Sixth Circuit Issues Opinion in In re Greektown Holdings Bankruptcy Adversary Proceeding

Here is the opinion in In re Greektown Holdings LLC (Papas v. Buchwald Capital Advisors, LLC):

Papas – Gatzaros Brief

Buckwald Capital Advisors Brief

Sault Tribe Brief

Papas – Gatzaros Reply Brief

An excerpt:

At issue in this appeal is a claims bar order entered in an adversary proceeding connected with the bankruptcy of Greektown Holdings, LLC. The appellants, the Papases and Gatzaroses, and two of the appellees, the Sault Ste. Marie Tribe of Chippewa Indians and the Kewadin Casinos Gaming Authority, are defendants in a fraudulent transfer action that was brought in federal bankruptcy court by Buchwald Capital Advisors, LLC. Buchwald Capital Advisors is the trustee of the Greektown Litigation Trust and an appellee in this appeal. The Sault Ste. Marie Tribe and the Kewadin Casinos Gaming Authority agreed to settle with Buchwald Capital Advisors. However, they conditioned the settlement upon the entry of an order that would bar any claims against them “arising out of or reasonably flowing from” either the fraudulent transfer proceeding or the allegedly fraudulent transfers themselves. The Papases and Gatzaroses objected to this requested order, but when they could not come up with any viable claims that would be enjoined by the bar order, the district court approved the settlement and entered the bar order. A short time later, the Papases and Gatzaroses filed a motion for reconsideration in which they detailed additional claims that they feared might be barred by the order. The district court denied their motion.

On appeal, the Papases and Gatzaroses argue that the bar order was improper and also contend that the district court abused its discretion when it denied their motion for reconsideration. The district court was clearly acting within its discretion when it denied the motion for reconsideration, so we affirm its order denying reconsideration. But the bar order itself raises several interesting questions of first impression in this Circuit. These questions concern the district court’s jurisdiction and power to enter the bar order and the proper scope of such an order. Unfortunately, these issues have not been adequately  briefed and argued by the parties and were not addressed below. We therefore remand  this case to the district court and instruct the district court to reevaluate the bar order under the guidance provided in this opinion.