lawsuit seeking relief from the guarantee
judgement. The Debtor's lawsuit against Lariat was
dismissed but the Debtor appealed the dismissal order, which
remains pending due to the Debtor's bankruptcy. A
separate attempt by the Debtor in the LLC's bankruptcy
case to enjoin Lariat from enforcing the guarantee judgment
was also unsuccessful. Ultimately, Lariat obtained a state
court order (which was stayed by the Debtor's Chapter 11
filing) allowing it to liquidate the Debtor's non-exempt
assets to satisfy the guarantee judgment.
(together with other creditors) commenced a pre-petition
fraudulent transfer action against the Debtor's wife in
state court, and later added the Debtor as a co-defendant.
Ultimately, the Debtor and his wife were held jointly and
severally liable to Lariat for fraudulent transfers totaling
approximately $800, 000. The Debtor and his wife later moved
in the state court for amended findings in that action. On
the petition date of the Debtor's Chapter 11 case, the
state court had not ruled on the motion for amended findings
and the Debtor believed that the automatic stay applied to
the fraudulent transfer proceeding.
Debtor filed his bankruptcy petition on February 10, 2014. On
his schedules, the Debtor listed assets exceeding the amount
of his liabilities. Lariat's guarantee judgment was
capped under Bankruptcy Code § 502(b)(6). The Debtor filed
his Second Modified Plan of Reorganization (Second Modified
Plan), which proposed to release his wife, Barbara Wigley,
from all claims held against her by the Debtor or the estate
(eliminating the fraudulent transfer judgment against her) in
exchange for her settlement payment (Settlement).
Specifically, the Second Modified Plan stated:
I. DEFINED TERMS
"Barbara Wigley Settlement Payment" means the sum
of $350, 000.00, to be paid pursuant to Section 4.3(A) of the
4.3. Plan Performance
A. Plan Funding.
In exchange for the release provided for in Section 4.4 of
the Plan, on or before the Effective Date, Barbara Wigley
shall remit the Barbara Wigley Settlement Payment to the
Debtor, and the Debtor shall distribute one hundred percent
of such funds to the holders of Class 1 [general unsecured]
claims pursuant to the terms of the Plan. The Debtor shall be
responsible for payment of all other amounts due and payable
under the Plan.
4.4. Settlement and Release of Claims Against Barbara Wigley
Confirmation of the Plan shall constitute approval of a
settlement agreement under which all claims that the Debtor
or any other representative of the estate could have asserted
against Barbara Wigley as of the Confirmation Date, including
but not limited to Avoidance Actions, shall be released in
exchange for payment of the Barbara Wigley Settlement
Payment, which shall be due no later than the Effective Date.
The settlement and release provided for herein shall be
binding on all ...