Michigan Bankruptcy- Reviewing Court and Ruling on comments.
A visiting bankruptcy judge presided over an evidentiary hearing on objections to certain claims filed.
There were numerous related adversary proceedings pending. During the hearing the Liquidation Trustee submitted a proposed Dismissal Order, with the disclaimer that applicable parties disagreed over the terms.
The Bankruptcy Court for the Western District of MI made a finding of fact that parties of this case had agreed in substance to the content of a specified paragraph in the proposal, when the terms of settlement were being read into the record.
Afterward the regularly assigned bankruptcy judge, not the visiting one, entered the Order as it had been presented. Adding specifically in a note, the visiting judge was consulted before signing, “and has determined that the form and content of this order adequately sets forth the intent of the court”.
Appellant Harvey N Gainey filed an Objection to the Order. His foremost concern was that the dismissal of a specific adversary proceeding, would negatively compromise his position in a connected adversary proceeding.
Factual findings are reviewed under the clearly erroneous standard, meaning it’s erroneous…if the reviewing Court has a “definite and firm conviction” that there’s a mistake.
The issue presented to the 6th Circuit Bankruptcy Panel is whether the Court enforced the settlement agreed upon, or altered its terms. A review of the transcript of the evidentiary hearing doesn’t provide with “definite and firm” certainty that a mistake had been made.
HNG didn’t present any defense at the hearing, which was interpreted as sufficient enough for the Court to assume…that all relevant parties had no preconceived expectations that dismissing one adversary proceeding, would have a detrimental effect (for Appellant) on a differing adversary proceeding. Without any defense raised, and silence to the Court otherwise, the Panel wasn’t clearly convinced a mistake was made, and the appealed Order was affirmed.
The Panel additionally ordered that their (own) decision is limited specifically to the present case.