In the case, chapter 11 debtors reached a global settlement agreement with creditors who foreclosed on their real property (the “Settlement Agreement”). The Settlement Agreement provided that the creditors were allowed to sell the property to a third party, and the creditors entered into a contract of sale with a third-party purchaser. The third-party purchaser, in turn, as it was required to do pursuant to the terms of the Settlement Agreement, moved for bankruptcy court approval pursuant to Bankruptcy Rule 9019.
At a hearing on the third-party purchaser’s motion, however, the debtors withdrew their support for the Settlement Agreement due to a purportedly better post-settlement offer. The Bankruptcy Court nonetheless granted the third-party purchaser’s motion and approved the Settlement Agreement. The debtors appealed.
On appeal, the debtors argued that they were entitled to rescind...
