This Opinion interested me because a few weeks earlier I read about this infamous Beverly Hills property battle in the Hollywood Reporter.
For those interested in the juicy Hollywood fight about the property mentioned in this Opinion, see here: http://www.hollywoodreporter.com/features/beverly-hills-1-billion-vineyard-819299
For those interested in the Ninth Circuit Opinion, please see my brief below.
In re: Tower Park Properties LLC, Ninth Circuit.
To have standing in federal court – you must satisfy three requirements: (1) statutory standing (i.e. one afforded under the Bankruptcy Code), (2) constitutional standing under Article III, and (3) prudential standing. In re Thorpe Insulation Co., 677 F.3d 869, 883–84 (9th Cir. 2012).
In this case, a Trust Beneficiary was objecting to the settlement agreement between the debtor, the Trust (as a creditor) and former trustees. The Ninth Circuit held that the Trust Beneficiary did not have statutory standing under §1109(b), and as such, the Court did not even consider the two other standing requirements.
As a rule, to have standing to be heard in Chapter 11 proceedings, you must be a “party in interest,” which includes, but not exclusive of, the debtor, trustee, creditors (or committee), equity security holder (or its committee), indenture trustee. Section 1109(b). The word “party in interest” is not defined.
Ninth Circuit has said that a “party in interest” is one who has a “legally protected interest that could be affected by a bankruptcy proceeding.” In re Thorpe. But, an entity “that may suffer collateral damage” but does not have a legally protected interest does not have standing under § 1109(b). Id.