Smith v. Slott

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 22-cv-61666-RKA

DON SMITH, et al.,

Appellants,

v.

SONYA S. SLOTT,

Appellee.

__________________________________/

ORDER AFFIRMING BANKRUPTCY COURT

Our Appellants, the Smith-Related Entities,1 challenge the Bankruptcy Court’s Order, which

approved a settlement between Sonya S. Slott (the “Trustee”) and Green Tech Development, LLC

(“Green Tech”), a creditor of the bankruptcy estate. See In re: No Rust Rebar, Inc., Case No. 21-12188-

PDR (the “Bankruptcy Case”) [Bankr. ECF No. 327].2 In approving that settlement (Appellants

claim), the Bankruptcy Court violated several substantive and procedural requirements of the

Bankruptcy Code, 11 U.S.C. §§ 101–1532 (the “Code”). Having carefully examined the briefs and the

record—and for the reasons outlined below—we now AFFIRM the Bankruptcy Court’s Order in

full.3

1 What we call the “Smith-Related Entities” are actually the following group of individuals and entities:

(1) Don Smith; (2) Global Energy Sciences, LLC; (3) Raw Energy Materials, Corp.; and (4) Yellow

Turtle Design, LLC.

2 We refer to the docket in the Bankruptcy Case as “Bankr. ECF No.”

3 Neither party requested oral argument. And, after carefully reviewing the briefs and the record, we

agree that any such argument would have been unnecessary because the parties have adequately

presented the facts and legal arguments in their papers. See FED. R. BANKR. P. 8019(b)(3).

THE FACTS4

I. No Rust Rebar, Inc., faces financial difficulties

Don Smith is “the president of No Rust Rebar, Inc.,” the debtor in this case. See Chapter 11

Subchapter V Voluntary Petition (“Chapter 11 Petition”) [Bankr. ECF No. 1] at 6. Smith founded the

company in 2015 “to manufacture and sell basalt-based reinforcing bars” that “do not rust.” See

Debtor’s Plan of Reorganization or Liquidation (“Debtor’s Plan”) [Bankr. ECF No. 56] at 1. Because

No Rust “needed to secure a manufacturing facility,” Smith contracted to buy a “foreclosed industrial

facility . . . for $450,000 and paid a non-refundable $50,000 deposit.” Order Converting Case to

Chapter 7 (“Conversion Order”) [ECF 13-2] at 5. Unfortunately, when the financing for the purchase

fell apart, No Rust had to change course. See id. at 5 (“Without additional investment . . . No Rust

lacked the funds to close and risked losing both the Property and its $50,000 deposit.”). And that

alternative course is what led the parties to this bankruptcy litigation.

Because No Rust didn’t have the funds to close, it “agreed to assign its right to purchase the

Property” to another company, Green Tech Development, LLC (“Green Tech”), which went ahead

and bought the property. Ibid. No Rust would later contend that “consideration for the assignment

included an option to purchase the Property [back] from Green Tech.” Id. at 6. But the record reveals

“no signed written agreement memorializing the purported option.” Ibid. So, when “Smith sought to

exercise No Rust’s purported option[,] . . . Green Tech refused to sell.” Id. at 7. No Rust then sued

Green Tech for specific performance in state court (the “Property Dispute”), see Notice of Removal

of Civil Action [Bankr. ECF No. 25], and filed a lis pendens against the Property—as a condition of

4 These facts are taken from the Bankruptcy Case filings [“Bankr. ECF”] and the Bankruptcy Case

record. See Bankruptcy Transmittal of Bankruptcy Appeal [ECF No. 13]. The record was transmitted

in two parts: (1) the Appellant’s Designation of the Items to be Included in the Record on Appeal

[ECF No. 13-1] (“Bankr. R.”); and (2) the Appellee’s Designation of Additional Items for Record on

Appeal [ECF No. 13-2] (“Bankr. Supp. R.”).

which it posted a $300,000 bond (the “Cash Bond”), see Trustee Sonya S. Slott’s Motion to Approve

Stipulation to Compromise Controversy (“Motion to Approve Compromise”) [ECF No. 13-1] at 36

(“[T]he Debtor had posted a cash bond in th[e] state court case as a condition for maintaining a Lis

Pendens on the Pompano Beach Property in favor of Green Tech in the amount of $300,000.00.”).

Green Tech separately responded by suing No Rust (also in state court) for ejectment and civil

trespass. See Notice of Removal of Civil Action [Bankr. ECF No. 26].

But that was just the beginning of No Rust’s problems. In 2019, the electric company cut off

the Property’s power for reasons that aren’t relevant here. See Conversion Order at 8. Rather than

lease some other property, though, No Rust continued to try to operate its business on the Property—

with a generator that provided only intermittent power. See id. at 8–9 (“[A] generator has provided

some power. . . . No Rust could have chosen to lease another Property. . . . [But] Smith testified, in

his business judgment, that was too expensive and not in No Rust’s best interests.”).

Finally, in March 2021, No Rust filed a voluntary bankruptcy petition to reorganize its business

under Subchapter V of Chapter 11 of the Bankruptcy Code. See Chapter 11 Petition at 1–2. Smith

continued running No Rust—now the “Debtor-in-Possession,” which was “allowed to remain in full

operation of its business and to manage its property.” Order Authorizing Debtor in Possession to

Continue Operation of its Business [Bankr. ECF No. 8] at 1.

II. No Rust tries to reorganize but is forced to liquidate

In the Bankruptcy Case, Green Tech filed a “Proof of Claim,” averring that, because of the

ongoing property dispute, No Rust owed it $1,948,339 in damages. See Green Tech Proof of Claim

[ECF No. 13-1] at 102–03 (reflecting a $1,948,339 claim for “’[d]amages resulting from a Lis Pendens

and occupying property”). Green Tech’s claim was partially secured by the $300,000 cash bond. See id.

at 103 (noting that “[t]he claim is secured by a lien on the property” of “300,000” and describing the

lien as the “bond posted”). The remaining $1,648,339 of the claim was unsecured. Ibid. (“Amount of

the claim that is unsecured: $1,648,339.00”). Green Tech reserved the right to amend its claim and “to

file an administrative claim.” Id. at 106. No Rust objected and asked the Bankruptcy Court to strike

the proof of claim because, if No Rust were to “prevail in [the Property Dispute],” the “claim w[ould]

be zero.” See Objection to Claim [Bankr. ECF No. 123] at 1. Green Tech responded by noting that it

had filed its “conditional claim” at the “court’s direction.” Response to Objection to Claim [Bankr.

ECF No. 150] ¶ 3.

After No Rust removed the Property Dispute to the Bankruptcy Court, see Notice of Removal

[Bankr. ECF No. 25], the Bankruptcy Court denied both sides’ summary-judgment motions, see Order

Denying Motions for Summary Judgment [ECF No. 31-1] at 276 (“Both parties seek summary

judgment, but genuine disputes as to material facts persist. Consequently, the Court denies both

motions.”). And No Rust’s reorganization “plan” made clear that, “[i]f [No Rust] is not successful in

the pending litigation . . . this case will be converted to a Chapter 7 liquidation.” Debtor’s Plan at 2.

But, before the Bankruptcy Court could adjudicate the case on its merits, Green Tech moved

for the Subchapter V Trustee to take control of the bankruptcy estate. See Motion for Removal of

Debtor as Debtor in Possession (“Motion for Removal”) [Bankr. ECF No. 70]. Green Tech alleged

that Smith had engaged in “Fraud,” “Dishonesty,” “Multiple, Incurable Conflicts of Interest,” and

“Gross Mismanagement.” See id. at 1–2. Soon after, Green Tech moved, in the alternative, to convert

the case to a Chapter 7 liquidation—alleging (again) problems with Smith’s control of the bankruptcy

estate. See generally Motion to Convert to Chapter 7 (“Motion to Convert”) [Bankr. ECF No. 116].

One of the issues Green Tech identified was that “Smith [had] transferred recoverable assets of the

Debtor to the Smith [Related] Entities [and] also to his partner Elina Jenkins and her [b]usiness[,]

Yellow Turtle Designs, LLC.” Id. at 2. A Chapter 7 trustee was needed, Green Tech argued, because

“the Debtor[, under Smith’s control, was] conflicted and unwilling to recover the assets of the Debtor

transferred to [these entities].” Ibid. In Green Tech’s view, then, a Chapter 7 liquidation would be “in

the best interests of creditors and the estate.” Id. at 6. After four days of evidentiary hearings on these

(and other related) motions, see Conversion Order at 13 (noting that the court held evidentiary hearings

on December 8, 2021, December 21, 2021, January 4, 2022, and January 10, 2022), the Bankruptcy

Court converted the case to a Chapter 7 liquidation, see Conversion Order at 34 (“This case is

CONVERTED to a Chapter 7 case.”).

In its Conversion Order, the Bankruptcy Court concluded that Smith had, in fact, mismanaged

the estate. See generally Conversion Order.5 So, for instance, the Bankruptcy Court found that Smith

had commingled No Rust’s assets and liabilities with his own in a giant asset soup he called “the

Family.” Id. at 21 (“[T]he Family appears to have been a group of commingled entities whose

responsibilities, assets, and liabilities were constantly shuffled to fit Smith’s needs or whims.”). And,

the court continued, while these business practices “demand[ed] an investigation into whether the

estate ha[d] an interest in any . . . assets of the other Family members,” Smith could not be trusted to

run that investigation. Id. at 25 (“Left in control, Smith, as the principal of No Rust, would have to

investigate and, if necessary, sue himself and his own entities. Clearly this is an incurable conflict of

interest.”).

Moreover, because No Rust’s reorganization plan “[was] not feasible,” id. at 27, its assets

would need to be liquidated—a process “best . . . accomplished through a Chapter 7,” id. at 34. At the

time, after all, No Rust was “not operating,” id. at 26, and it was relying entirely on the possibility that

it might one day “prevail in the Property Dispute,” id. at 27 (“Here, the only means provided for the

Plan’s implementation require that No Rust prevail in the Property Dispute.”). But a No Rust victory

5 Because the Conversion Order was never appealed, we accept its findings as true. See In re Cummings,

381 B.R. 810, 823 (S.D. Fla. 2007) (Gold, J.) (explaining that, under the “law of the case doctrine,”

“the findings of fact and conclusions of law by an appellate court are generally binding in all

subsequent proceedings in the same case in the trial court or on a later appeal” and noting that the

“doctrine applies to lower court rulings that have not been challenged on appeal” (cleaned up)).

(the court explained) was “not reasonably likely” because No Rust faced “an undeniably high burden.”

Id. at 28. For one thing, its specific-performance claim required “prov[ing] the contract . . . by

competent and satisfactory proof which must be clear, definite and certain.” Id. at 27. For another,

“[t]o take the [oral-option] contract out of the statute of frauds under the partial performance

exception,” No Rust would have to satisfy a multipronged test. Ibid. Even if No Rust could overcome

these obstacles, it would then have to “prov[e] that it strictly complied with the applicable provisions

of the contract and was ready, willing, and able to perform under the contract at the time it exercised

the Option.” Id. at 27–28. At the end of the day, “No Rust [was] an entity that, at best, h[eld] an

interest in a single piece of real estate, lack[ed] any real production facility, and ha[d] failed to provide

a ‘viable solution’ to becoming an operational business.” Id. at 33.

III. The Trustee and Green Tech agree to a compromise and seek court approval

Once Sonya S. Slott was appointed as the estate’s Chapter 7 trustee, see Notice of Appointment

of Trustee [Bankr. ECF No. 195], she “and Green Tech began settlement discussions, which

continued over several weeks,” see Trustee Sonya S. Slott’s Motion to Approve Stipulation to

Compromise Controversy Between Trustee and Green Tech Development, LLC (“Motion to

Approve Compromise”) [ECF No. 13-1] at 38 ¶ 17. On July 19, 2022, Slott and Green Tech reached

a global resolution of their disputes (the “Compromise”) and moved for the court’s approval. See

generally Motion to Approve Compromise.

As relevant here, the Compromise outlined the following terms: (1) Green Tech and the estate

would mutually dismiss their ongoing litigation, and the Trustee would withdraw her objection to

Green Tech’s claim, see Settlement Agreement and Release [ECF 13–1] at 57–58 (“12. Dismissal of

Adversary Proceedings and Withdrawal of Objection with Prejudice: . . . .”); (2) Green Tech and the

estate would exchange mutual releases for all potential suits and claims, see id. at 56 (“11. Mutual Release:

. . . .”); (3) Green Tech and the estate would jointly sell their respective interests in the Property with

a total reserve price of $3,000,000 (the “Property Sale”), id. at 51 (“4. Special Power of Attorney

Recorded in Favor of Trustee,” and “5. Marketing and Sale of the Pompano Beach Property: . . . .”);

(4) the proceeds of the Property Sale would be shared between Green Tech and the estate in tiers,

with different price targets triggering different sharing percentages, see id. at 55 (“6. Distribution and

Payments from Sale Proceeds: . . . .”); (5) regardless of the Property Sale’s outcome, the Cash Bond

No Rust had posted would be released to the estate, see id. at 54–55 (“7. Absolute Payment of Net

Cash Bond to the Estate: . . . .”); (6) “in recognition” of Green Tech’s “substantial contribution” to

the Chapter 11 phase of the case, which “materially advanced” the estate’s litigation prospects against

No Rust’s affiliates and “insiders” for improper transfers of estate assets (the “Insider Litigation”),

Green Tech would receive 33% of the recovery from any such future litigation (the “Litigation Sharing

Provision”), see id. at 55 (“9. Sharing in Recoveries from Certain Litigation Brought by the Estate: . . .

.”); and (7) “[i]n consideration of the general terms of the settlement,” Green Tech would be granted

a “non-priority general unsecured claim” of “$2,500,000,” id. at 56 (“10. General Unsecured Claim in

Favor of Green Tech: . . . .”).

IV. The Bankruptcy Court approves the Compromise

The Bankruptcy Court set the Motion to Approve Compromise—and some related filings—

for a hearing on August 17, 2022 (the “Settlement Approval Hearing”). See Notice of Hearing [ECF

No. 13-1] at 64. The Smith-Related Entities filed eight objections to the Compromise. See Objections

to Motion to Compromise [ECF No. 13-1] at 66–67. They also submitted a “counterproposal” for

the trustee to adopt in lieu of the Compromise. See id. at 68–69. The counterproposal (in relevant part)

offered the Trustee $200,000 in exchange for an assignment of (1) the estate’s claims in the Property

Dispute and (2) any potential claims against No Rust’s affiliates and insiders. See ibid.

The Bankruptcy Court heard from all parties at the Settlement Approval Hearing. See August

17, 2022, Hearing Transcript (“Aug. 17 Hr’g Tr.”) [ECF No. 19-1] at 246:4–15 (noting that, “with

respect to the motion to compromise controversy,” the court would “hear from the trustee’s counsel,

and then to hear from any others supporting the settlement, and then [ ] would turn the podium over

to the objecting parties”). After an extensive colloquy with counsel for all the interested parties, the

court overruled all but one of the Smith-Related Entities’ objections. See id. at 98:15–18 (“The Court:

. . . Right now what I’m finding . . . is that the settlement agreement is otherwise approvable.”). With

respect to that one objection, the court echoed Smith’s concern that the Litigation Sharing Provision

would pay Green Tech funds from the estate ahead of other creditors in violation of the Code’s

priority scheme. See Aug. 17 Hr’g Tr. at 97:13–18 (“The Court: Okay, and when the estate pays 33

percent off the top to Green Tech in consideration for what is now a subordinated substantial

contribution claim, it is not following the 726 priority scheme, correct, because they’re getting 33

percent off the top. Am I missing something there?”). Given the court’s concern, the Trustee and

Green Tech agreed to sever that provision from the Compromise. Id. at 99:12–24 (“Mr. Malnik

[Trustee’s counsel]: . . . . I believe we can proceed with this deal and just sever this provision. It, to be

quite frank, may not be worth the Court’s or the trustee’s headache approving this given your Honor’s

concern at this point.”).

After the hearing, the Bankruptcy Court approved the Compromise, see Order Granting

Trustee Sonya S. Slott’s Motion to Approve Stipulation to Compromise [ECF No. 13-1] at 75, and

later set forth its reasons in a separate order, see Memorandum Opinion on Order Granting Motion

to Compromise Controversy (the “Mem. Op.”) [ECF No. 13-1] at 79. The Smith-Related Entities

timely appealed that order.

6 We refer here not to the page number of the transcript itself, but to the page in the Bankruptcy Court’s

record where the transcript appears.

THE LAW

District courts have “jurisdiction to hear appeals from final judgments, orders, and decrees . . .

of bankruptcy judges.” In re Charter Co., 778 F.2d 617, 621 (11th Cir. 1985) (quoting 28 U.S.C. § 158(a)).

“In reviewing bankruptcy court judgments, a district court functions as an appellate court. It reviews

the bankruptcy court’s legal conclusions de novo, but must accept the bankruptcy court’s factual

findings unless they are clearly erroneous.” In re JLJ Inc., 988 F.2d 1112, 1116 (11th Cir. 1993); see also

In re Gaddy, 851 F. App’x 996, 999 (11th Cir. 2021) (“A bankruptcy court abuses its discretion when it

either misapplies the law or bases its decision on factual findings that are clearly erroneous.”). “De novo

review requires the court to make a judgment independent of the bankruptcy court’s, without

deference to that court’s analysis and conclusions.” In re Piper Aircraft Corp., 244 F.3d 1289, 1295 (11th

Cir. 2001). And “[t]he bankruptcy court’s findings of fact are not clearly erroneous unless, in light of

all the evidence, we are left with the definite and firm conviction that a mistake has been made.” In re

Int’l Pharm. & Disc. II, Inc., 443 F.3d 767, 770 (11th Cir. 2005); see also In re Gaddy, 851 F. App’x at 999

(“A factual finding is not clearly erroneous unless, after reviewing all of the evidence, we are left with

a definite and firm conviction that a mistake has been committed.”). Finally, we “review the

bankruptcy court’s approval of a settlement agreement under an abuse of discretion standard.” In re

Chira, 567 F.3d 1307, 1311 (11th Cir. 2009). This standard of review is “extremely limited” and “highly

deferential.” Aldana v. Del Monte Fresh Produce N.A. Inc., 578 F.3d 1283, 1288 (11th Cir. 2009).

ANALYSIS

The issue in this appeal is whether the Bankruptcy Court abused its discretion by approving

the Compromise. “Under Federal Rule of Bankruptcy Procedure 9019, a bankruptcy court may

approve a settlement of controversies on motion by the trustee and after notice and a hearing.” In re

Kenny, 2022 WL 2282843, at *3 (11th Cir. June 23, 2022) (citing FED. R. BANKR. P. 9019(a) (cleaned

up)). There is “a strong public policy in favor of settlement,” ibid., and a bankruptcy settlement should

be approved so long as it doesn’t “fall below the lowest point in the range of reasonableness.” Martin

v. Pahiakos (In re Martin), 490 F.3d 1272, 1275 (11th Cir. 2007). In considering whether to approve a

settlement, bankruptcy courts should analyze four factors:

(a) The probability of success in the litigation; (b) the difficulties, if any, to be

encountered in the matter of collection; (c) the complexity of the litigation involved,

and the expense, inconvenience and delay necessarily attending it; [and] (d) the

paramount interest of the creditors and a proper deference to their reasonable views

in the premises.

In re Justice Oaks II, Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990).

Our Appellants don’t suggest that the Bankruptcy Court misapplied these Justice Oaks factors.

See generally Initial Br. [ECF No. 21] at 2–11; Reply Br. [ECF No. 23] at 1. They, in fact, never mention

these factors at all—let alone the cases that analyze them. They’ve thus forfeited any such argument.

See United States v. Campbell, 26 F.4th 860, 873 (11th Cir. 2022) (en banc) (“[F]ailure to raise an issue in

an initial brief . . . should be treated as a forfeiture of the issue, and therefore the issue may be raised

by the court sua sponte [only] in extraordinary circumstances[.]”); Hamilton v. Southland Christian Sch., Inc.,

680 F.3d 1316, 1319 (11th Cir. 2012), overruled in part on other grounds by United States v. Durham, 795 F.3d

1329, 1331 (11th Cir. 2015) (en banc) (“[T]he failure to make arguments and cite authorities in support

of an issue [forfeits] it.”); In re Egidi, 571 F.3d 1156, 1163 (11th Cir. 2009) (“Arguments not properly

presented . . . are deemed [forfeited].”). Still, in part III of our analysis, we’ll address the Bankruptcy

Court’s treatment of these factors because it’ll help us deal with one of the Appellants’ final

arguments—viz., that their counterproposal should have been approved instead of the Compromise.

See Initial Br. at 11 (contending that the Appellants’ counterproposal “was rejected in favor of the ‘pig

in a poke,’ which the Bankruptcy Court approved”).

First, though, we’ll address the crux of the Appellants’ position—which is that, by approving

the Compromise, the Bankruptcy Court violated several substantive and procedural requirements of

the Bankruptcy Code. Id. at 5 (“The Bankruptcy Court erred in approving the compromise of

controversy in which the terms of such compromise violate specific provisions of the Bankruptcy

Code.”).7 In saying so, the Appellants advance (essentially) four basic points: (1) that the Property Sale

was improper under § 363 of the Code, id. at 8 (“In another perverse application of the Bankruptcy

Code, the Trustee utilized 11 U.S.C. § 363 . . .”; (2) that the Compromise would pay Green Tech estate

funds ahead of other creditors, in violation of the Code’s prescribed payment scheme, id. at 6 (“The

approved distribution of proceeds directly contradicts the statutorily prescribed priorities of

distribution in 11 U.S.C. §§ 507, 726, in contravention of the clear instructions of the Supreme Court

of the United States in Czyzewski v Jevic Holding Corp . . . .”); (3) that the Bankruptcy Court erred by

refusing to hold an evidentiary hearing or allow discovery, id. at 10 (“The Bankruptcy Court erred in

approving the Motion without holding an evidentiary hearing, or permitting discovery to be completed

prior to closing the hearing.”); and (4) that the Appellants’ counterproposal was superior to the

Compromise, id. at 11 (“Where a simpler alternative provides for payment of all legitimate non-insider

creditors, that is the proposal which should have been approved.”). We address—and reject—each

argument in turn.

7 We agree (of course) that, if the Compromise had violated the terms of the Bankruptcy Code, then

the Bankruptcy Court would’ve abused its discretion by ratifying that Compromise. See, e.g., Cooter &

Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990) (“A district court would necessarily abuse its discretion

if it based its ruling on an erroneous view of the law[.]”); Law v. Siegel, 571 U.S. 414, 420–21 (2014)

(“A bankruptcy court has statutory authority to issue any order, process, or judgment that is necessary

or appropriate to carry out the provisions of the Bankruptcy Code. . . . But in exercising those statutory

. . . powers, a bankruptcy court may not contravene specific statutory provisions.” (cleaned up));

Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 471 (2017) (explaining that “courts cannot deviate from

the procedures specified by the Code, even when they sincerely believe that creditors would be better

off” (cleaned up)).

I. The Property Sale complied with § 363

As part of the Compromise, the Trustee plans to sell both the estate’s and Green Tech’s interests

in the Property. See Mem. Op. at 88 (“The Proposed Settlement merely provides that Green Tech and

the [e]state will sell their respective interests in the Property together and each will receive agreed upon

amounts based on those separate interests.”); see also Settlement Agreement and Release at 51 (“Green

Tech . . . shall execute a special power of attorney in favor of the trustee to act on behalf of Green

Tech with respect to the sale of the Pompano Beach Property.”). The Appellants claim that the

Property Sale violates § 363 of the Bankruptcy Code because no court has declared the validity of the

estate’s equitable interest in the Property. See Initial Br. at 9 (“An asserted equitable interest in real

property located in Florida is not an interest in property until or unless a court so holds. Under

363(b)(1), the record does not support a finding of exactly what interest the Debtor held in the subject

property.”).8

That’s an odd argument for the Appellants to make since it’s been their position—from the

very beginning of their dispute with Green Tech—that they hold an ownership interest in the

Property. Recall that Smith—who was in control of No Rust at the start of the bankruptcy

proceedings—listed an equitable interest in the Property as one of the estate’s assets. See Summary of

Assets and Liabilities for Non-Individuals (the “Summary of the Estate’s Assets and Liabilities”)

[Bankr. ECF No. 19] at 7, “Part 9” (listing “equitable interest” under the “[n]ature and extent of

debtor’s interest in [the Property]” and giving “$1,055,000.00” as the “[c]urrent value of debtor’s

8 The Appellants provide no legal authority for this position, see generally Initial Br.; Reply Br.—which

is reason enough for us to disregard it, see Campbell, 26 F.4th at 873; Hamilton, 680 F.3d at 1319; In re

Egidi, 571 F.3d at 1163; and Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014)

(collecting cases for the proposition that “an appellant [forfeits] a claim when he either makes only

passing references to it or raises it in a perfunctory manner without supporting arguments and

authority”).

interest”). The estate’s equitable interest in the Property is a form of property that can be sold under §

363. According to the Bankruptcy Code, “[p]roperty of the estate” includes “all legal or equitable

interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). And

§ 363(b) makes clear that “the Trustee may use, sell, or lease . . . property of the estate.” 11 U.S.C. §

363(b)(1) (emphasis added); see also MOAC Mall Holdings LLC v. Transform Holdco LLC, 143 S. Ct. 927,

932 (2023) (“[T]he Bankruptcy Code permits . . . a trustee[ ] to sell or lease the bankruptcy estate’s

property outside of the ordinary course of the bankrupt entity’s business.” (citing 11 U.S.C. § 363(b))).

Nor does the law support the Appellants’ view that the estate’s interest in the Property was

somehow ineffectual because it was contingent. See, e.g., Segal v. Rochelle, 382 U.S. 375, 379 (1966)

(“[T]he term ‘property’ has been construed most generously and an interest is not outside its reach

because it is novel or contingent or because enjoyment must be postponed.”); United States v. Whiting

Pools, Inc., 462 U.S. 198, 204–05 (1983) (noting that “Congress intended a broad range of property to

be included in the estate,” including “property in which the debtor did not have a possessory interest

at the time the bankruptcy proceedings commenced”); In re Berris, 458 B.R. 601, 610 (Bankr. S.D. Fla.

2011) (Cristol, J.) (noting that the phrase “[a]ll legal or equitable interests” of a debtor “include[s]

legally enforceable rights under state law”). For what it’s worth, the Appellants’ position would also

undermine the Code’s “policy of maximizing the value of the bankruptcy estate.” Toibb v. Radloff, 501

U.S. 157, 163 (1991). As the Bankruptcy Court correctly recognized, if the estate couldn’t sell an

“undetermined” equitable interest, “the [e]state would conceivably retain the right to exercise the

option against the buyer.” Mem. Op. at 85. No “buyer would agree to pay fair market value for the

Property under those circumstances.” Ibid.

If we understand the Appellants correctly, they seem to be thinking of a hypothetical

circumstance in which their claimed equitable intertest in the Property was found to be invalid. In that

circumstance, they point out, the Trustee would have no right to sell the Property. But remember that,

to approve a settlement, a bankruptcy court need only provide “notice and a hearing,” FED. R. BANKR.

P. 9019(a), and “determine that the settlement does not fall below the lowest point in the range of

reasonableness,” In re Kenny, 2022 WL 2282843, at *3 (quoting In re Martin, 490 F.3d at 1275). And,

notably, “[i]n evaluating a settlement proposal, a bankruptcy court need not find facts, draw legal

conclusions, or otherwise adjudicate the merits of underlying litigation.” Id. at *5. The whole point of

a settlement, in other words, is to avoid the need to fight every potential legal issue to the bitter end.

In approving the Compromise, then, the Bankruptcy Court was entitled to assume that the Appellants

have been right from the beginning—viz., that the estate does have an interest in the Property—and to

maximize the creditors’ return by selling that purported interest (together with Green Tech’s) to the

highest bidder.

We also agree with the Bankruptcy Court that Green Tech was authorized to consent to the

Trustee’s sale of Green Tech’s interest in the Property. See § 363(f) (“The trustee may sell property

under subsection (b) or (c) of this section free and clear of any interest in such property of an entity

other than the estate [ ] if . . . such entity consents.” (emphasis added)). As part of the Compromise,

Green Tech gave the Trustee a power of attorney to sell its legal interest in the Property. See Settlement

Agreement and Release at 5 (“Green Tech, as necessary and appropriate, shall execute a special power

of attorney in favor of the Trustee to act on behalf of Green Tech with respect to the sale of the [ ]

Property.” (emphasis added)). In their Objections, the Appellants maintain that, “because the Trustee

was appointed to execute a deed on behalf of” Green Tech, “the Trustee was not selling the estate’s

interest and the interest of ‘an entity other than the estate.’” Initial Br. at 9. But that’s absurd. A power

of attorney authorizes one party to speak for another in official documents. See Power of Attorney,

BLACK’S LAW DICTIONARY (11th ed. 2019) (“[P]ower of attorney (18c) 1. An instrument granting

someone authority to act as agent or attorney-in-fact for the grantor.”). It doesn’t transfer ownership

from one party to the other. So, in addition to selling the estate’s interest, the Trustee was also selling

the “interest . . . of an entity other than the estate”—i.e., Green Tech’s.

The rest of the Appellants’ § 363 objections turn on subsections of § 363 that the Property

Sale did not involve. First, the Appellants claim that the sale didn’t satisfy the conditions of § 363(h).

See Initial Br. at 9 (“[Section] 363(h) defines the types of co-ownership which may bring the interest

of a non-debtor within the control of a trustee, but none of those enumerated forms of co-ownership

define the relationship between an owner of record and a party asserting an equitable interest.”). But

that subsection is triggered only when a trustee sells “an undivided interest” the debtor shares with

another entity “as a tenant in common, joint tenant, or tenant in the entirety.” § 363(h). Our Trustee,

of course, wasn’t selling any such interest—principally because no one has ever suggested that the

estate and Green Tech own “an undivided interest” in the Property as tenants in common, joint

tenants, or tenants by the entirety. A “tenancy in common” is a “tenancy by two or more persons, in

equal or unequal undivided shares, each person having an equal right to possess the whole property

but no right of survivorship.” Tenancy, BLACK’S LAW DICTIONARY (11th ed. 2019). Since Green Tech

owns the Property outright in fee simple—and given that the estate only holds a contingent interest

in the Property through its purchase option—the estate and Green Tech don’t have “an equal right to

possess the whole property.” A “joint tenancy,” by contrast, is a “tenancy with two or more coowners

who are not spouses on the date of acquisition and have identical interests in a property with the same

right of possession.” Ibid. Since (as we’ve established) the estate’s and Green Tech’s interests in the

Property are not identical—and because the estate has no right of possession over the Property—the

estate and Green Tech don’t own the Property through a joint tenancy. Finally, a “tenancy by the

entirety” is a “common-law estate in which each spouse is seised of the whole of the property. . . . A

joint tenancy can exist with any number of persons, while an estate by entirety can be held only by a

husband and wife and is not available to any other persons. And it can be acquired only during the

marriage.” Ibid. Because Green Tech and the estate aren’t married, they cannot own the Property

through a tenancy by the entirety. In short, Green Tech and the estate don’t own an “undivided

interest” in the Property as joint tenants, tenants in common, or tenants by the entirety, so § 363(h)

doesn’t govern us here. In any event, the Trustee didn’t need to look to § 363(h) for permission to sell

the Property because, as we’ve explained, the Compromise separately satisfied the requirements of §

363(f). See § 363(f)(2) (“The trustee may sell property under subsection (b) or (c) of this section free

and clear of any interest in such property of an entity other than the estate, only if . . . (2) such entity

consents[.]” (emphasis added)). And we’d only have to rely on the provisions of § 363(h) if the

requirements of § 363(f) had not been met. See § 363(h) (“Notwithstanding subsection (f) of this

section, . . . .”).9

Second, the Appellants contend that “[Section] 363(j) would require the Trustee to distribute to

[Green Tech] the value of its interest in the subject property”—and (they add) this “provision [was]

not included in the Motion.” Initial Br. at 9. But § 363(j) only limits the “sale of property [under]

subsection (g) or (h),” § 363(j)—neither of which apply here. We’ve already explained why § 363(h) is

inapplicable—because the estate isn’t sharing “an undivided interest” with anyone “as a tenant in

common, joint tenant, or tenant in the entirety.” And § 363(g) is likewise inapposite because it applies

only to debtors who sell their interests “free and clear of any vested or contingent right in the nature

of a dower or curtesy.” “The term ‘dower’ generally refers to the interest a widow takes in the estate

of her deceased husband. . . . Curtesy is the corresponding right of the husband by which he is entitled,

on the death of his wife, to a life estate in [certain property.]” Est. of Johnson v. C.I.R., 718 F.2d 1303,

9 We, for similar reasons, reject the Appellants’ contention that the Compromise ignored some salient

aspect of § 363(i). See Initial Br. at 9 (“363(i) would entitle [Green Tech] to purchase the property, but

that was not included in the Motion.”). That Section—like § 363(j)—only applies to “the

consummation of a sale of property to which subsection (g) or (h) of this section applies, or of

property of the estate that was community property of the debtor and the debtor’s spouse immediately

before the commencement of the case[.]”

1307 n.9 (5th Cir. 1983). The Appellants never suggest that this case involves some interest the estate

had to sell “free and clear of any vested or contingent right in the nature of a dower or curtesy.” Indeed,

§ 363(j)’s reference to § 363(g) makes clear that the latter only applies when a trustee is selling the joint

property of current or former spouses. See § 363(j) (“After a sale of property to which subsection (g) or

(h) of this section applies, the trustee shall distribute to the debtor’s spouse or the co-owners of such

property, as the case may be, and to the estate, the proceeds of such sale, less the costs and expenses,

not including any compensation of the trustee, of such sale, according to the interests of such spouse or

co-owners, and of the estate.” (emphases added)). At first glance, the term “or the co-owners” might

seem to apply to the relationship between the estate and Green Tech. But a closer inspection of §

363(j) reveals that it’s referring here to the two kinds of ownership outlined in the two subsections it

cross-references: (g) and (h). Since the latter governs cases involving a “co-owner in property,” §

363(h), and the former applies to spousal interests (“dower or curtesy,” § 363(g)), the reference to

“spouse or co-owners” in § 363(j) is (we think) just a reference to the spousal and co-ownership

relationships identified in §§ 363(g) & (h), respectively. And we’ve already found that those two types

of relationships are irrelevant here—mainly because the estate and Green Tech weren’t spouses (§

363(g)) and didn’t own “an undivided interest” in the Property “as a tenant in common, joint tenant,

or tenant in the entirety” (§ 363(h)).

Third, the Appellants appear to suggest that the Compromise violated the rights of another

creditor (Pet star Corporation) to bid on the Property under § 363(k). See Initial Br. at 9 (“363(k) would

entitle Pet Star to credit bid its mortgage, another provision of the Code overlooked in the Motion.”).

But our Appellants lack standing to assert claims on Pet star’s behalf. See In re Bay Circle Props., LLC,

955 F.3d 874, 879 (11th Cir. 2020) (noting that the “person aggrieved doctrine” limits “the right to

appeal a bankruptcy court order to . . . those whom [it] directly, adversely, and pecuniarily affects by

diminishing their property, increasing their burdens, or impairing their rights” (cleaned up)).10 In any

event, the record is clear that Pet Star supported the Compromise. See Aug. 17 Hr’g Tr. at 46:3–6 (“Mr.

Kelly: . . . I’m appearing here just to vocalize Petstar Corporation’s support for the trustee’s motion

and settlement.”).11

There is, therefore, no support for the Appellants’ contention that the Property Sale violated

any part of § 363.

II. The Compromise does not violate the Code’s priority scheme

The Appellants maintain that “[t]he approved distribution of proceeds directly contradicts the

statutorily prescribed priorities of distribution in 11 U.S.C. §§ 507, 726,” Initial Br. at 6, but they never

explain why they think so. Here (again), then, they’ve forfeited any such argument. See Campbell, 26

F.4th at 873; Hamilton, 680 F.3d at 1319; In re Egidi, 571 F.3d at 1163; Sapuppo, 739 F.3d at 681. In any

event, our independent review of the record confirms that the Compromise doesn’t violate the

Bankruptcy Code’s priority scheme.

The Code “sets forth a basic system of priority, which ordinarily determines the order in which

the bankruptcy court will distribute assets of the estate.” Jevic Holding Corp., 580 U.S. at 457. As relevant

here, “[s]ecured creditors are highest on the priority list,” followed by “[s]pecial classes of creditors,”

10 The Appellants never even imply that they were harmed by this (supposed) violation of Pet star’s

rights. Nor (it goes without saying) have they explained how they might have been harmed by that

violation.

11 To the extent the Appellants are claiming that the Compromise is inadequate because it would allow

the mortgage holder (Pet Star) to credit bid the value of its mortgage against the sale price of the

Property, we don’t think it’s done enough—in this cryptic, citation-less sentence—to preserve this

position. See Sapuppo, 739 F.3d at 681 (collecting cases for the proposition that “an appellant [forfeits]

a claim when he either makes only passing references to it or raises it in a perfunctory manner without

supporting arguments and authority”). In any case, Pet Star has never been interested in buying the

Property, so this concern—to the extent it is one—is really neither here nor there. See Aug. 17 Hr’g

Tr. at 32:17–33:7 (Mr. Malnik, the Trustee’s lawyer, explaining that he and Mr. Kelly, Pet Star’s lawyer,

were very close to an agreement on the amount the estate would pay to Pet Star, in exchange for a

release of Pet Star’s secured claim, after the Property is sold to someone else).

which must be paid in the order set out first in § 507, then in § 726. Ibid.; see also 11 U.S.C. § 726(a)

(requiring that “property of the estate [ ] be distributed . . . first, in payment of claims of the kind

specified in, and in the order specified in, section 507”). Among these “special classes of creditors”

are those holding “administrative expenses.” 11 U.S.C. § 507(a)(2). Next in line are holders of various

types of unsecured claims. See 11 U.S.C. § 507(a)(2)–(8).

Given the Bankruptcy Court’s last-minute emendation, we see no priority issues with the

Compromise.12 Under the Compromise’s terms, Green Tech would receive a $2,500,000 “allowed”

general unsecured claim in exchange for, among other things, a release of all its claims (and potential

claims) against the estate. See Settlement Agreement and Release at 56 (“In consideration of the general

terms of settlement . . . Green Tech shall be granted an allowed, non-priority general unsecured claim

(as established by 11 U.S.C. § 726(a)(2)) in the amount of $2,500,000.00.”). And at least two of the

claims Green Tech waived—a secured claim on the Cash Bond and a (potential) administrative-

expenses claim—were entitled to a higher priority than the general unsecured claim it received through

the Compromise. See Aug. 17 Hr’g Tr. at 121:18–122:9 (the court noting that Green Tech was giving

consideration for the $2,500,000 general unsecured claim and that “[o]ne aspect of that consideration

is the agreement by Green Tech to subordinate [its current and potential claims]”); see also Jevic Holding

Corp., 580 U.S. at 457 (noting that secured claims are “highest on the priority list”); 11 U.S.C. § 726

(listing unsecured claims as subject to payment only after claims listed in § 507, like administrative-

expense claims, are satisfied).

True, Green Tech’s “allowed” $2,500,000 claim would then be reduced, dollar for dollar, by

the portion of the sale proceeds Green Tech received for its legal interest in the Property. See

Settlement Agreement and Release at 56 (“[T]he Green Tech [allowed $2,500,000 claim] shall be

12 Because the court severed the Litigation Sharing Provision from the Compromise, that provision is

not at issue here.

reduced dollar for dollar by all sums paid (or to be paid) to Green Tech as [ ] Green Tech Sale

Proceeds.”); see also id. at 54 (defining Green Tech Sale Proceeds as the net proceeds from the sale of

the Property “received by Green Tech pursuant to [the sale-proceeds-sharing formula]”). And, in their

brief, the Appellants challenge—albeit in very cursory fashion—Green Tech’s right to this dollar-for-

dollar reimbursement over and above other creditors. See Initial Br. at 6 (contending that “[t]he approved

distribution of proceeds directly contradicts the statutorily prescribed priorities of distribution in 11

U.S.C. §§ 507, 726”). But, remember, these payments to Green Tech would be remuneration for Green

Tech’s interest in the Property, not the estate’s. Because the priority rules in §§ 507 & 726 apply only to

the distribution of estate assets, any payment to Green Tech for the value of its own separate assets falls

outside the scope of these priority rules. See Jevic Holding Corp., 580 U.S. at 457 (noting that the Code

“sets forth a basic system of priority, which ordinarily determines the order in which the bankruptcy

court will distribute assets of the estate” (emphasis added)); see also 11 U.S.C. § 726(a) (setting forth the

rules by which the “property of the estate shall be distributed” (emphasis added)). As the Bankruptcy

Court correctly explained:

Green Tech holds title to the Property in fee simple and is getting paid based on its

direct interest in the Property upon its sale. The Proposed Settlement does not

contemplate the transfer of Green Tech’s interest to the [e]state prior to the sale,

thereby making the proceeds resulting from the sale of Green Tech’s fee interest

property of the [e]state. . . . The Proposed Settlement merely provides that Green Tech

and the [e]state will sell their respective interests on the Property together and each

will receive agreed upon amounts based on those separate interests. In short, Green

Tech’s fee simple interest in the Property is not property of the estate, and the sale

proceeds it receives on account of its interest are not subject to § 726. As a result,

Green Tech can be paid directly from the sale of the Property as contemplated under

the Proposed Settlement without implicating the distribution scheme under § 726 as

long as the Proposed Settlement otherwise complies with Rule 9019.

Mem. Op. at 88–89.

The Appellants haven’t even tried to undermine this reasoning. Because the Compromise

allows Green Tech to recover some of the proceeds of the Property Sale as compensation for Green

Tech’s independent interest in the Property, we don’t think the settlement violates the Bankruptcy

Code’s priority scheme.

III. The Bankruptcy Court didn’t need to hold an evidentiary hearing, allow more

discovery, or fully assess the merits of Green Tech’s potential claim before

approving the Compromise

To approve a settlement, a bankruptcy court need only provide “notice and a hearing,” FED.

R. BANKR. P. 9019(a), and “determine that the settlement does not fall below the lowest point in the

range of reasonableness,” In re Kenny, 2022 WL 2282843, at *3 (quoting In re Martin, 490 F.3d at 1275).

And, as we’ve explained, “[i]n evaluating a settlement proposal, a bankruptcy court need not find facts,

draw legal conclusions, or otherwise adjudicate the merits of underlying litigation.” Id. at *5. The

Bankruptcy Court satisfied these minimal requirements here.

The 117-page transcript of the Settlement Approval Hearing—and the Memorandum Opinion

that followed—make one thing abundantly clear: Before deciding that the Compromise was

reasonable, the Bankruptcy Court thoroughly considered (and properly applied) the four Justice Oaks

factors. See Aug. 17 Hr’g Tr. at 135:18–21 (“The Court: . . . . [after discussing the Justice Oaks factors)]

Again, I’m sorry I took so long, but there was a lot at stake here, and quite a few issues, and I wanted

to try to get to a bottom[-]line resolution, which I think we were able to do.”); see also Mem. Op. at

89–97 (analyzing the Justice Oaks factors).

Starting with the first factor—the “probability of success”—the court noted that the Trustee

(litigating on behalf of the estate) was “not reasonably likely” to win the Property Dispute. Mem. Op.

at 90. And that seems right. As the court explained, “to prevail in a suit for specific performance,

Florida law requires that [the Trustee] also establish that she is ready, willing, and able to perform

under the contract.” Ibid. This was a problem (the court pointed out) because the estate “lack[ed] the

funds” to buy the Property—making it very unlikely that the estate could prove it was “able to perform

under the contract.” Ibid. And the record plainly supports the Bankruptcy Court’s assessment of the

estate’s finances (and the likelihood that the estate would be able to buy the Property outright). See,

e.g., Aug. 17 Hr’g Tr. at 43:6–12 (“Mr. Malnik: . . . [T]he pure economic thing is, the estate is

administratively insolvent. It does not have the funds to pay the option exercise price. So it would

have to assign the option contract, which will certainly have to be done at a pretty steep discount,

because someone would be stepping into a very uncertain position as to how they could exercise it.”);

id. at 118:22–25 (“The Court: . . . . Though the trustee might be able to monetize the option, the mere

fact that the estate is not presently capable of executing under the option on its face further reduces

the likelihood of success in the litigation.”). We thus agree with the court’s view of this first Justice

Oaks factor.

Turning to the second factor—“difficulties in collection”—the court correctly recognized that

“collection is not necessarily an issue” because “the Property Dispute seeks specific performance.”

Mem. Op. at 90. We could probably stop here. But (the court also explained) the estate was going to

have a problem “collecting” any value from its option. To prevail on its specific-performance claim

to enforce its purported option, after all, the estate would have to show that it was “ready, willing, and

able” to close, even though it didn’t actually have the funds to do so. See Aug. 17 Hr’g Tr. at 99. The

estate would therefore be in the difficult position of having to “assign the purported option before it

even proves the option exists.” Mem. Op. at 91. Who (in the open market) would be willing to pay

any real money for that?

Here, again, we agree with the Bankruptcy Court. “A bankruptcy court abuses its discretion

when it either misapplies the law or bases its decision on factual findings that are clearly erroneous.”

In re Gaddy, 851 F. App’x at 999. And “[a] factual finding is not clearly erroneous unless, after reviewing

all of the evidence, we are left with a definite and firm conviction that a mistake has been committed.”

Ibid. (cleaned up). Nothing in the record suggests that the Bankruptcy Court erred when it, consistent

with the Trustee’s business judgment, found that the estate was better off selling the Property. See In

re Morgan, 439 F. App’x 795, 795 (11th Cir. 2011) (“The bankruptcy court approved the settlement

because it was the Trustee’s best business judgment that the settlement be approved. We find no basis

in the record for questioning the Trustee’s judgment.”). The only person, in fact, who seemed

interested in buying the option was Smith. But, while his “[c]ounterproposal [would] give[ ] the [e]state

$200,000.00,” that payment came with significant strings attached—specifically, it was “in exchange

for significant consideration, including—but well beyond—a transfer of the purported option.” Mem.

Op. at 91. And our Appellants, as the Bankruptcy Court highlighted, have failed to “put forth any

legal or factual basis to conclude that selling the purported option and allowing another entity to

continue the litigation is a superior alternative to the Proposed Settlement with Green Tech.” Ibid.

Indeed, if the estate receives the $300,000 (or more) the Trustee estimated it would clear from the sale

of the Property, the Compromise would net the estate at least $482,000 (from the Cash Bond and the

sale of the Property) and would allow the estate the right to recover (if it could) even more money from

the Insider Litigation.13 That’s far more lucrative than the Appellants’ $200,000 purchase offer—

which would have required the estate to forego any profits it would otherwise have been entitled to

from (1) the sale of the Property, (2) the return of the Cash Bond, and (3) its interest in the Insider

Litigation.14

As for the third factor (“complexity”), the court found that litigating the Property Dispute

“would likely require significant time, effort, and administrative expense,” that any trial victory “would

almost certainly be mired by a years[-]long appellate process,” and that, even putting all this aside, “the

Trustee would have to find the funds to exercise the option.” Mem. Op. at 91. “Settling [the Property

Dispute] on the terms proposed,” the court therefore concluded, “[wa]s more than reasonable.” Ibid.

13 We’ll explain how the court arrived at these figures in a moment.

14 Plus, as we’ll explain, even under a worst-case scenario, the total value of the Compromise is likely to

exceed the Appellants’ $200,000 cash offer.

Again, none of this strikes us as an abuse of discretion. See In re Gaddy, 851 F. App’x at 999 (ruling that

the bankruptcy court did not abuse its discretion in approving a compromise partly because “litigating

the . . . claims would delay closing the estate for several more years” and “would be costly to the

estate”); In re Morgan, 439 F. App’x at 795 (“The bankruptcy court approved the settlement because it

was the Trustee’s best business judgment that the settlement be approved. We find no basis in the

record for questioning the Trustee’s judgment.”).

Finally, on the fourth factor (the “best interest of the creditors”), the court had little trouble

concluding that the estate’s creditors would do better under the Compromise than they would under

the Appellants’ counterproposal. After creating a chart that compared the salient features of both

proposals, the court acknowledged that the Appellants’ counterproposal would leave the estate with

$200,000. See Aug. 17 Hr’g Tr. at 121:1–2 (“The Court: . . . . [T]he counterproposal is $200,000 in

cash.”); Mem. Op. at 96–97 (outlining the various aspects of each proposal). The Compromise’s worst-

case scenario, by contrast, would leave the estate with the balance of the Cash Bond (some $182,000).

See Aug. 17 Hr’g Tr. at 123:13–18 (“The Court: . . . . Even if the trustee and Green Tech are

unsuccessful in marketing a sale of the property, and the trustee is unable to recover any fraudulent

and avoidable transfers, again, the estate only receives $20,000 more under the counterproposal, and

that, again, assumes everything goes wrong.”). But the court found this worst-case scenario rather

unlikely—mainly because (1) the estate’s distribution from the Property Sale would likely “exceed[ ]

$300,000” based on the minimum sale price, and (2) the lawsuits against the insiders had the potential

for a “significant” recovery. Mem. Op. at 97. There was thus “no clear basis for the [c]ourt to supplant

its business judgment for the Trustee’s, especially where the Counterproposal at its best is only

marginally better than the worst-case scenario of the Proposed Settlement.” Ibid.

For several reasons, we agree with the Bankruptcy Court’s conclusion on this fourth factor

too. The Compromise, as the court recognized, “provides the opportunity for the sale of the property

from which the estate will receive substantial proceeds far in excess of that $20,000 [difference

between Smith’s $200,000 offer and the worst-case scenario under the Compromise ($182,000)], and

again, provides for the potential of the trustee pursuing the litigation claims [against insiders] and

recovering even more money.” Aug. 17 Hr’g Tr. at 123:19–24. The Compromise also averted a

potential “mid-six figures [ ] administrative expense claim” and a “substantial contribution claim”

from Green Tech, see id. at 35:21–36:6, along with any additional attorneys’ fees the estate would’ve

had to pay in its litigation against Green Tech, see id. at 120:16–18 (“The Court: . . . . [The Compromise]

minimizes or eliminates further professional fees and costs associated with further litigation with

Green Tech.”). Even in a worst-case scenario, then, the Compromise (very likely) comes out on top.

Here too, therefore, the Bankruptcy Court reasonably deferred to the Trustee’s business judgment.

Against all this, the Appellants advance five arguments—all unavailing. First, they say that the

Bankruptcy Court should have approved their counterproposal because it was a “simpler alternative”

that “provided for payment of all legitimate non-insider creditors.” Initial Br. at 11. But, as we’ve

outlined, the Bankruptcy Court did carefully weigh the competing deals’ relative “complexity” when it

addressed the third Justice Oaks factor. See Mem. Op. at 91. But, even if it hadn’t, that omission

(standing alone) wouldn’t qualify as an abuse of discretion. See In re Chira, 567 F.3d at 1313 (affirming

the approval of a compromise even though “[t]he bankruptcy court did not consider the second and

third Justice Oaks factors—collection difficulties for the Trustee and the complexity, expense,

inconvenience, and delay of the potential litigation [ ]—in any meaningful way”). In any event, the

counterproposal didn’t guarantee the estate’s creditors more than they would’ve received under the

Compromise: The counterproposal, as we’ve shown, would net the estate only a $200,000 “flat”

payment—without any of the added revenues from the Insider Litigation, the Cash Bond, or the

Property Sale (all of which are available under the Compromise). See Mem. Op. at 96–97 (setting zero

as the potential recovery under the Appellants’ counterproposal for both the “Property Sale” and the

“Proceeds from Actions Against Insiders & Affiliates”). As the Bankruptcy Court’s chart made clear,

when we compare anything above the Compromise’s worst-case scenario, the Compromise far

outpaces the Appellants’ proposal in value (by hundreds of thousands of dollars, in fact). See ibid. And

that’s because, between the Cash Bond and the estate’s share of the Property Sale, the Compromise

would net the estate at least $482,000, plus the “possibly significant” recovery from the Insider

Litigation, see id. at 97—far more than the $200,000 “ceiling” of the counterproposal. And, as we’ve

seen, even though the counterproposal would have netted the estate $18,000 more than the

Compromise’s worst case—an extremely unlikely result given that the counterproposal left the estate

open to an administrative claim from Green Tech, for which the defense fees alone might exceed

$18,000—that minimal extra cash would have required the estate to forego its (potentially lucrative)

interest in both the Property Sale and the Insider Litigation. See ibid. Whether the counterproposal is

simpler or not, in short, we cannot agree that the Bankruptcy Court erred in siding with the

Compromise.

Second, the Appellants maintain that the Bankruptcy Court should have held an evidentiary

hearing. See Initial Br. at 10 (“The Bankruptcy Court erred in approving the [Compromise] without

holding an evidentiary hearing.”). But the Bankruptcy Court did hold a final approval hearing—and

nothing in Rule 9019 requires anything more. That rule provides, in pertinent part, as follows: “On

motion by the trustee and after notice and a hearing, the court may approve a compromise or

settlement.” FED. R. BANKR. P. 9019(a). The rule thus unambiguously requires bankruptcy courts to

hold a hearing—but it doesn’t set out any evidentiary requirements for that hearing. As the Supreme

Court has said many times, when a rule’s “language is plain, the sole function of the courts is to enforce

it according to its terms.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989); see also A.

SCALIA AND B. GARNER: THE INTERPRETATION OF LEGAL TEXTS 93 (2012) (“Nothing is to be added

to what the text states or reasonably implies (casus omissus pro omisso habendus est). That is, a matter not

covered is to be treated as not covered.”). And we’re not alone in reading the rule this way. As the

Seventh Circuit has explained: “It is clear that Rule 9019(a) itself does not expressly obligate the court

to hold an evidentiary hearing prior to approving a compromise under Rule 9019(a).” Depoister v. Mary

M. Holloway Found., 36 F.3d 582, 586 (7th Cir. 1994). This, by the way, is also the view of the Third

Circuit—the only other court of appeals to have commented on this question. See In re ID Liquidation

One, LLC, 555 F. App’x 202, 207 (3rd Cir. 2014) (“The Bankruptcy Court was not required to have

an evidentiary hearing on the merits of all claims before approving the Settlement[.]”). The Bankruptcy

Court thus didn’t err by declining to hold an evidentiary hearing.

Third, the Appellants claim that the “terms of [the] [C]ompromise were not fully disclosed”

and should have been included “in the notice to interested parties.” Initial Br. at 10. But the only term

they actually identify as having been omitted is an alleged “transfer of the Debtor’s tax attributes to

[Green Tech],” which (the Appellants say) was “a major consideration, neither included in the Motion,

nor quantified at the hearing.” Ibid.15 The Appellants raised something of a similar objection below—

which the Bankruptcy Court rejected, noting that they “appear to be laboring under the misconception

that, under the Proposed Settlement, the estate would be responsible for 100% of the tax burden from

the sale of the Property,” but have, once again, “presented no explanation for why that might be the

case.” Mem. Op. at 83 n.10. In any case, the Bankruptcy Court did (contra the Appellants’ contentions)

hear about the tax implications of the settlement at the approval hearing. See Aug. 17 Hr’g Tr. at 44:16–

21 (the Trustee testifying that, “contrary to the claims in the objection, the trustee has retained Soneet

Kapila’s office, which has done a detailed tax analysis of the settlement” and which has concluded that

15 We’re having some difficulty understanding what exactly the Appellants are saying here. To the extent

they’re raising a procedural-due-process claim, though, they’ve plainly forfeited that objection by never

raising it before the Bankruptcy Court. See In re Lett, 632 F.3d 1216, 1229 (11th Cir. 2011) (“If the

record reflects an issue was presented in a cursory manner and never properly presented to the

Bankruptcy Court, the issue is not preserved for appeal.” (cleaned up)).

“the estate [has] a potential low to mid-five figure exposure on taxes with respect to this deal”). And

(it goes without saying) the Appellants have done nothing—neither here nor before the Bankruptcy

Court—to call this tax opinion into question. We, in short, agree with the Bankruptcy Court’s

assessment of this issue: “In the absence of any explanation by the [Appellants] supporting th[eir] [tax-

treatment] assumption,” the court said, “the Court sees no legitimate challenge to the Trustee’s

business judgment in this regard.” Mem. Op. at 83 n.10.

Fourth, the Appellants insist that the Bankruptcy Court erred by not “permitting discovery to

be completed prior to closing the hearing.” Initial Br. at 10. Again, however, they cite no legal authority

for this objection, see id. at 10–11; Reply Br. at 1–2—which is reason enough for us to overrule it, see

Campbell, 26 F.4th at 873; Hamilton, 680 F.3d at 1319; In re Egidi, 571 F.3d at 1163. In any event, the

Eleventh Circuit has made clear that bankruptcy courts need not allow full discovery before approving

a compromise. See In re Gaddy, 851 F. App’x at 1003 (“[The bankruptcy court] was not required to

order full discovery on the merits [of a claim that was settled].”). Take, for instance, In re Gaddy, where

a Chapter 7 trustee and the debtor’s founder submitted to the bankruptcy court a proposed

compromise to “release [ ] fraudulent transfer claims against the estate for a ‘premium’ of $825,000.”

Id. at 999. A creditor objected to the proposed compromise, arguing (among other things) that “it had

a high probability of success on the merits of the fraudulent transfer claims in the district court

proceeding” and that “more discovery was necessary to evaluate the Trustee’s propos[al].” Ibid.

(cleaned up). After a hearing, the bankruptcy court “issued an order approving the compromise.” Ibid.

On appeal, the creditor argued that “the bankruptcy court should not have approved the compromise

without permitting [the creditor] to take discovery related to the proposed compromise.” Id. at 999–

1000. Rejecting this argument, the Eleventh Circuit noted that “[n]othing in Rule 9019(a) or Justice

Oaks suggests that the bankruptcy court must order the Trustee or debtor to submit to full discovery

so that a creditor can be assured of the reasonableness of the proposed compromise.” Id. at 1003. The

court also reiterated that “the role of the bankruptcy judge is not to decide the numerous questions of

law and fact raised by appellants but rather to canvass the issue and see whether the settlement falls

below the lowest point in the range of reasonableness.” Ibid.

The Bankruptcy Court admirably carried out this baseline canvassing function here. And

nothing in Rule 9019 required the court, before approving the Compromise, to allow extra (and costly)

discovery.16 See FED. R. BANKR. P. 9019(a) (“On motion by the trustee and after notice and a hearing,

the court may approve a compromise or settlement.”). Indeed, such a requirement “would defeat the

purpose of a compromise because, after full discovery, the parties might as well go ahead and try the

case.” In re Gaddy, 851 F. App’x at 1003.

Fifth, the Appellants contend that the administrative-expenses statute (11 U.S.C. §

503(b)(3)(D)) required the Bankruptcy Court to hold a hearing to determine the validity of Green

Tech’s potential administrative-expense and substantial-contribution claims. See Initial Br. at 8 (“The

approved enhancement of the claim of [Green Tech] is purportedly due to the contributions which

[it] made to the case, and waivers of unclaimed administrative expenses, yet is granted in the absence

of compliance with 11 U.S.C. § 503(b)(3)(D).”). And § 503(b)(3)(D) does say that, “[a]fter notice and a

hearing, there shall be allowed administrative expenses, . . . including the actual, necessary expenses . .

. incurred by . . . a creditor . . . in making a substantial contribution in a case under chapter 9 or 11 of

this title[.]” § 503(b)(3)(D) (emphasis added). But Green Tech was “allowed” no such claims in this

case. It, on the contrary, waived its right to seek these claims as a part of the Compromise. See, e.g., Aug.

17 Hr’g Tr. at 36:4–6 (“Mr. Malnik: . . . . [W]e’re talking a potentially very sizable mid-six figures claim,

16 We say “extra” because (while the Appellants never mention it) the parties did engage in some

discovery below. The record reflects, for instance, that No Rust sought and obtained documents and

testimony from the Chapter 7 Trustee before the final approval hearing. See Notice of Filing Transcript

of 2004/7030 Examination of Sonya Salkin Slott [Bankr. ECF No. 247] at 5 (“[Mr. Gleason, counsel

for No Rust]: Thank you, and I appreciate the 797 pages of production in advancement [sic].”).

administrative expense claim that Green Tech is waiving as part of this settlement.”). Section

503(b)(3)(D) is thus neither here nor there.

To the extent the Appellants are here suggesting that the Bankruptcy Court should have

conducted a hearing to calculate the exact amount of the administrative-expense claim Green Tech

was waiving, we see four problems with this argument. One, the Appellants never actually advance this

argument explicitly, and it’s not our job to make arguments for them. See Campbell, 26 F.4th at 873;

Hamilton, 680 F.3d at 1319; In re Egidi, 571 F.3d at 1163; Sapuppo, 739 F.3d at 681. Two, by its own

terms, § 503(b)(3)(D) only requires a hearing when the administrative-expense claim is “allowed.”

Since Green Tech waived any such claim as part of the Compromise, § 503(b)(3)(D) is inapposite here.

Three, Mr. Malnik did tell the court that Green Tech’s administrative-expense claim was “sizable” and

in the “mid-six figures[.]” Aug. 17 Hr’g Tr. at 36:4–6. And, in approving a settlement of these various

claims, the Bankruptcy Court was entitled to take him at his word. See In re Gaddy, 851 F. App’x at

1003 (“[T]he role of the bankruptcy judge is not to decide the numerous questions of law and fact

raised by appellants but rather to canvass the issue and see whether the settlement falls below the

lowest point in the range of reasonableness.”). Four, even if the administrative-expense claim was

ultimately meritless, the Compromise was still a better deal than the counterproposal because, as we’ve

shown, it (1) allowed the estate to profit from the Sale of the Property, (2) entitled the estate to

whatever remains of the Cash Bond, (3) permitted the estate to recover extra money from the Insider

Litigation, and (4) saved the estate all the attorneys’ fees it would’ve had to pay in defending against

Green Tech’s claims (however viable those claims ultimately turned out to be).

* * *

For all these reasons, then, we hereby ORDER AND ADJUDGE that the Bankruptcy

Court’s Order Granting Trustee Sonya S. Slott’s Motion to Approve Stipulation to Compromise

[Bankr. ECF No. 257] is AFFIRMED.

DONE AND ORDERED in the Southern District of Florida on July 20, 2023.

ROY K. ALTMAN

UNITED STATES DISTRICT JUDGE

ce: counsel of record

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