Daskal v. 1584 Fulton, LLC et al

Filing 11

ORDER. For the reasons set forth in the attached Memorandum and Order, the settlement order entered by the Bankruptcy Court is affirmed. This appeal is either moot or without merit. The Clerk of Court is respectfully requested to enter judgment in favor of the appellees and close this case. Ordered by Judge Kiyo A. Matsumoto on 10/23/2015. (McNulty, John)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------ X
MARTIN DASKAL,
ORDER
14-CV-7402 (KAM)

Appellant,
-against1584 FULTON, LLC, ALAN LEDERFEIND,
JOSEPH TYRNAUER, and MFG FULTON
HOLDINGS, LLC,
Appellees.
X
-----------------------------------MATSUMOTO, United States District Judge:

On September 25, 2014, the United States Bankruptcy
Court for the Eastern District of New York (the “Bankruptcy
Court”) entered an order approving the settlement of the
objection of appellant Martin Daskal and the debtor 1584 Fulton,
LLC to the claim by appellee MFG Fulton Holdings, LLC (“MFG
Fulton”), which was negotiated by Plan Administrator Alan
Lederfeind (the “Plan Adminstrator”) in the Chapter 11
bankruptcy of 1584 Fulton, LLC (“debtor”).

Presently before the

court is an appeal from the Bankruptcy Court’s order by
appellant Daskal.

For the reasons set forth below, the appeal

is denied.
BACKGROUND
1584 Fulton, LLC, the debtor in the confirmed chapter
11 case In re 1584 Fulton LLC, Petition No. 13-40279, is a New
York limited liability company that was engaged in the business

1

of owning and operating the real property located at 1584 Fulton
Street in Brooklyn, New York (the “Property”).

(See ECF No. 7,

Brief for MFG Fulton Holdings, LLC (“MFG Fulton Br.”) Ex. 2,
Transcript of 12/2/14 Bankruptcy Court Hearing (“Dec. 2 Tr.”),
17.)

The Property, which is the debtor’s only asset, is a

vacant building that the debtor acquired in February 2002 for
$187,500.

(Id.)

Appellant and appellee Joseph Tyrnauer own

equal interests in the debtor.

(Id.)

On or about February 13, 2009, appellant and Mr.
Tyrnauer, on behalf of the debtor, executed a promissory note
pursuant to which the debtor agreed to pay Mr. Tyrnauer or the
holder of the Note $1,050,000 on February 12, 2010.

(ECF No. 5,

Appellant’s Brief (“Appellant Br.”) Ex. DD, MFG Proof of Claim
(“MFG Claim”), at 9-10; see also Dec. 2 Tr. 17.)

The note was

to be secured by a mortgage on the Property, which was never
recorded.

(See MFG Claim at 11-12.)

Appellant states that, as

consideration for the note, Mr. Tyrnauer was to personally
invest $1,050,000 to complete the development of a different
property owned by 333-345 Green LLC (“Green LLC”), in which Mr.
Daskal and Mr. Tyrnauer also held equal interests.

(See

Appellant Br. Ex. H, 9/16/14 Declaration of Martin Daskal in
Opposition to Motion to Approve Settlement, ¶¶ 1-5.)

Mr.

Tyrnauer acknowledged that he never put cash into Green LLC but
stated that the consideration for the note was a $1,050,000

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reduction in the claims that Mr. Tyrnauer’s wholly-owned
companies had against Green LLC.

(See In re 1584 Fulton LLC,

ECF No. 41-1, 7/25/13 Declaration of Joseph Tyrnauer in Support
of Response of MFG Fulton to Debtor’s Motion to Disallow MFG
Fulton Claim ¶¶ 7-8.)
The debtor did not remain current on its real estate
taxes and, in or about the 2011, NYCTL 2010-A Trust commenced a
tax lien foreclosure action in New York State Court with respect
to the Property.

(Dec. 2 Tr. 17.)

The debtor then filed a

voluntary petition for relief under Chapter 11 of Title 11 of
the United States Code (the “Bankruptcy Code”) on January 17,
2013, which stayed the state court foreclosure action.
Tr. 18.)
2013.

(Dec. 2

Mr. Tyrnauer assigned the note to MFG Fulton in April

(See MFG Claim at 5-8.)
On May 2, 2013, MFG Fulton, as assignee of the note,

filed a proof of claim in the debtor’s Chapter 11 case asserting
a claim in the amount of $1,495,418.15, plus interest at the
fixed rate 11.500% (the “MFG Claim”).
Claim.)

(See Dec. 2 Tr. 18; MFG

After the debtor’s time to file a plan and disclosure

statement ended, on June 21, 2013, MFG Fulton filed a creditor’s
plan of liquidation (the “MFG Plan”) and disclosure statement.
(Appellant Br. Ex. B, MFG’s Plan of Liquidation; see also Dec. 2
Tr. 18.)

The disclosure statement stated that MFG Fulton was a

holder in due course of the note executed by appellant and Mr.

3

Tyrnauer, 1 which had been assigned to MFG Fulton, and that the
outstanding loan amount was $1,495,418.15 at the time the
petition was filed.

(See In re 1584 Fulton LLC, Petition No.

13-40279, ECF No. 30, Disclosure Statement, at 5-6; Dec. 2 Tr.
18.)
On June 26, 2013, the debtor filed an objection to and
motion to disallow or reduce the MFG Claim (the “MFG Claim
Objection”), and on August 1, 2013, appellant filed a
declaration in support of the MFG Claim Objection. (See In re
1584 Fulton LLC, ECF Nos. 37, 47.)

On July 26, 2013, the Debtor

filed an objection to the MFG Plan and disclosure statement.
(See In re 1584 Fulton LLC, ECF No. 43.)

Both appellant and the

debtor argued that the MFG Plan was not proposed in good faith,
as required by the Bankruptcy Code, and that Mr. Tyrnauer
assigned the mortgage to MFG Fulton in order to disguise or hide
his involvement with and knowledge of what appellant
characterized as the “bogus nature” of the note.
19.)

(Dec. 2 Tr.

Mr. Tyrnauer did not oppose the MFG Claim and supported

the MFG Plan. (Dec. 2 Tr. 18.)
On July 26, 2013, MFG Fulton filed a response to the
MFG Claim Objection (see In re 1584 Fulton LLC, ECF No. 41), and
the debtor filed its reply on August 1, 2013 (see In re 1584
1 Appellant contends that MFG Fulton is not a holder in due course because (1)
it was on notice that the note was overdue when it was assigned and (2) the
payor was in bankruptcy when the note was assigned. (See Appellant Br. at
8.)

4

Fulton LLC, ECF No. 48).

On August 12, 2013, the Bankruptcy

Court entered an order approving the disclosure statement, over
the debtor’s objection, and setting deadlines for objections to
the MFG Plan and a confirmation hearing on the MFG Plan.

(See

In re 1584 Fulton LLC, ECF No. 51.)
Pursuant to the MFG Plan, MFG Fulton proposed a public
sale of the Property to Skidbladnir LLC for $2,250,000.00,
subject to better offers, as set forth in the bidding procedures
approved by the Bankruptcy Court on August 8, 2013.
1584 Fulton LLC, ECF No. 51.)

(See In re

An auction sale of the Property

was held on October 4, 2013, and Avrumi House LLC made an
initial over bid of $2,371,500.00, and was declared the
successful bidder.

(See In re 1584 Fulton LLC, ECF No. 173,

Order Confirming the Results of Public Sale.)
On October 8, 2013 and October 15, 2013, the debtor
filed an objection to confirmation of the MFG Plan (see In re
1584 Fulton LLC, ECF Nos. 65, 76), and on December 13, 2013,
appellant joined in debtor’s objection to the confirmation of
the MFG Plan (see In re 1584 Fulton LLC, ECF No. 126).

The sole

issue raised by the debtor and appellant in their objections was
whether the MFG Plan was filed in good faith, within the meaning
of section 1129(a)(3) of the Bankruptcy Code.

The issue of good

faith turned on the nature of the note assigned to MFG Fulton,
as MFG Fulton would not be able to file a creditor’s plan in the

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debtor’s Chapter 11 case without a valid claim against the
debtor.

On October 15, 2013, the Bankruptcy Court found that

the MFG Plan satisfied the other requirements of section 1129(a)
and scheduled an evidentiary hearing on the issue of whether the
MFG Plan was proposed in good faith and not forbidden by law.
(Dec. 2 Tr. 19; see In re 1584 Fulton LLC, Minute Entry dated
10/15/13.)
Over the course of seven months, on approximately
fourteen different days, the Bankruptcy Court heard argument and
received evidence concerning the issue of whether the MFG Plan
satisfied the good faith requirement of Bankruptcy Code Section
1129(a)(3).

(Dec. 2 Tr. 19.)

Evidence was presented regarding

validity of the note and what consideration was paid. 2

(See

Appellant Br. at 6.)
At a hearing held before the Bankruptcy Court on May
27, 2014, the debtor and appellant withdrew their objections to
the confirmation of the MFG Plan, and on June 2, 2014, after
days of trial and without objection, the Bankruptcy Court
entered a consensual order confirming the MFG Plan. 3

(Dec. 2 Tr.

19; Appellant Br. Ex. C, Order Approving Plan of Liquidation.)
2 Appellant contends that additional expert evidence, not presented to the
Bankruptcy Court during the hearings related to the MFG Plan, indicated that
Mr. Tyrnauer’s proof that he had reduced debts owed to his company by Green
LLC was fabricated. (See Appellant Br. at 10.)
3 On May 9, 2014, the Bankruptcy Court also entered an order confirming the
results of the sale of the Property. (See In re 1584 Fulton LLC, ECF No.
173.)

6

Section 7.1 of the MFG Plan provides for the
appointment of a Plan Administrator on the Confirmation Date.
The “Plan Administrator, on behalf of the Debtor, the Disbursing
Agent and the Successful Purchaser shall take all necessary
steps, and perform all necessary acts, to consummate the terms
and conditions of the Plan.”

(Appellant Br. Ex. B at 21.)

Section 8.5 of the MFG Plan provides that “[a]fter the
Confirmation Date, only the Plan Administrator and the
Disbursing Agent shall have authority to file, settle,
compromise, withdraw or litigate to judgment objections to
Disputed Claims.”

(Id.; Dec. 2 Tr. 22-23.)

Section 1.46 of the

MFG Plan defined “Plan Administrator” as meaning “Alan
Lederfeind.” (Appellant Br. Ex. B; Dec. 2 Tr. 21-22.)
Although the role of the Plan Administrator was
defined in the confirmed MFG Plan, at a hearing held before the
Bankruptcy Court on June 23, 2014, the Plan Administrator and
his counsel appeared for the first time before the Bankruptcy
Court in the Chapter 11 case and expressed the need for a formal
plan administrator agreement and order in aid of confirmation
approving that agreement in order to give effect to the intended
role of the Plan Administrator.

(See In re 1584 Fulton LLC, ECF

No. 193, Transcript of 6/23/14 Hearing, at 15.)
The agreement was signed on July 28, 2014 (the “Plan
Administrator Agreement”), and approved by order of the

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Bankruptcy Court on August 6, 2014 (the “Plan Administrator
Order”).

(Appellant Br. Ex. D, Order in Aid of Confirmation of

Plan Approving Plan Administrator Agreement.)

Pursuant to the

MFG Plan, the Plan Administrator Agreement, and the Plan
Administrator Order, Alan Lederfeind was appointed Plan
Administrator and, under the terms of the MFG Plan and Plan
Administrator Agreement, was given the sole authority to file,
settle, compromise, withdraw or litigate to judgment objections
to disputed claims, including the pending objection to the MFG
Claim.

The Plan Administrator’s duties were to effectuate the

terms of the MFG Plan, propose any claims objections, if
appropriate, and settle any claims objections.

(MFG Plan at 10,

26-27.)
After reviewing the MFG Claim, the MFG Claim
Objections, the responses to the MFG Claim Objection, deposition
transcripts, hearing transcripts, and certain exhibits, the Plan
Administrator and his counsel determined that the MFG Claim
Objections should be settled.

(See In re 1584 Fulton LLC, ECF

No. 206-1, Proposed Stipulation between Plan Administrator and
MFG Fulton Allowing Claim of MFG Fulton dated 8/28/14, at 3-4.)
The Plan Administrator and MFG reached a resolution to the MFG
Claim Objections, pursuant to which MFG would have an allowed
general unsecured claim in the reduced amount of $1,325,000,
without any additional interest or attorney’s fees, and would

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receive payment of its agreed upon claim within three business
days of the Bankruptcy Court’s approval of a stipulation
memorializing the described resolution (the “Stipulation”).
(See generally id.)
On August 28, 2014, the Plan Administrator filed a
motion seeking approval of the Stipulation (Appellant Br. Ex. E
(the “Motion to Approve”); see MFG Fulton Br. Ex. 1, Transcript
of 9/23/14 Bankruptcy Court Hearing (“Sept. 23 Tr.”), 19-20.)
The motion stated, in relevant part:
The proposed settlement of MFG’s Claim meets the “lowest level of
reasonableness” standard since it resolves a long standing and
costly litigation for a fair amount. After poring through the
hundreds of pages of deposition transcripts, the transcripts of
the Hearings, as well the pertinent trial exhibits, the Plan
Administrator and the undersigned counsel believe that it is more
likely than not that this Court will find that that Joseph
Tyrnauer gave consideration for his note and mortgage, and that
the MFG Claim is valid. Since all creditors have been, or will
be, paid in full from the proceeds of the sale of the Debtor’s
real property; the issues concerning the recordation of the
mortgage is not relevant.
After reviewing the record, the Plan Administrator’s [sic] has
concluded that the centerpiece of the Debtor’s objection to
confirmation of the Plan was the validity of the MFG Claim. Thus,
the Plan Administrator believes that based upon the record, the
likelihood of MFG Claim proving the validity of its claim, and
being entitled to additional interest and attorneys’ fees,
supports the reasonable of the settlement being proposed by this
motion.

(Appellant Br. Ex. E.)

On September 16, 2014, appellant filed

an objection to the Motion to Approve (Appellant Br. Ex. G (the
“Daskal Objection”); see Sept. 23 Tr. 20), and on September 19,
2014, Mr. Tyrnauer, MFG Fulton, and the Plan Administrator filed
replies to the Daskal Objection (Appellant Br. Exs. I, L, and M;
see Sept. 23 Tr. 20).

On September 22, 2014, the debtor joined

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in appellant’s objection to the Motion to Approve.

(Appellant

Br. Ex. O; see Sept. 23 Tr. 30.)
After a hearing before the Bankruptcy Court on
September 23, 2014, Bankruptcy Judge Stong approved the
settlement of the MFG Claim on the record, over the objections
of appellant and the debtor.

(Sept. 23 Tr. 98-122.)

On

September 25, 2014, the Bankruptcy Court entered an order on the
docket granting the Motion to Approve and approving the
stipulation by and between the Plan Administrator and MFG Fulton
(the “Approval Order”).

(Appellant Br. Ex. Q; see Dec. 2 Tr.

20-21.)
Neither appellant nor the debtor sought a stay of the
Approval Order.

On or about September 29, 2014, MFG Fulton’s

counsel, the disbursing agent under the MFG Plan, remitted the
sum of $1,325,000 to MFG Fulton, in accordance with the
Stipulation and the Approval Order.

(See ECF No. 6, Brief of

Alan Lederfeind, Plan Administrator, at 14; see also Dec. 2 Tr.
21.)
On October 8, 2014, after the settlement had been
approved but before the Bankruptcy Court was informed that the
funds had been paid to MFG Fulton, the debtor and appellant
filed motions for reconsideration of the Approval Order (the
“Reconsideration Motions”).
Nos. 225-226.)

(See In re 1584 Fulton LLC, ECF

At a November 10, 2014 hearing, the Bankruptcy

10

Court heard argument from counsel for appellant and the debtor
on their Reconsideration Motions.

(See In re 1584 Fulton LLC,

ECF No. 242, 11/10/14 Hearing Transcript.)

On December 2, 2014,

Judge Stong issued an oral decision denying the Reconsideration
Motions. (Dec. 2 Tr. 28-47.)

The Bankruptcy Court entered

orders on the docket denying the Reargument Motions on December
4, 2014.

(Appellant Br. Exs. AA, BB.)
On December 18, 2014, appellant filed a notice of

appeal of the Approval Order, which was transmitted to this
court on December 19, 2014.

(Appellant Br. Ex. CC; ECF No. 1,

Notice of Appeal from Bankruptcy Court.)

After a motion to

extend the deadlines for filing briefs in this appeal was
granted on the consent of the parties, appellant filed his brief
and annexed exhibits on February 4, 2015, and appellees Alan
Lederfeind and MFG Fulton filed opposition briefs with annexed
exhibits on March 6, 2015.

(ECF No. 5, Appellant’s Brief; ECF

No. 6, Brief of Alan Lederfeind, Plan Administrator; ECF No. 7,
Brief for MFG Fulton.)

Appellant filed a reply brief on March

20, 2015, and the record was transmitted to the court on April
24, 2015.

(ECF No. 9, Appellant’s Reply Brief (“Appellant

Reply”; ECF No. 10, Transmittal of Record on Appeal.)
LEGAL STANDARD
I.

Standard of Review
District courts have jurisdiction to review final

11

judgments, orders, and decrees of a bankruptcy court under 28
U.S.C. § 158(a)(1).

The bankruptcy court’s conclusions of law

are reviewed de novo, and its findings of fact are reviewed for
clear error.

See In re Vebeliunas, 332 F.3d 85, 90 (2d Cir.

2003); see also Fed. R. Bankr. P. 8013.
A bankruptcy court’s finding that a settlement is
reasonable pursuant to Rule 9019 is reviewed for abuse of
discretion.

See, e.g., In re Delta Airlines, Inc., 374 B.R.

516, 522 (S.D.N.Y. 2007).

If “no reasonable [person] could

agree with the decision” to approve the settlement, the
bankruptcy court will be found to have abused its discretion.
Delta, 374 B.R. at 522 (internal citations and quotation marks
omitted)).
II.

Mootness
The appeal of a bankruptcy court order is presumed

equitably moot when, pending a final appellate decision, there
is either (1) “substantial consummation” of the debtor’s
reorganization plan, or (2) a “comprehensive change in
circumstances” relative to the challenged order.

In re

Chateaugay Corp., 10 F.3d 944, 952 (2d Cir. 1993) (“Chateaugay
II ”); In re Chateaugay Corp., 988 F.2d 322, 325 (2d Cir. 1993)
(“Chateaugay I ”); In re Adelphia Comm. Corp., 222 Fed. App’x 7,
8 (2d Cir. 2006).

These principles are especially pertinent in

bankruptcy proceedings, where the ability to achieve finality is

12

essential to the fashioning of effective remedies.

Chateaugay

I, 988 F.2d 322, 325.
An appellant can rebut the presumption of mootness by
establishing that
(a) the court can still order some effective relief, (b) such
relief will not affect the re-emergence of the debtor as a
revitalized corporate entity, (c) such relief will not unravel
intricate transactions so as to knock the props out from under
the authorization for every transaction that has taken place and
create an unmanageable, uncontrollable situation for the
Bankruptcy Court, (d) the parties who would be adversely affected
by the modification have notice of the appeal and an opportunity
to participate in the proceedings, and (e) the appellant
pursue[d] with diligence all available remedies to obtain a stay
of execution of the objectionable order . . . if the failure to
do so creates a situation rendering it inequitable to reverse the
orders appealed from.

Chateaugay II, 10 F.3d at 952 (internal citations and quotations
omitted; alterations in original); see also In re Global Vision
Products, Inc., Nos. 07–cv–12628, 09–cv–374, 2009 WL 2170253, *4
(S.D.N.Y. July 14, 2009).
The Second Circuit has held that a party’s failure to
seek a stay of a bankruptcy order on appeal weighs heavily in
favor of finding equitable mootness.

See In re Malese 18 Corp.,

426 B.R. 44, 48-49 (E.D.N.Y. 2010) (citing In re Metromedia
Fiber Network, Inc., 416 F.3d 136, 145 (2d Cir. 2005)); see also
Chateaugay I, 988 F.2d at 326 (“The party who appeals without
seeking to avail himself of [a stay] does so at his own risk.”).
III. Evaluating a Settlement
The bankruptcy court must make an “informed and
independent judgment” in evaluating whether a settlement is fair

13

and equitable.

Protective Comm. for Indep. Stockholders of TMT

Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968).
Courts in this Circuit assess the following factors when
evaluating settlements in bankruptcy cases:
(a) the probability of success should the issues be litigated,
versus the present and future benefits of the settlement without
the delay and expense of litigation and subsequent appeals;
(b) the likelihood of complex and protracted litigation if the
settlement is not approved (with its attendant expense,
inconvenience, and delay), including the difficulty in collecting
on the judgment;
(c) the interests of the creditors, including the degree to which
creditors support the proposed settlement;
(d) the proportion of interested parties who support the
settlement, and the relative benefits to be received;
(e) the competency and experience of counsel supporting the
settlement, and the extent to which the settlement is the product
of arm's length bargaining; and
(f) the nature and extent of releases to be issued

See In re Iridium Operating LLC, 478 F.3d 452, 462 (2d Cir.
2007).
“A bankruptcy judge need not decide the numerous
questions of law and fact raised by the settlement, but rather,
should ‘canvass the issues and see whether the settlement falls
below the lowest point in the range of reasonableness.’”

In re

E. 44th Realty, LLC, No. 05 BR. 16167, 2008 WL 217103, at *8
(S.D.N.Y. Jan. 23, 2008) (quoting In re W.T. Grant Co., 699 F.2d
599, 608 (2d Cir. 1983)).

In determining whether to approve a

settlement, the bankruptcy court “should not substitute its
judgment for that of the trustee; rather the bankruptcy judge

14

and the district court may ‘give weight to the opinions of the
trustee, the parties, and their attorneys.’”

Id. (internal

citations and quotation marks omitted).
DISCUSSION
Appellant does not appear to contest that the
presumption of mootness applies, either because “an unstayed
order has resulted in a ‘comprehensive change of circumstances’”
or the “reorganization is ‘substantially consummated.’”

(See

Appellant Reply (applying the Chateaugay II factors).)

In this

case, the settlement of the MFG Fulton claim was approved over
one year ago, without any attempt by appellant or the debtor to
stay its effectuation, and MFG Fulton was paid $1,325,000 by the
disbursing agent.

The court finds that the evidence indicates

that there has been a comprehensive change of circumstances and
that the confirmed Plan has been substantially consummated.
Thus, the court will consider the Chateaugay II factors to
determine whether appellant can rebut the presumption of
mootness.
Appellant argues that the court can fashion effective
relief by ordering MFG Fulton to return the money it received in
settlement of its claim, and that such an unwinding would not
affect the re-emergence of the debtor or other transactions in
the reorganization, namely, the sale of the Property.

Most

significantly, appellant concedes that he did not seek a stay of

15

the order from which he appeals.

Consequently, appellant must

overcome a strong presumption that his appeal has been rendered
moot, see, e.g., Metromedia, 416 F.3d at 145, but only states
without further explanation that his failure to seek a stay
“does not . . . ‘create[] a situation rendering it inequitable
to reverse the orders appealed from.’”

(Appellant Reply at 6

(quoting Chateaugay II, 10 F.3d at 953).)
Even assuming the court could still order some
effective relief, which is disputed by the parties, appellant
has not shown that the remaining Chateaugay factors are
satisfied.

The Plan administrator, the parties to the debtor’s

Chapter 11 proceeding, and the Bankruptcy Court spent countless
hours litigating the bona fides of the promissory note, and
whether the MFG claim and Plan satisfied the good faith
requirement.

Moreover, appellant cannot satisfy the final

Chateaugay II factor and provides no explanation for his failure
to pursue a stay, nor any other evidence that would outweigh the
heavy presumption of a finding of mootness.

See Metromedia, 416

F.3d at 145 (“In the absence of any request for a stay, the
question is not solely whether we can provide relief ... but
also whether we should provide relief in light of fairness
concerns.”).

Accordingly, the court finds that the appeal is

moot.
Even if the appeal were not equitably moot, the court

16

finds that the Bankruptcy Court did not abuse its discretion in
approving the settlement. 4

The transcript from the hearing on

the Motion to Approve indicates that Judge Stong considered the
history of the case, the issues raised by the parties in
opposition, and the Iridium factors before concluding that the
settlement fell above the lowest point in the range of
reasonableness.
In support of appellant’s position that the Plan
Administrator should have been required to consult with him
before settling the MFG Claim, appellant cites one district
court case in which the court upheld a bankruptcy court’s
approval of a settlement that occurred after, inter alia, the
trustee proposing the settlement had “met with all interested
parties to ascertain the best course of action for the Debtor,
its creditors, and the estate.”

In re E. 44th Realty, LLC, No.

05 BR. 16167, 2008 WL 217103, at *4 (S.D.N.Y. Jan. 23, 2008). 5
Appellant argues that the Bankruptcy Court’s failure to require the Plan
Administrator to consult with appellant or Mr. Tyrnauer was an “articulation
of the legal standard used to evaluate the settlement” that should be
reviewed de novo, unlike the Bankruptcy Court’s decision to approve the
settlement, which may be reviewed for abuse of discretion. (See Appellant
Br. at 3.) The court finds this distinction unpersuasive, as appellant is
fundamentally challenging the Bankruptcy Court’s decision to approve the
settlement over his objection, and reviews the Bankruptcy Court’s
determination under the deferential abuse of discretion standard. Even under
a de novo standard of review, this court finds appellant’s argument to be
meritless and, for the reasons stated herein, affirms the Bankruptcy Court’s
evaluation and approval of the settlement.
4

5 In East 44th Realty, the district court held that the appeal was moot
because the sale pursuant to the approved settlement had closed and the
appellant had failed to seek a stay of the sale. In re E. 44th Realty, LLC,
2008 WL 217103, at *6-8. The court also held that, even if the appeal was
not moot, the bankruptcy court’s determination that the settlement was

17

Appellant cannot cite authority for his position that the Plan
Administrator was required to consult with appellant or Mr.
Tyrnauer before proposing a settlement, or that the Bankruptcy
Court’s determination that a settlement was reasonable, where
the Plan Administrator evaluated the settlement based on the
existing record without consulting appellant or Mr. Tyrnauer,
constitutes reversible error.
Appellant also contends that the evidence of record
establishes that Mr. Tyrnauer did not provide consideration for
the note, rendering the MFG Claim “worthless” and the Bankruptcy
Court’s decision to approve the settlement in error.
Br. at 23.)

(Appellant

The Bankruptcy Court heard and considered evidence

related to the validity of the MFG Claim, the MFG Plan, and the
Plan Administrator Agreement.

The orders approving the Plan and

the Plan Administrator Agreement provided that the Plan
Administrator would be vested with sole authority to object to
claims following confirmation of the MFG Plan.

As noted above,

the Bankruptcy Court extensively reviewed the record, including
but not limited to the Plan Administrator’s Motion to Approve,
considered the Iridium factors, determined that “[t]he
possibility of a significant reduction in this claim balanced
against the benefit of a certain reduction [of $175,000],” and
the fact that the settlement was the product of arm’s length
reasonable was not an abuse of discretion.

18

Id. at *9-12.

bargaining weighed in favor of approval, and overruled the
objections of the debtor and appellant.
114-22.)

(See Sept. 23 Tr. at

During the hearing on the motion for reconsideration,

the Bankruptcy Court noted that, although the debtor and
appellant had objected to and ultimately withdrawn their
objections to the MFG Plan, neither the debtor nor appellant had
objected to the Plan Administrator Agreement prior to its
approval, or the particular provisions granting the Plan
Administrator the authority to object to and settle all disputed
claims.

(See Dec. 2 Tr. 34-44.)

Accordingly, the court is

unable to find that the Bankruptcy Court abused its discretion
or misapplied the law in approving the settlement of the MFG
Claim.
CONCLUSION
For the reasons set forth above, the settlement order
entered by the Bankruptcy Court is affirmed.
either moot or without merit.

This appeal is

The Clerk of Court is

respectfully requested to enter judgment in favor of the
appellees and close this case.

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SO ORDERED.
Dated:

October 23, 2015
Brooklyn, New York
_____________/s/_____________
Kiyo A. Matsumoto
United States District Judge

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