IN RE: Michael B. Thompson (2026)

Chapter 7

MEMORANDUM OPINION AND ORDER DENYING JOINT MOTION TO APPROVE SETTLEMENT AND COMPROMISE (DOC. 44)

I. Introduction

This matter is before the Court on the Joint Motion of Creditor, CFBank, National Association and Debtor Michael B. Thompson, II to Approve Settlement and Compromise (Doc. 44) (the “Motion to Approve Settlement”), filed on October 24, 2025. As stated therein, the settlement “is intended to resolve CFBank's Motion to Dismiss filed on April 9, 2025 (ECF Doc. # 34) [(the “Motion to Dismiss”)] and the pending adversary proceeding, CFBank, N.A. v. Thompson, Adv. Pro. No. 3:25-ap-03015[.]”¹ Mot. to Approve Settlement at 1. But tellingly, CFBank does not analyze the bases for the settlement and whether it meets the standard for approval of a settlement under Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 9019 and applicable case law;² rather, the Motion to Approve Settlement simply sets forth the terms. This could be read as a tacit acknowledgment that analyzing the bases for the settlement would lead to the conclusion that the settlement should not be approved, given that only CFBank would benefit from the proposed settlement. Either way, the Court finds the terms of the proposed settlement, in the context of the claims asserted by CFBank, to be inappropriate and violative of public policy.

CFBank seeks to deny Mr. Thompson a discharge of all his debts (not just his debt to CFBank) pursuant to 11 U.S.C. § 727(a)(2) and (5). See Compl. of Creditor CFBank, Nat'l Ass'n Objecting to Discharge Pursuant to 11 U.S.C. § 727 (the “Complaint”), Adv. Pro. No. 25-3015 (Doc. 1).³ But what CFBank did not assert in its Complaint is any claim to object to the dischargeability of a debt owed to it; thus, the proposed settlement, in which Michael B. Thompson, II (“Mr. Thompson” and “Debtor”) would pay CFBank $20,000, appears to squarely violate the best interest of the estate, not be “fair and equitable,” and potentially violate what is sometimes referred to as the public policy against forcing the debtor to purchase their discharge.⁴ Not only that, but another term of the settlement is that “[i]f Mr. Thompson fails to pay as agreed, then the entire debt owed to CFBank becomes non-dischargeable.” Mot. to Approve Settlement at 2, ¶ 4. Yet, as noted above, there is no pending claim to object to the dischargeability of a debt owed to CFBank under 11 U.S.C. § 523(a)(2), (4), or (6), and the time to file any such claim expired on April 10, 2025, such that CFBank appears to have no legal basis to have its debt held non-dischargeable, such that this Court would not have a basis to enter such a judgment. See Stip. of Debtor Michael B. Thompson, II, and Creditor CFBank, N.A. to Extend Deadline to Obj. to Discharge (Est. Doc. 19), Feb. 6, 2025. Thus, although the law favors settlement, particularly in bankruptcy matters,⁵ and although the Court is mindful that this will leave the matter unresolved for now, this settlement cannot be approved as proposed. In other words, to approve this type of settlement, under these circumstances, would effectively encourage demands for payments from debtors for the sole benefit of the objecting creditor in exchange for withdrawing complaints objecting to the discharge of all the debtor's debts, even when the creditor has no basis to object to the dischargeability of a debt owed to them.⁶ This type of settlement cannot be approved as it does nothing for the estate and is not fair and equitable, nor does it meet the more tailored test for approval of these types of settlements as discussed below.

The very reason that Bankruptcy Rule 7041 adds a requirement, on top of the requirements of Federal Rule of Civil Procedure (“Civil Rule”) 41, for a plaintiff to move to dismiss “a complaint objecting to the debtor's discharge” on “notice to the trustee, the United States trustee, and any other person the court designates” is so that parties cannot simply stipulate to dismiss a discharge complaint in exchange for payment solely to the objecting creditor. This type of settlement squarely presents the improper arrangement of a debtor having to buy their discharge from a single “squeaky wheel” creditor.⁷ Because CFBank took on the role of “pursuing the action for the benefit of all creditors,” which is what it did when it filed its Complaint in the adversary proceeding objecting only to Debtor's discharge under 11 U.S.C. § 727, any settlement of an objection to discharge brought by a creditor “will not be dismissed or compromised unless the consideration is paid to the estate for the benefit of all creditors.” 10 Collier on Bankruptcy ¶ 7041.01 at 7041-3, n.6 (citing Ballard Furniture Co. v. Lindsey (In re Lindsey), 208 B.R. 169, 170 (Bankr. E.D. Ark. 1997)), 7041-4, n. 11 (citing Bankr. Receivables Mgmt. v. de Armond (In re de Armond), 240 B.R. 51, 56 (Bankr. C.D. Cal. 1999) (discussing three approaches to settlement of claims under 11 U.S.C. §§ 523 and 727)). Thus, if the parties want to salvage a settlement and not go forward with (or have CFBank withdraw entirely) the pending adversary proceeding and corresponding Motion to Dismiss filed by CFBank, it appears they would need to pay the consideration into the estate for the benefit of all creditors, subject to the established priorities of the Bankruptcy Code.

As a result of the foregoing, as more fully discussed below, the Court has determined, based on the skeletal unopposed Motion to Approve Settlement before it, that the terms and conditions of the proposed settlement provide no benefit to the bankruptcy estate or the other creditors and would result in the appearance of, if not the actual agreement for, the Debtor to be required to purchase his general discharge of all debts from one creditor, CFBank. Moreover, it would grant to CFBank the possibility of obtaining a judgment holding its debt non-dischargeable in an adversary proceeding in which CFBank has not timely asserted a valid claim to hold those debts non-dischargeable. For all these reasons, the Motion to Approve Settlement, as currently proposed, cannot be granted.

II. Jurisdiction

This Court has jurisdiction pursuant to 28 U.S.C. § 1334(b) and Amended General Order 05-02 (Amended Standing Order of Reference) of the United States District Court for the Southern District of Ohio entered pursuant to 28 U.S.C. § 157(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (J), and (O).

III. Background

A. Chapter 7 Case, Examination of Debtor, and Motion to Dismiss

On November 2, 2024, Debtor Michael B. Thompson, II (the “Debtor”) filed a petition for relief under chapter 7 of title 11 of the United States Code (the “Bankruptcy Code”). (Est. Doc. 1.) The meeting of creditors occurred on February 10, 2025. See Docket Entry dated Feb. 10, 2025. The Chapter 7 Trustee, Eileen Field, docketed a Report of No Distribution on March 5, 2025. The Debtor and Creditor CFBank, N.A. (“CFBank”) entered into a stipulation on February 6, 2025, as permitted by Local Bankruptcy Rules (“LBR”) 4004-2 and 4007-1(a) and gave only CFBank an extension of the original deadline of February 10, 2025, to and including April 10, 2025, “to object to discharge and to challenge whether the debts owed to CFBank are dischargeable[.]” Stip. (Est. Doc. 19).

On April 7, 2025, CFBank filed a transcript (the “Transcript”) of the examination of Mr. Thompson that its counsel took on January 21, 2025.⁸ See Tr. of Rule 2004 Examination of Michael B. Thompson II Via Videoconference (Docs. 32 and 33). And on April 9, 2025, the Bank filed its Motion of Creditor CFBank, National Association to Dismiss Chapter 7 Case (Est. Doc. 34) (the “Motion to Dismiss”). Therein, CFBank sought dismissal of Debtor's chapter 7 case under 11 U.S.C. § 707(a), alleging that Debtor “has filed this Chapter 7 petition in bad faith by abusing the protections of the Bankruptcy Code, the debts are modest in relation to Thompson's assets and income, and Thomspon [sic] transferred assets shortly before bankruptcy.” Mot. to Dismiss at 1. CFBank also sought, pursuant to 11 U.S.C. § 349(a), a two-year prohibition from the Debtor filing any type of bankruptcy. Id. The facts alleged as forming a basis for the Motion to Dismiss are the same as those forming the basis for CFBank's Complaint objecting to the Debtor's discharge, as set forth below (such that those alleged facts will not be repeated here).

B. CFBank's Complaint Objecting to Discharge (11 U.S.C. § 727(a)(2) and (5))

On the same day as filing the Motion to Dismiss, CFBank commenced the adversary proceeding by filing its Complaint seeking to deny the Debtor his discharge, of all debts, pursuant to 11 U.S.C. § 727(a)(2) and (5). See 11 U.S.C. § 727(c) (providing that a chapter 7 trustee, creditor, or the United States Trustee “may object to the granting of a discharge ․”).

The Complaint contains a series of allegations related to the Debtor's finances and business interests. See Compl. at 2-3, ¶¶ 5-24. According to those allegations and citations to the Transcript, the Debtor earns $170,000 each year “working in logistics for the Goodrich Corporation” and “operates several businesses, including a long-haul trucking business ․ , an Amazon delivery company ․ , a laundromat ․, and a management consulting company ․” Compl. at 2, ¶¶ 5-6. CFBank alleges it loaned the long-haul trucking business, DPD Transportation, Logistics & Courier Services, Inc. (“DPD Transportation”) $372,500 on December 15, 2021, as evidenced by a Cognovit Promissory Note. Id. at 2, ¶ 7 and Ex. A. The Debtor is alleged to have personally guaranteed this loan, as evidenced by a Commercial Guaranty. Id. at 2, ¶ 9 and Ex. C. When DPD Transportation allegedly went out of business in 2024, CFBank took judgment on the Cognovit Promissory Note and the Debtor's Commercial Guaranty in the Court of Common Pleas, Franklin County, Ohio, Case No. 24CV4517, on June 13, 2024.⁹ Id. at 2, ¶¶ 10-11. In addition, although the Debtor had allegedly previously paid $105,016 to invest in the laundromat, Alpha & Omega LT Holding, LLC, and invested another $20,000 for repairs, the Debtor's interest in the laundromat is scheduled as having no value. Id. at 3, ¶¶ 12-14. In regard to the Amazon delivery company, DPD Deliveries LLC (“DPD Deliveries”), that company allegedly paid the Debtor's management consulting company, MBT2 Management LLC (“MBT2”) $41,000 for “human resources and bookkeeping services[,]” and other members of DPD Deliveries had their management consulting companies paid a “combined amount of $84,000 in 2024.” Id. at 2-3, ¶¶ 6, 17, 19. The Debtor allegedly owns both DPD Deliveries (which allegedly had profit of only $5,000 in 2024, despite gross revenues of “approximately $3,000,000.00 per year”) and MBT2, both of which were also scheduled as having no value. Id. at 3, ¶¶ 18, 20-21. In addition, two DPD Transportation trucks that allegedly secured CFBank's loan were “totaled in traffic collisions in 2023[,]” but CFBank did not receive any insurance proceeds, despite those vehicles being insured. Id. at 3, ¶¶ 22-24. Finally, the Debtor allegedly purchased a 2024 Toyota 4Runner with no cash down for approximately $60,000.00 in April 2024, just over 6 months prior to filing his chapter 7 bankruptcy. Id. at 3, ¶ 15; Schedule A/B: Property (Est. Doc. 1) at 2, item 3.1. However, Debtor asserts that he “financed the vehicle 100%” and he scheduled a claim in favor of Omega PSI PHI Fraternity Credit Union in the amount of $58,932 secured by the 2024 Toyota 4Runner (greater than the scheduled $56,832 value), and Debtor has since reaffirmed that debt. Resp. to Mot. to Dismiss (Doc. 34) at 9 (Est. Doc. 37), Apr. 29, 2025; Schedule D at 4, item 2.7 (Est. Doc. 1 at 24); Reaffirmation Agmt. (Est. Doc. 30), Mar. 21, 2025.

The Complaint, in its first claim, alleges that the Debtor transferred assets to “hinder, delay, or defraud a creditor ․ ” in violation of § 727(a)(2), including spending, approximately seven (7) months before filing bankruptcy, “$105,016.00 in liquid funds, to purchase an interest in a laundromat that he now claims has no value.” Id. at 4, ¶ 27. In addition, the Complaint alleges that “[a]pproximately 6 months before Thompson filed for bankruptcy, Thompson purchased himself a new Toyota 4Runner using his available credit to avoid paying any money down.” Id. at 4, ¶ 28. Further, the first claim in the Complaint alleges that Debtor used his business (MBT2) bank account to pay “car loan payments and life insurance premiums[.]” Id. at 4, ¶ 29. In the second claim of the Complaint, seeking a denial of discharge under § 727(a)(5), in which CFBank alleges that the Debtor “failed to explain satisfactorily ․ any loss of assets or deficiency of assets to meet the debtor's liabilities[,]” CFBank accuses the Debtor of failing to “explain why he does not have the cash and credit that he used to purchase the interest in the laundromat, the Toyota 4Runner, or the life insurance premiums.” Id. at 5, ¶ 35. And finally, in the second claim, CFBank alleges that Debtor “has failed to satisfactorily explain the failure ․ to pay CFBank any of the proceeds of the insurance claim from the two totaled vehicles.” Id. at 5, ¶ 36.

C. CFBank Did Not Timely File a Complaint Under 11 U.S.C. § 523(a)(2), (4), or (6) to Determine Whether its Debt is Dischargeable

Interestingly, despite the fact that CFBank appears to hold a cognovit judgment that is jointly and severally against Mr. Thompson (for an amount not disclosed in the Complaint, for which CFBank did not file a proof of claim in Mr. Thompson's chapter 7 case, and for which CFBank did not attach a copy to its Complaint), CFBank did not include a claim in its Complaint to object to the dischargeability of this debt pursuant to 11 U.S.C. § 523(a)(2), (4), or (6), such that if and when a discharge is issued in Debtor's chapter 7 case, this judgment debt will be discharged.

D. Consolidation of the Motion to Dismiss and Adversary Proceeding

As noted above, following the Court's review of the parties’ Joint Preliminary Pretrial Statement (Adv. Doc. 9) filed on June 5, 2025, the Court held a pretrial conference on June 25, 2025 (Adv. Doc. 14 and Est. Doc. 41, June 26, 2025). Following that pretrial conference, the Court entered an Order on July 1, 2025, consolidating the adversary proceeding and the Motion to Dismiss, which have since proceeded within the adversary proceeding. Order (Adv. Doc. 15; Est. Doc. 42).

E. Motion to Approve Settlement

On October 24, 2025, CFBank and the Debtor jointly filed the Motion to Approve Settlement to compromise both the Motion to Dismiss filed in the chapter 7 case and the Complaint filed in the adversary proceeding, pursuant to Bankruptcy Rule 9019. (Est. Doc. 44.) Although the Motion to Approve Settlement cites to Bankruptcy Rule 9019, it does not cite to any case law, does not advocate for this Court to take any particular approach to analyzing the settlement, and does not even attempt to argue why the proposed settlement meets any legal standard governing approval; rather, it simply set forth the proposed terms of the settlement and compromise,¹⁰ which are solely stated in the Motion to Approve Settlement (not in a separate settlement agreement) as follows:

1. Mr. Thompson will pay CFBank $20,000 within 60 days of the Court's approval of the settlement described herein.

2. The Motion to Dismiss will be withdrawn within seven days of the Court's approval of the settlement.

3. If Mr. Thompson pays $20,000 as agreed, then the balance of the debt owed to CFBank is discharged with Mr. Thompson's other debts when the Court issues its standard discharge order in the Main Case.

4. If Mr. Thompson fails to pay as agreed, then the debt owed to CFBank[11] becomes non-dischargeable. The Motion to Dismiss will still be withdrawn and the debts other than the debt owed to CFBank will be discharged when the Court issues its standard discharge order in the event Mr. Thompson fails to pay the settlement amount.

5. The Adversary Action shall be resolved by either a stipulated dismissal if Mr. Thompson pays as agreed herein or by a judgment entry excluding the debt owed to CFBank from the discharge in the event Mr. Thompson does not pay as agreed.[12]

Mot. to Approve Settlement at 1-2.

Notably, the settlement does not provide any payment to the bankruptcy estate, and it appears, if the settlement was approved, this case would close as a “no-asset” case. Therefore, except for CFBank, none of the estate's creditors would receive any distribution. And the Debtor's scheduled creditors are not insignificant.

F. Debtor's Scheduled Debts

The Debtor scheduled priority debts owed to the IRS of $48,961 for 2021, $43,349 for 2022, an estimated $35,000 for 2023, and an unknown amount for 2024, along with another $1,000 in tax debt to the State of Ohio. Schedule E/F at 1-3 (Est. Doc. 1 at 25-27). The Debtor also scheduled $686,840 in non-priority unsecured debt. Id. at 11 (Est. Doc. 1 at 35).

As far as secured claims, CFBank was scheduled as holding a claim of $300,207, partially secured by a judgment lien relating to debt incurred on July 5, 2024, on the Debtor's residence at 9724 Dinwiddie Court, Dayton, Ohio 45458 (the “Dinwiddie Property”). Schedule D at 2, item 2.2 (Est. Doc. 1 at 22).¹³ However, that judgment lien appeared to be junior in priority to two senior mortgages on the Dinwiddie Property granted in 2019 and 2023, on January 29, 2025, Debtor filed a Motion to Avoid Judicial Lien on Real Property Pursuant to 11 U.S.C. § 522(f)(1)(A) (Est. Doc. 17), in which he asserted that there are two senior mortgages on the Dinwiddie Property,¹⁴ and on February 25, 2025, the Court entered the Order Granting Motion to Avoid Judicial Lien on Real Property Pursuant to 11 U.S.C. § [522](f)(1)(A) (Est. Doc. 26), providing that upon discharge in the chapter 7 case, CFBank's judgment lien will be avoided.¹⁵

IV. Analysis

A. Bankruptcy Rule 9019

Initially, the question is whether Bankruptcy Rule 9019 applies to this situation. Bankruptcy Rule 9019 concerns court approval of a compromise or settlement “[o]n the trustee's motion[.]” Fed. R. Bankr. P. 9019(a). Under Bankruptcy Rule 9019, whether the compromise is “fair and equitable” is examined under the following four factors:

(a) The probability of success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection; (c) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises.

Bush v. Nathan (In re Bush), No. 19-2131, 2021 U.S. App. LEXIS 768, at *6 (6th Cir. Jan. 12, 2021) (quoting Bard v. Sicherman (In re Bard), 49 F. App'x 528, 530 (6th Cir. 2002) (quoting Drexel v. Loomis, 35 F.2d 800, 806 (8th Cir. 1929))); Prime Fin., Inc. v. Shapiro (In re TAJ Graphics Enters., L.L.C.), 162 F.4th 791, 798-99 (6th Cir. 2025) (quoting In re Bard, 49 F. App'x at 530 (collecting cases)). Notably, a bankruptcy court “enjoys ‘significant discretion’ in determining ‘whether to approve a proposed settlement.’ ” In re TAJ Graphics Enters., L.L.C., 162 F.4th at 798 (quoting Hindelag v. Mid-State Aftermarket Body Parts Inc. (In re MQVP, Inc.), 477 F. App'x 310, 312-13 (6th Cir. 2012) (quoting Rankin v. Lavan and Assoc., P.C. (In re Rankin), 438 F. App'x 420, 426 (6th Cir. 2011))). Ultimately, this Court “is charged with an affirmative obligation to apprise itself of the underlying facts and to make an independent judgment as to whether the compromise is fair and equitable.” In re TAJ Graphics Enters., L.L.C., 162 F.4th at 798 (quoting In re MQVP, Inc., 477 F. App'x at 313 (quoting Reynolds v. Comm'r of Internal Revenue, 861 F.2d 469, 473 (6th Cir. 1988))).

Chapter 11 debtors-in-possession are expressly included within the definition of a “trustee” as used in the Bankruptcy Rules, pursuant to Bankruptcy Rule 9001(b)(11), and neither sections 101 or 102 of the Bankruptcy Code, which are referenced as also providing definitions of words that apply to the Bankruptcy Rules, contain contrary or supplemental definitions of the word “trustee.” Sometimes a debtor acts derivatively on behalf of a trustee for the benefit of the estate. See Hyundai Translead, Inc. v. Jackson Truck & Trailer Repair, Inc. (In re Trailer Source, Inc.), 555 F.3d 231, 245 (6th Cir. 2009) (creditors can pursue avoidance actions derivatively in both chapter 7 and chapter 11 cases). However, in this instance, CFBank, as creditor, ultimately took up the mantel of prosecuting an objection to the Debtor's discharge, as expressly permitted by § 727(c)(1). As previously noted, that provision permits the Chapter 7 Trustee, a creditor, or the United States Trustee to pursue an objection to the discharge of all debts. 11 U.S.C. § 727(c)(1). However, when a creditor does so, they act in a pseudo-fiduciary capacity on behalf of all the creditors and the estate, in the nature of what the Chapter 7 Trustee might do if they were funded to do so and believed there was a valid claim to pursue. 10 Collier on Bankruptcy ¶ 7041.01 at 7041-3 & n.7 (citing In re de Armond, 240 B.R. 51). Thus, CFBank has stepped in to fulfill the role of fiduciary, similar to a trustee, such that it makes sense that CFBank would also have the ability to seek approval of a compromise that would normally be sought by the Chapter 7 Trustee, particularly given that the Debtor is the other party to the settlement.

The next question is whether the resolution of a complaint to object to a debtor's discharge under § 727(a) is subject to being settled. An objection under § 727(a) “is not property of the estate which is to be reduced to money nor is it a contested claim against the estate which must be resolved before the [s]ection 726 distribution can be completed.” In re Levine, 287 B.R. 683, 693 (Bankr. E.D. Mich 2002). Unlike other claims brought on behalf of an estate, “the only type of ‘judgment’ which can be entered in such an adversary proceeding is a judgment sustaining the objection.” Id. And some courts therefore conclude that an objection to discharge cannot be turned “into an economic benefit” regardless of “whether the monetary recovery benefits only the competing creditor or the entire creditor body” because a discharge “cannot be sold ․, nor can it be bought off by the debtor.” Id. However, at least one of the bankruptcy courts in that camp have also found that a “pragmatic approach” of allowing a Chapter 7 trustee “to accept money in exchange for her dismissal of an objection to the debtor's discharge” “works well when the debtor's misconduct is at issue, which it is when the objection is based upon one or more of the exceptions set forth in [s]ections 727(a)(2)-(7).” Id.

Generally, settlements under Bankruptcy Rule 9019, or otherwise, are to be encouraged. See In re Batt, 488 B.R. 349 (Bankr. W.D. Ky. 2013) (citing In re Fishell, 47 F.3d 1168 (6th Cir. 1995) (citing In re A & C Props., 784 F.2d 1377 (9th Cir. 1986)). This Court approves settlements of all stripes, on matters large and small, and such settlements generally are to be encouraged. See, e.g., In re Sheffer, 350 B.R. 402, 406 (Bankr. W.D. Ky. 2006) (“This Court is ever mindful that litigation is costly and taxes judicial resources. Settlement should be encouraged, where appropriate, in order to expedite case administration.”). It is also beyond debate that the Court has discretion in determining the appropriateness of settlements. See In re Batt, 488 B,R, at 350 (citing In re Planned Sys., Inc., 82 B.R. 919, 921 (Bankr. S.D. Ohio 1988)). But as noted above, settlement of a creditor's complaint objecting to a debtor's discharge raise unique issues. “A creditor ․ may not initiate a § 727(a) proceeding as a tool in negotiating the nondischargeability of a debtor's debt to it.” In re Babb, 346 B.R. 774, 778 (Bankr. E.D. Tenn. 2006) (quoting Bank One v. Kallstrom (In re Kallstrom), 298 B.R. 753, 758-59 (B.A.P. 10th Cir. 2003) (quoting State Bank of India v. Chalasani (In re Chalasani), 92 F.3d 1300, 1310 (2d Cir. 1996))). A voluntary dismissal, under certain circumstances, may “create the appearance that the debtor is purchasing his discharge.” Preston-Marone Constr. v. McKissack (In re McKissack), 320 B.R. 703, 718 (Bankr. D. Colo. 2005). In order to address these competing concerns, decisions have taken three different methods to analyze § 727 settlements: (1) the per se prohibition of such settlements; (2) allowing compromises that serve the public interest; and (3) examining whether the proposed settlement is fair and equitable and in the estate's best interests. Lindauer v. Traxler (In re Traxler), 277 B.R. 699, 702-03 (Bankr. E.D. Tex. 2002). This Court is taking the last approach.

At least under the currently proposed compromise, the guidelines for approval under Bankruptcy Rule 9019, which are geared toward the resolution of a claim asserted for the benefit of the estate, such as a claim to avoid and recover a transfer, do not appear to be met. The current compromise proposed between the Debtor and CFBank does nothing for the very estate on behalf of which CFBank was supposedly prosecuting the objection to Mr. Thompson's discharge. However, it could be a different story if the payment Debtor proposed would be paid into the chapter 7 estate for administration and distribution to the Debtor's creditors—a benefit to the estate and potentially to all creditors.¹⁶ Whether to approve this proposed settlement is further discussed below in the context of Bankruptcy Rule 7041.

B. Bankruptcy Rule 7041

In this instance, in addition to Bankruptcy Rule 9019, CFBank must address Bankruptcy Rule 7041, but has failed to do so. Generally, Civil Rule 41, which is made applicable in adversary proceedings by Bankruptcy Rule 7041, allows dismissal without a court order by stipulation by all parties. Fed. R. Civ. P. 41(a)(1)(A)(ii). However, Bankruptcy Rule 7041 adds a more stringent requirement, providing that in an adversary proceeding objecting to discharge, a complaint may be dismissed “on the plaintiff's motion only[,]” and “by a court order setting out any terms and conditions for the dismissal[.]” Fed. R. Bankr. P. 7041(a). Further, the motion must notice “the trustee, the United States trustee, and any other person the court designates.” Fed. R. Bankr. P. 7041(b). The reason for this more stringent approach to dismissal of a discharge complaint is explained in the Advisory Committee's notes to Bankruptcy Rule 7041, as follows:

Dismissal of a complaint objecting to a discharge raises special concerns because the plaintiff may have been induced by an advantage given or promised by the debtor or someone acting in his interest. Some courts by local rule or order have required the debtor and his attorneys or the plaintiff to file an affidavit that nothing has been promised to the plaintiff in consideration of the withdrawal of the objection. By specifically authorizing the objection to impose conditions in the order of dismissal this rule permits the continuation of this salutary practice.

In re Levine, 287 B.R. at 697. This has been interpreted to mean that “the Advisory Committee was concerned that a debtor might corrupt the judicial process of granting or denying a discharge by ‘buying off’ parties who otherwise had legitimate bases to participate in the process.” Id. at 699. There is also a concomitant problem in the situation in which a creditor is pursuing the objection to discharge, once the payment of money is introduced, as to whether the sum at issue will satisfy the creditor if they are forced to share it equally with all creditors. In other words, if the settlement is rejected because the payment of money is not made to the estate for ratable distribution to all creditors, will that not incentivize the creditor to simply ask for more such that its ultimate ratable share is closer to what was expected if it were the sole recipient of the funds? Perhaps this suggests that simply prohibiting the payment of money, per se, to resolve an objection to discharge, as some courts have concluded, is the better approach.

For the moment, however, the question is “whether there is anything in the Code that prohibits such settlements.” Carbone v. Beltran (In re Beltran), No. 09 A 00778, 2010 Bankr. LEXIS 2548, at *10 (Bankr. N.D. Ill. Aug. 25, 2010). And “[m]ost courts allow settlement of an objection to discharge if the terms of the settlement are fair and equitable and in the best interest of the estate.” Id. at *11 (citing In re Sheffer, 350 B.R. 402, 406-07 (Bankr. W.D. Ky. 2006) (collecting cases)). Here, however, there is zero benefit to the estate. “[I]n a Chapter 7 case in which there are no assets to distribute—and over 95% of Chapter 7 cases involve no assets—the settlement does nothing to benefit other creditors because they will not receive any distribution on their claims.” In re Beltran, 2010 Bankr. LEXIS 2548, at *13. Therefore, “permitting a single creditor to obtain a benefit disproportionate to what other creditors receive is at odds with the consequence of a denial of discharge, which allows all creditors equally to pursue their claims.” Id. at *13-14 (noting that “[m]any decisions recognize this problem with a proposed settlement payment to a single creditor.” (collecting cases)). Moreover, Bankruptcy Rule 7041, which only permits a complaint objecting to discharge to be dismissed “by a court order setting out any terms and conditions for the dismissal[,]” which is interpreted to mean that bankruptcy courts have “ ‘considerable discretion in determining whether a § 727(a) complaint should be dismissed at the request of a plaintiff, and if so under what terms and conditions’ ” means that a creditor should not be permitted to dismiss a complaint objecting to discharge on terms that the court finds inappropriate. In re Baltran, 2010 Bankr. LEXIS 2548, at *18 (quoting Kallstrom, 298 B.R. at 759).

As mentioned above, Collier on Bankruptcy summarizes that when a settlement is proposed to resolve a complaint objecting to a debtor's discharge, “it will not be dismissed or compromised unless the consideration is paid to the estate for the benefit of all creditors.” 10 Collier on Bankruptcy ¶ 7041.01. This view is echoed in case law within the Sixth Circuit:

It should be crystal clear to all concerned that the settlement of a § 727 action which calls for a payment to go only to the complaining creditor in return for dismissal of the adversary proceeding are highly disfavored and are unlikely to be approved. Such settlements create the appearance that a bankruptcy discharge is a commodity that is up for sale; and they fail to account for the interests of the estate and the remaining creditors in the § 727 action.

In re Babb, 346 B.R. at 779 (quoting McKissack, 320 B.R. at 722-23). The settlement at bar suffers from these problems and is “highly disfavored.”

The Court does not, at this time, ascribe to the view that settlements of § 727 actions should be forbidden per se. See In re Sheffer, 350 B.R. 405-06 (rejecting a per se ban of settlement of all § 727 actions as “unduly restrictive” and stating, in the context of settlement of an objection to discharge under § 727, that such an approach “undermines the fundamental principle that the law favors settlements” and that “[s]ettlement should be encouraged, where appropriate, in order to expedite case administration.”); In re Batt, 488 B.R. at 353-54 (adopting the position in In re Johnston, 2007 WL 1239199 (Bankr. W.D. Ky. 2007) to reject “any per se rule banning § 727 settlements as unduly restrictive.” (other citations omitted)); In re Maynard, 269 B.R. 535, 543 (D. Vt. 2001) (concluding that “a blanket prohibition on settlement of § 727 cases is not justified by the language of Bankruptcy Rule 7041, the majority of jurisdictions that have considered the matter, or countervailing public policy concerns favoring dispute resolution”). But the per se prohibition view does have a logical and systemic appeal and has been adopted by some courts. See In re Levine, 287 B.R. at 693 (denying the Chapter 7 Trustee's motion to approve settlement with the Debtor because “the Chapter 7 Trustee simply has no authority to settle objections to discharge in exchange for consideration[;]” such a settlement “is ultra vires and, therefore, breaches the Chapter 7 Trustee's fiduciary duty to engage in only lawful activities on behalf of the bankruptcy estate.”); In re Applegate, 498 B.R. 383 (Bankr. S.D. Ga. 2013); In re Rotert, 530 B.R. 791 (Bankr. N.D. Okla. 2015). Instead, the Court is only focused on addressing the proposed settlement now before it, although the Court suspects that a case-by-case approach is best given that it must be apprised of all facts and a different set of facts could result in a different outcome.¹⁷

What is fairly clear, however, is that a creditor cannot bring a complaint to object to the debtor's discharge of all debts under § 727, which concerns all creditors, and then use that as the leverage to extract a benefit for only themselves, with no benefit to a no-asset chapter 7 estate.¹⁸ See, e.g., Gordon v. Streck (In re Streck), No. 03-1193, 2007 Bankr. LEXIS 311, at *2-3 (Bankr. D. Mass. Jan. 25, 2007) (agreeing “with the majority view that an adversary proceeding seeking denial of discharge under § 727 can be settled” (citing In re Sheffer, 350 B.R. at 406), but holding that when all “the consideration being paid by Debtor (and his spouse) goes directly to Plaintiff and not to the estate” the settlement “is not in the best interests of the estate” (citing In re de Armond, 240 B.R. at 56; In re Bates, 211 B.R. 338, 345 (Bankr. C.D. Cal. 1999)).

If the present situation does not implicate the need to closely scrutinize these types of settlements and to decline to approve this type of compromise in order to uphold the integrity of the discharge in bankruptcy, then the Court is not sure what type of situation would rise to that level. In other words, approving this settlement, based on the terms set forth in the Motion to Approve Settlement, set against the backdrop of the Motion to Dismiss and Complaint, would suggest that there is little to no bar to a creditor utilizing a § 727 action as leverage for recovery on a single debt—a recovery from the debtor that no other creditor will receive. Not only does this is this not “fair and equitable” and not in the best interest of the estate, but it would seem to encourage an end-run around the chapter 7 process for creditors with means and motive to pursue an objection to discharge. While true that settlements are favored in bankruptcy, the focus in analyzing which settlements to approve should likely focus more on preventing creditors from forcing this issue than simply helping with an exit strategy.

In Carbone v. Betran (In re Beltran), Judge Wedoff noted that some decisions have concluded that “an objection to discharge can never be settled—that the plaintiff must either proceed to judgment or dismiss the action without consideration from the debtor.” 2010 Bankr. LEXIS 2548, at *7 (collecting cases). One rationale for this analysis is that a Chapter 7 Trustee or a creditor lacks the authority to settle an objection to discharge. But, as Judge Wedoff aptly points out, parties’ rights to settlement flow from their standing to prosecute the claim, and no other “special grant of authority” is required. Id. at *8. The “second rationale is that a debtor's discharge is a matter of public policy and so cannot be negotiated—that dishonest debtors should not be able to purchase discharges to which they are not entitled.” Id. at *7-8.

Nevertheless, if the totality of the circumstances indicates that the Debtor is having to purchase their discharge and the proceeds of that purchase will solely benefit the objecting creditor, who is only pursuing an objection to the debtor's discharge of all debts under 11 U.S.C. § 727(a)(2) and (5), and a related motion to dismiss this case under § 707(a), the settlement likely should not be approved. The Court is not attempting, at this point, to establish a uniform standard for reviewing these types of settlements; however, this particular settlement does not pass muster based on the current record of this case and the skeletal Motion to Approve Settlement.

Although the Court is not ascribing to a particular test at this time for all situations, for purposes of comparison it is worthwhile to review the McKissack decision, which applied a seven (7)-part, non-exhaustive set of factors to consider the propriety of any settlement of an action to revoke or deny a debtor's discharge. This test was cited favorably for analysis of § 727 settlements in In re Babb, 346 B.R. at 780. Given the absence of any analysis or argument in support of the proposed settlement by the parties in the Motion to Approve Settlement, the Court will run through this framework to shed light on the propriety of the terms of this settlement:

“1. Nature of the wrongful behavior alleged in the complaint and the basis and support for those allegations.” In re McKissack, 320 B.R. at 723-724.

The Court cannot, at this time, determine exactly how egregious, if at all, Mr. Thompson's behavior was leading up to his chapter 7 case, particularly given that the Complaint is only at the pleading stage and the parties provided no analysis within the Motion to Approve Settlement. The Bank alleges certain issues of supposedly undervalued assets, two significant purchases six and seven months prior to filing bankruptcy (the Toyota 4Runner and the interest in a laundromat), and certain transfers from his business entities, but the issues complained of seem to boil down to Debtor having used funds to do things other than repay the debt to CFBank. The Court is also aware that the Chapter 7 Trustee, as an independent fiduciary, has not pursued any avoidance actions in this case and did not pursue a § 727 action, filed a no-asset report, and has not weighed in on the propriety of the proposed settlement. It is unclear at this stage whether CFBank could prevail on its claims. Thus, this factor is not compelling one way or the other.

“2. Whether consideration for the dismissal is paid into the estate or only to the complaining creditor.” Id.

This factor is front and center in this case and is of paramount concern to the Court, given that the proposed settlement would not benefit anyone besides CFBank and the Debtor despite the fact that pursuing a denial of discharge is a matter of concern to the entire creditor body. Further, CFBank did not seek to have its debt held non-dischargeable after conducting an examination of the Debtor and obtaining an extension of time to file a complaint under 11 U.S.C. § 523, such that it appears there was not a good faith basis for CFBank to seek to hold the debt non-dischargeable, absent a tactical decision to forego this approach. Moreover, CFBank's settlement term that would purport to hold the prospect of a future judgment for non-dischargeability over the head of the Debtor as leverage to force payment, which it has no right to do, given that it failed to timely file a non-dischargeability claim, appears to be overreaching. This factor weighs heavily in favor of denying approval of the proposed settlement.

“3. Whether the amount of consideration going to the complaining creditor is greater than its expenses in prosecuting the action.” Id.

The Court has no information concerning this factor given that the Motion to Approve Settlement Motion does not provide any information regarding the Bank's expenses. Accordingly, this factor does not cut one way or the other.

“4. Whether other parties have filed objections to the proposed settlement.” Id.

In this case, no parties have filed objections to the proposed settlement. Accordingly, this factor would seem to weigh in favor of approving the settlement, and if there were some benefit to the estate, perhaps this factor would tip the scale; however, as it stands, the Court believes that it must perform its independent role in analyzing the proposed settlement and only allowing CFBank to dismiss its Complaint objecting to Debtor's discharge on terms and conditions it finds appropriate, as required by Bankruptcy Rule 7041(a).

“5. Whether another qualified party in interest is willing to commit to taking over the litigation and pursuing it to judgment.” Id.

No other party has stepped forward to take over the Complaint objecting to Debtor's discharge under § 727, or to take over the Motion to Dismiss the Debtor's chapter 7 case under § 707(a). There could be a variety of reasons for this, such as no other party wanting to throw good money after bad, other parties not viewing the Complaint as particularly strong, or perhaps just having moved on due to the filing of a bankruptcy. Accordingly, this factor does not seem particularly relevant to the present case.

“6. The degree to which the settling parties have sought the involvement of the [U.S. Trustee] and case trustee at an early stage of their settlement negotiations. Id.

The parties have not provided any information to the Court regarding this factor and the Chapter 7 Trustee and United States Trustee have not weighed in; thus, the Court cannot weigh this factor.

“7. Whether or not a § 523 action is being settled at the same time that a § 727 action is proposed to be dismissed.” Id.

If a parallel § 523 action existed the Court would, under this factor, need to consider “the extent to which any consideration paid ․ is being paid on account of the § 727 action.” Id. at 724. But here, there is no claim under § 523 such that all the consideration is being paid to resolve the § 727 action, along with the Motion to Dismiss, which is based upon the same nucleus of facts. Moreover, as already mentioned, this proposed settlement is inappropriate from the standpoint that it would purport to give CFBank rights it does not presently have to object to the dischargeability of debt under 11 U.S.C. § 523(a)(2), (4), or (6), as leverage to ensure Debtor's payment of the settlement.

This non-exhaustive list of factors leads to only one conclusion, which is that the Cout should not approve this settlement. Again, the overriding concern of the Court is that the Debtor is being coerced into paying a single creditor in return for CFBank withdrawing both its Motion to Dismiss and Complaint objecting to discharge so that Debtor can remain in this case and receive his discharge. This raises concerns not only for the administration of this particular case, but also for the systemic dynamic of what may happen in other cases. Accordingly, the Court will not approve this settlement, as currently proposed and particularly without any analysis or support for the Motion to Approve Settlement by the parties. At this point, CFBank may choose to move to dismiss the Complaint pursuant to Bankruptcy Rule 7041 on other terms, withdraw the Motion to Dismiss, pursue the litigation to its conclusion, or propose a different settlement, if agreed to by the Debtor, for consideration by the Court, all creditors, and parties in interest.

Ultimately, for many of the same reasons as the Court in In re Betran relied upon, this Court will not approve the settlement proposed by CFBank and Debtor. As in In re Beltran, the “settlement does not propose to pay [the creditor] just a disproportionate share of the proceeds, but all of the proceeds.” In re Beltran, 2010 Bankr. LEXIS 2548, at *20. Therefore, “[i]t is simply impossible to approve such an agreement as ‘fair, reasonable, and adequate’ ” because, at its essence, CFBank “is attempting to use an objection to discharge—which can be asserted only on behalf of all creditors—to obtain a payment solely for [itself].” Id. at 20-21. This type of settlement of a discharge complaint is often rejected on the following basis:

Some things are black and white and this is one of them. If the successful prosecution of a proceeding will benefit the entire creditor body, that action may not be settled in return for a private benefit. Unless the same parties that would benefit from the successful prosecution of a particular action also receive the benefits of its settlement, the settlement is improper. No amount of notice, absence of objection, or lack of creditor interest can change this principle or remove the fundamental impropriety which taints a settlement that does not comply with it.

In re Beltran, 2010 Bankr. LEXIS 2548, at *21 (quoting Bank One NA v. Smith (In re Smith), 207 B.R. 177, 178 (Bankr. N.D. Ind. 1997)). The terms and conditions of the settlement are not proper in this context. See In re Babb, 346 B.R. at 778, 783 (concluding that the court could not approve a settlement that would determine the creditor's “[j]udgment to be nondischargeable, and pay her $10,000.00 towards her attorneys’ fees and expenses in exchange for [creditor] dismissing her § 727 action against him.”). As aptly summarized for the present case, “ ‘[t]his quid pro quo exchange is exactly what Bankruptcy Rule 7041 discourages, and the [parties] failed to present any evidence showing that [their settlement] was something other than what it appears on its face.’ ” Id. at 783 (quoting In re Kallstrom, 298 B.R. at 760).

Whether another settlement would be “fair and equitable and in the best interest of the estate” cannot be predicted at this time, but it would appear to require, at a minimum, that the benefit be paid into the estate, not solely to CFBank.

V. Conclusion

Based upon the foregoing analysis and for many of the same reasons analyzed in the In re Beltran opinion by former Bankruptcy Judge Wedoff, “[b]ecause a creditor may not compromise an objection to discharge in exchange for payments that benefit only that creditor,” the proposed settlement between CFBank and Mr. Thompson “cannot be approved” and the Motion to Approve Settlement will be denied. In re Beltran, 2010 Bankr. LEXIS 2548, at *21. Moreover, this case presented an extra wrinkle in that CFBank was effectively purporting to obtain a right through this proposed settlement that it does not currently have, which is to end up with a non-dischargeable judgment if the Debtor did not pay the settlement, again solely to CFBank. Given that CFBank did not timely file a complaint objecting to the dischargeability of debt under 11 U.S.C. § 523(a)(2), (4), or (6), this is troubling. Notwithstanding, this denial is without prejudice to another settlement that would be fair and equitable and in the best interest of the estate. CFBank will need to decide whether to propose a settlement on terms that will benefit the estate and that Debtor will find acceptable, dismiss the Complaint (on terms the Court would find appropriate) and its Motion to Dismiss, or continue forward in prosecution of its Complaint and Motion to Dismiss. The Court will schedule a status conference in order to discuss the next steps with the parties.

IT IS SO ORDERED.

FOOTNOTES

1.   Previously, this Court entered an Order (Doc. 42) on July 1, 2025 consolidating CFBank's Motion to Dismiss Chapter 7 Case (Doc. 34) and Adversary Proceeding No. 25-3015, in which CFBank is seeking to deny Mr. Thompson a discharge of all debts pursuant to 11 U.S.C. § 727(a)(2) and (5), which set deadlines for discovery and dispositive motions, but did not set a trial date.

2.   The Motion to Approve Settlement also fails to address Bankruptcy Rule 7041 given that it does not request “a court order setting out any terms and conditions for the dismissal[,]” which would be required for the parties to stipulate to dismiss the Complaint objecting to Debtor's discharge as proposed in paragraph 5 of the proposed settlement, as set forth below.

3.   Hereinafter, items on the docket of the adversary proceeding, No. 25-3015, will be cited as “Adv. Doc. __” and items on the docket of Debtor's chapter 7 case, No. 24-32150, will be cited as “Est. Doc. __.”

4.   The Court is not opinion, at this time, on whether it views this as a violation of public policy.

5.   See 10A Collier on Bankruptcy ¶ 9019.01 at 9019-2 & n.2 (16th ed. 2025) (stating “[c]ompromises and settlements are favored in bankruptcy” (citations omitted)).

6.   The Court does not know why CFBank did not file a complaint objecting to dischargeability of a debt pursuant to 11 U.S.C. § 523(a)(2), (4), or (6), but given how active CFBank has been in opposing Mr. Thompson's discharge under § 727, it stands to reason that if CFBank had a good faith basis to file a complaint under § 523(a)(2), (4), or (6), they would have done so.

7.   See 10 Collier on Bankruptcy ¶ 7041.01 at 7041-2-7041-4 (16th ed. 2025) (stating “[i]t is improper for a debtor to offer or for a creditor to receive any consideration for the doing or forbearance of any act.”).

8.   Notably, CFBank did not obtain an order of this Court under Bankruptcy Rule 2004(a) to permit the examination before proceeding to conduct the examination of Mr. Thompson on January 21, 2025. Although CFBank filed its Motion of Creditor CFBank, National Association for an Order Authorizing Bankruptcy Rule 2004 Discovery (Est. Doc. 13) on December 27, 2024, CFBank asked to conduct the examination on January 21, 2025, which was the twenty-fifth (25th) day after it filed its motion, and before it even uploaded the proposed order in accordance with LBR 9072-1(e). See Order (Est. Doc. 15), Jan. 23, 2025 (stating “[t]he court ․ received the proposed order granting the Motion after the examination was scheduled to be conducted.”).

9.   The online docket of the Franklin County, Ohio Clerk of Courts of the Common Pleas reflects that counsel for CFBank herein obtained a Judgment Entry in Case No. 24CV4517 against DPD Transportation, Logistics & Courier Services, Inc., Jarrod Pickens, and Michael Thompson on June 13, 2024, jointly and severally, in the amount of $287,239.49.

10.   Originally, the parties had inquired whether they could simply submit an agreed order. That approach would appear to violate Bankruptcy Rule 7041(a) and (b), and it would not provide the Chapter 7 Trustee, the United States Trustee, or any other creditors in this case an opportunity to review and oppose the settlement.

11.   The Clerk's Claims Register for this case indicates that only The Huntington National Bank filed a proof of claim in this chapter 7 case, Claim 1-1, on March 3, 2025, for what appears to be a similar, but different guaranty of a loan made to DPD Transportation Logistics & Courier. Creditors were notified to “not file a proof of claim now” in the original Notice of Chapter 7 Bankruptcy Case – No Proof of Claim Deadline (Doc. 9) issued on November 4, 2024 (see item 10), and the Chapter 7 Trustee filed a Report of No Distribution on the docket on March 5, 2025, such that no deadline to file proofs of claim was ever set.

12.   Although not presently up for determination, the Court cannot envision a scenario in which it would enter a judgment holding CFBank's debt non-dischargeable given there is no timely filed non-dischargeability claim asserted in the Complaint. See, e.g., In re Dalen, 259 B.R. 586, 607 n.28 (Bankr. W.D. Mich. 2001) (citing Chevy Chase FSB v. DeGraves (In re DeGraves), No. 91-8031, 1991 WL 303452 (W.D. Mich. 1991)). It appears that ship has sailed; thus, CFBank's Complaint focused on objecting to the discharge of all of Debtor's debts, not a specific debt owed to it, which concerns the estate and all creditors.

13.   As noted above, CFBank did not file a proof of claim in Debtor's chapter 7 case. See supra note 9.

14.   Flagstar Bank holds the apparent first position secured mortgage on the Dinwiddie Property, which is scheduled in the amount of $263,028. Schedule D at 2, item 2.3 (Est. Doc. 1 at 22). And Huntington Mortgage Group holds the apparent second position secured mortgage on the Dinwiddie Property, which is scheduled in the amount of $118,538. Id. at 3, item 2.5 (Est. Doc. 1 at 23).

15.   The Court is providing this additional background from the record of the chapter 7 case solely for context of analyzing the settlement herein and obviously makes no findings with respect to any secured claim or the priorities.

16.   The Court is cognizant that if funds are paid into the estate and the priorities of distribution under 11 U.S.C. §§ 726(a) and 507 are such that only some of the priority claims are paid, unsecured nonpriority creditors will not realize a benefit; however, the Court cannot alter the priorities of the Bankruptcy Code, and this is something the creditor would need to take into account when determining whether to pursue an action to object to the debtor's discharge in a no-asset chapter 7 case. See, e.g., Czyzewski v. Jevic Holding Corp., 580 U.S. 451 (2017).

17.   The Court notes that in this particular case, because there were no objections filed, no hearing was conducted; however, the Court has conducted a thorough review of the case record and takes judicial notice of the same pursuant to Rule 201(c) of the Federal Rules of Evidence for the purpose of issuing this Memorandum Opinion and Order.

18.   In reviewing case law on this topic, there are a few cases that appear to have approved this type of settlement, as identified in In re Beltran, 2010 Bankr. LEXIS 2548, at *12 (citing Tindall v. Mavrode (In re Mavrode), 205 B.R. 716, 721 (Bankr. D.N.J. 1997) (“approving a settlement under which the plaintiff creditor received $15,000 and other creditors received nothing); Jacobson v. Robert Speece Props., Inc. (In re Speece), 159 B.R. 314, 317-23 (Bankr. E.D. Cal. 1993) (“finding potentially fair and equitable a settlement that benefited only the objecting creditor, but ultimately disapproving settlement because the court had previously determined that debtor was not entitled to discharge”)). However, those were not no-asset chapter 7 cases, such that there was arguably some benefit to the estate by permitting a settlement that resolved one creditor's claims and permitted the remaining creditors to receive their resultantly increased distributions. Id.

Tyson A. Crist United States Bankruptcy Judge