In Re: GUY F. ATKINSON COMPANY OF CALIFORNIA, a Delaware corporation, ATKN COMPANY, fka GUY F. ATKINSON COMPANY, a Nevada corporation, ATKN HOLDINGS, LTD., fka GUY F. ATKINSON HOLDINGS, LTD., a Canadian federal corporation, Debtors. WELLS FARGO BANK, N.A., Appellant, v. GUY F. ATKINSON COMPANY OF CALIFORNIA, a Delaware corporation, doing business as ATKN Company of California; ATKN COMPANY, formerly known as GUY F. ATKINSON COMPANY, a Nevada corporation; ATKN HOLDINGS, LTD., formerly known as GUY F. ATKINSON HOLDINGS, LTD., a Canadian federal corporation; OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF GUY F. ATKINSON COMPANY; FIDELITY AND DEPOSIT COMPANY OF MARYLAND; and AMERICAN INTERNATIONAL GROUP OF COMPANIES, Appellees., 242 B.R. 497

Summary

Appellant challenged an order of the bankruptcy court that authorized appellees bonding companies to negotiate and propose compromises of disputes with owners of debtors' bonded construction projects. On appeal, the issue was under what circumstances could the bankruptcy court authorize a party other than a trustee to compromise claims that were property of the estate. The court held that the bankruptcy court could authorize a party other that a trustee to settle such claims, but two prerequisites had to exist. There had to be sufficient reason and the entity's interests and incentives in settling the claims had to be consistent with maximizing the estate for all creditors. Nevertheless, the court reversed and remanded the decision for the bankruptcy court to determine whether cause existed for such authorization and whether the bonding companies' interest and incentives in settling the claims were consistent with maximizing the estate for all creditors.