Case No.: 06-50873.United States Bankruptcy Court, E.D. Michigan, Southern Division.
February 26, 2007
ORDER IN CONNECTION WITH TRUSTEE’S MOTION TO COMPROMISE AND SETTLE WITH JAMES AND SHIRLEY MCCLEAN (“TRUSTEE’S MOTION”) AND MOTION OF MEDLEY LARKIN FOR DISTRIBUTION OF SALES PROCEEDS, ETC., (“LARKIN MOTION”)
WALTER SHAPERO, Bankruptcy Judge
The Court having heard arguments on the Trustee’s Motion which is presented as being a settlement of Adversary Proceeding #04-2121 brought by the Unsecured Creditors Committee against the McCleans, and having also considered same in light of the contemporaneous arguments in connection with the Larkin Motion; the Larkin Motion seeking to in effect enforce payment under the Settlement Agreement dated May 15, 2006, the parties to which are the Unsecured Creditors Committee of the Debtor, the McCleans, Larkin, Joseph P. Stetson and Professional Chefs, Inc., (“Settlement Agreement”) which was approved by the Court by its order of July 21, 2006; the Settlement Agreement, among other things, stating that it was intended to resolve and settle (among other settled matters) the very same Adversary Proceeding which the Trustee’s Motion now seeks to settle (on somewhat different or additional terms); it being clear to the Court that the various considerations running to and from the various parties (which include but are not limited to the McCleans) to the Settlement Agreement, were part of a cohesive whole settlement; the Trustee having made clear she is resisting the granting, at least for now, of the Larkin Motion in order to
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investigate whether there might be grounds for setting aside the Settlement Agreement and/or not enforcing payment under it; the Court concluding (a) it would be entirely inappropriate to approve of what is in essence a settlement of a controversy that had already previously been settled under circumstances where that previous settlement which was part of a larger settlement is under potential attack, at least until it is determined whether or not the extent to which that attack might be successful, and, (b) the mutual considerations underlying the Settlement Agreement require that any attempt to change the terms of that Settlement Agreement, that does not have the affirmative consent of all of the parties to that Settlement Agreement and the Court must await a disposition of a challenge to the validity and enforcibility of that Settlement Agreement; it being sufficiently unclear at this point what the ramifications as to all parties thereto might be if the entire Settlement Agreement were set aside, or to some other possible outcome not voiding the Settlement Agreement but affecting only the rights of Medley Larkin or other involved parties; the Court further concluding that pending same the status quo as to disposition of any of the proceeds of wine sales to creditors should be preserved;
Now therefore, IT IS HEREBY ORDERED that (1) the Court’s decision on the Trustee’s Motion is deferred until there is some disposition of the Larkin Motion; and/or any action brought by the Trustee with reference to the Settlement Agreement; and (2) a status conference is hereby scheduled for Thursday, March 22,2007, at 11:00 a.m., in Room 1042 of the Theodore C. LevinU.S. Courthouse, for the purpose of (a) scheduling an evidentiary hearing on the Larkin Motion, and (b) discussing the possibility of scheduling such in conjunction with any proceeding the Trustee contemplates relative to the Settlement Agreement; and (3) the Trustee shall not make any distributions to creditors, including the McCleans and Larkin, until further order of the Court.