A Reminder That a 9019 Motion Is Not a Slam Dunk: Bankruptcy Court Denies 9019 Motion After Determining That Approving Certain Findings Required By Settlement Would Amount to Inappropriate Advisory Op
In a recent decision, Bath Iron Works Corp. v. Congoleum Corp. (In re Congoleum Corp.), 2021 Bankr. LEXIS 10, 2021 WL 28396 (Bankr. D.N.J. Jan. 4, 2021), the Bankruptcy Court for the District of New Jersey denied a motion by Congoleum Corporation (the “Debtor”) for approval pursuant to Bankruptcy Rule 9019 of a settlement agreement, (the “Settlement”) between the Debtor and Bath Iron Works Corporation (“BIW”). The Court declined to approve the Settlement, which was conditioned on the Court making findings that could impact litigation in another court, because the Court was unwilling to make all the requested findings. However, instead of explaining why it was denying approval of the Settlement or issuing partial findings, the Court denied the motion in its entirety, because to do otherwise while related pending litigation existed would, in the Court’s view, amount to little more than an inappropriate advisory opinion.
Although this decision turned on unique procedural and jurisdictional issues, it is a reminder that while the standards for approval pursuant to Bankruptcy Rule 9019 of debtor settlements are generally considered to be lenient or easy to satisfy, obtaining bankruptcy court approval of a settlement is not a “slam dunk.”
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Weil, Gotshal & Manges LLP by Ronit Berkovich and Ryan C. Rolston. Published June 1, 2021.