Jenner & Block

Seventh Circuit Win Preserves Trustee’s Rejection of Unfavorable Settlement

The U.S. Court of Appeals for the Seventh Circuit on Tuesday dismissed an appeal by Enodis Corporation that sought to force the Trustee of Consolidated Industries, the Firm’s client, to obtain bankruptcy court approval for a settlement of an $8 million personal injury suit in Alabama.  The victory is the latest dismissal obtained by Jenner & Block on behalf of the Trustee of many appeals by Enodis.

Jenner & Block's attorneys argued that the Trustee rejected the first settlement proposal out of concern that Enodis Corporation would use it to challenge the Trustee's standing to pursue claims that Enodis, the former owner of Consolidated Industries, had forced Consolidated to transfer more than $37 million to Enodis, with an intent to hinder, delay or defraud Consolidated's creditors.  To avoid the expense and distraction of defeating this challenge, the Trustee declined to pursue the first proposed settlement structure, and the initial proposal lapsed.

“We note that this appeal, too, is doomed,” the appeals court wrote in its decision.  “There are significant issues as to whether Enodis has standing.  And the trustee contends that the appeal is moot because the [Alabama] settlement had been taken off the table. We cannot order approval of a settlement which does not exist.”

Bankruptcy Practice Partner Catherine L. Steege and Litigation Partner Joel T. Pelz led the Firm’s representation of Trustee Daniel L. Freeland, and Appellate and Supreme Court Practice Co-Chair Barry Levenstam argued this appeal.  Partner Jacob I. Corré and Associate Peter A. Siddiqui assisted in the briefing.

Please click here to view the Seventh Circuit's opinion in this case.