In re: Michael Robert Wigley, Debtor.
Michael Robert Wigley, Debtor - Appellee, Barbara Wigley, Interested Party - Appellant,
Submitted: October 16, 2017
from the United States Bankruptcy Appellate Panel for the
SMITH, Chief Judge, MURPHY and COLLOTON, Circuit Judges.
COLLOTON, CIRCUIT JUDGE
Wigley is the wife of Michael Wigley, a debtor in Chapter 11
bankruptcy proceedings. Barbara, who was not a party to the
bankruptcy proceedings, seeks to appeal several orders of the
bankruptcy court: (1) an order denying confirmation of
Michael's plan of reorganization, (2) an order confirming
Michael's subsequent plan of reorganization, and (3) an
order granting stay relief to Lariat, one of Michael's
creditors. The Eighth Circuit Bankruptcy Appellate Panel
dismissed Barbara Wigley's appeal, holding that she was
not a "person aggrieved" by the orders and
therefore lacked standing. We agree and dismiss the appeal.
about October 8, 2008, Baja Sol Cantina EP, LLC-a limited
liability company that operated a Mexican restaurant in Eden
Prairie, Minnesota-entered into a lease agreement with Lariat
Companies, Inc. Michael Wigley, as the ninety percent member
and chief manager of Baja Sol, personally guaranteed the
company's obligations under the Lariat lease.
Mexican restaurant was not profitable, and Baja Sol developed
financial problems. On October 28, 2010, Lariat sued Baja Sol
and Michael Wigley as guarantor in Minnesota state court.
Lariat sought recovery of $245, 975 in allegedly past-due
rent plus approximately $2 million for future accruing rent.
In July 2011, the state court entered summary judgment for
Lariat against Baja Sol and Michael in the amount of $2.238
Lariat's action was underway but before the court had
granted summary judgment, Michael transferred some of his
assets to his wife, Barbara Wigley. After Lariat had obtained
the $2.238 million judgment in its lease action, Lariat and
several other creditors sued Barbara Wigley in state court
for fraudulent transfer of funds under the Minnesota Uniform
Fraudulent Transfer Act, Minn. Stat. § 513.41 et
seq. The creditors added Michael as a defendant in the
fraudulent transfer action. The state court found the Wigleys
jointly and severally liable for $795, 098 of fraudulently
transferred funds, plus interest, costs, and disbursements.
Shortly thereafter, the Wigleys moved for amended findings in
the state court action; the motion was pending when this
appeal was filed.
February 2014, Michael filed for Chapter 11 bankruptcy.
Because Lariat's claim against Michael arises from a real
property lease termination, the Bankruptcy Code, 11 U.S.C.
§ 502(b)(6), caps Lariat's recovery in these
bankruptcy proceedings. Lariat may recover only a limited
amount of future rent losses in bankruptcy. See In re
Wigley, 533 B.R. 267 (B.A.P. 8th Cir. 2015).
filed a Plan of Reorganization with the bankruptcy court.
Under this plan, Michael proposed to pay unsecured creditors
their allowed claims in full. The plan also contained a
section entitled "Settlement and Release of Claims
Against Barbara Wigley." This section provided:
Confirmation of the Plan shall constitute approval of a
settlement agreement under which all claims that the Debtor
or any other representative of the estate could have asserted
against Barbara Wigley as of the Confirmation Date, including
but not limited to Avoidance Actions, shall be released in
exchange for payment of the Barbara Wigley Settlement
Payment, which shall be due no later than the Effective Date.
The settlement and release provided for herein shall be
binding on all creditors and other parties interest, whether
or not entitled to receive payments or other distributions
under the Plan.
Plan defined "Barbara Wigley Settlement Payment" as
a sum of $350, 000. The plan, then, would settle the
fraudulent transfer action in which the state court had
entered a judgment of $795, 098 against the Wigleys for a
$350, 000 payment from Barbara.
objected, and the bankruptcy court denied confirmation of the
Plan. The court concluded that although 11 U.S.C. §
1123(b)(3)(A) allows for settlements in a plan, the proposed
settlement must be "fair and equitable." See
Protective Comm. for Indep. Stockholders of TMT Trailer
Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968).
Drawing on factors identified by this court in evaluating a
settlement under Federal Rule of Civil Procedure 23(e),
see In re Flight Transp. Corp. Sec. Litig., 730 F.2d