Blue Coal Corp., In re

• Decision Date: 26 January 1993
• Docket Number: No. 92-7390,92-7390
• Citation: 986 F.2d 687
• Parties: Bankr. L. Rep. P 75,175 In re BLUE COAL CORPORATION. Frank J. McDONNELL, Trustee for Blue Coal Corporation v. McCLELLAN REALTY CORP.; Luzerne County Tax Claim Bureau; Bureau of Warrior Run; Bureau of Sugar Notch; Anthracite Health and Welfare Fund; Greater Wilkes-Barre Industrial Fund; Commonwealth of PA; United States of America Anthracite Health and Welfare Fund, Appellant. . Submitted under Third Circuit Rule 12(6)
• Court: U.S. Court of Appeals — Third Circuit

Page 687

986 F.2d 687

Bankr. L. Rep. P 75,175

In re BLUE COAL CORPORATION.

Frank J. McDONNELL, Trustee for Blue Coal Corporation v. McCLELLAN REALTY CORP.; Luzerne County Tax Claim Bureau;

Bureau of Warrior Run; Bureau of Sugar Notch; Anthracite

Health and Welfare Fund; Greater Wilkes-Barre Industrial

Fund; Commonwealth of PA; United States of America

Anthracite Health and Welfare Fund, Appellant.

No. 92-7390.

United States Court of Appeals, Third Circuit.

Submitted under Third Circuit Rule 12(6) Jan. 26, 1993.

Decided March 4, 1993.

Charles A. Shea, III, Shea, Shea & Caputo, Wilkes-Barre, PA, for appellant.

D. Alan Harris, Harris & Ruble, Chicago, IL, for appellee, Com. of PA.

Gary R. Allen, Gary D. Gray, Christine A. Grant, U.S. Dept. of Justice, Tax Div., Washington, DC, for appellee, U.S.

Before: GREENBERG, ROTH, and LEWIS, Circuit Judges.

OPINION OF THE COURT

LEWIS, Circuit Judge.

This is a dispute over the distribution of proceeds from a sale of real property formerly held by the debtor in this bankruptcy case, Blue Coal Corporation. On August 19, 1991, the bankruptcy court entered an order permitting the proposed sale of property to go forward free and clear of all liens, claims and encumbrances, and further directing that proceeds from the sale be distributed to the Anthracite Health and Welfare Fund (the "Fund").

The Commonwealth of Pennsylvania and the United States, which are creditors of Blue Coal, brought an appeal in the district court. The district court found that the bankruptcy court's order had followed from a settlement agreement between the trustee for Blue Coal and the Fund. Prior to entering its order, the bankruptcy court had rejected the Commonwealth's suggestion that such a settlement had occurred and that other creditors of the bankrupt estate should therefore receive notice of the settlement and an opportunity to object to its terms. In the bankruptcy court's view, because no settlement had been reached, other creditors were not entitled to notice and an opportunity to respond. The district court found otherwise, stating, "We are of the view that the totality of the circumstances evidences a settlement. Notice of the settlement agreement should have been sent to all of the creditors with an opportunity to be heard thereon." Consequently, by an order entered on June 26, 1992, the district court (1) vacated the portion of the bankruptcy court's order which had directed that the sale proceeds be paid to the Fund, (2) directed that the Fund continue to preserve the proceeds in an interest-bearing account (in accordance with a previous order of the district court) and (3) remanded the matter to the bankruptcy court for further proceedings consistent with the district court's opinion.

Rather than return to the bankruptcy court to participate in further proceedings, the Fund brought this appeal challenging the merits of the district court's decision and arguing that it was entitled to immediate possession of the sale proceeds. However, we will not reach those questions because we have...