Defensive Appellate Rights Are Property of the Bankruptcy Estate Under Colorado Law, Allowing a Chapter 7 Trustee to Waive Them in a Rule 9019 Settlement (Roberts v. Sender)

Introduction

In Roberts v. Sender (10th Cir. Mar. 31, 2026) (unpublished “Order and Judgment”), the Tenth Circuit affirmed approval of a Chapter 7 trustee’s settlement with major creditors arising from nearly a decade of cross-border litigation over Mexican coastal real estate held through a Mexican entity. The appellant-debtor, Michael Joseph Roberts, Sr., had formed PdC, LLC with former partners Timothy Flaherty and Timothy Kneen, and the parties used Riviera Country Club, S. de R.L. C.V.S. (“RCC”) to acquire property because Mexico restricts foreign ownership of coastal land.

The dispute escalated after Roberts fraudulently used a power of attorney to place liens on two properties and attempted to foreclose for himself—conduct the BAP described as an “economic coup.” The former partners and related entities (the “PdC Creditors”) obtained injunctive and contempt relief in Colorado state court and ultimately secured a $22.8 million damages-and-fees award. Roberts then filed Chapter 11 on the eve of the damages hearing while jailed for civil contempt; the bankruptcy court later converted the case to Chapter 7 after finding bad faith litigation conduct. The Chapter 7 trustee, Harvey Sender, negotiated a settlement intended to terminate the state-court war and stop continued accrual of interest and fees. Roberts and his attorney objected; no other creditors did.

The central issue on appeal was narrow: whether the bankruptcy court abused its discretion in approving the settlement. But the Tenth Circuit also addressed a consequential property-of-the-estate question: whether “defensive” state-court appellate rights belong to the bankruptcy estate, enabling the trustee to waive them as part of a settlement.

Summary of the Opinion

The Tenth Circuit affirmed. Applying abuse-of-discretion review under Reiss v. Hagmann, 881 F.2d 890, it held the bankruptcy court’s approval was informed, just, and grounded in an objective evaluation of developed facts. The bankruptcy court conducted a multi-day evidentiary hearing, made detailed credibility findings (crediting the trustee, PdC’s CFO, and the movants’ expert; discounting the objectors’ expert), and properly applied the “Kopexa factors” used in this circuit to evaluate settlements.

On the ancillary issues, the court held: (1) the trustee could relinquish the debtor’s state-court appellate rights because they were property of the estate; (2) the bankruptcy court did not need to retry the merits of the PdC Creditors’ claim and defenses in order to approve a compromise; (3) the bankruptcy court was not required to resolve the debtor’s claim objections before approving the settlement where no individualized property rights (like lien priority) were at stake; and (4) the debtor’s comity and res judicata defenses did not undermine the settlement’s reasonableness given the record and expert assessment of low appellate prospects.

Analysis

Precedents Cited

  • Reiss v. Hagmann, 881 F.2d 890: The governing abuse-of-discretion standard for approval of bankruptcy compromises. The panel emphasized it will affirm unless the decision is “uninformed” or “unjust” and not based on an “objective evaluation of developed facts.”
  • In re Amerson, 839 F.3d 1290: Reinforced that, even when the appeal comes from the BAP, the Tenth Circuit independently reviews the bankruptcy court’s decision and does not defer to the BAP, though the BAP may be persuasive.
  • Fed. R. Bankr. P. 9019 and Kearney v. Unsecured Creditors Comm., 987 F.3d 1284: Supplied the procedural and policy backdrop—trustees may compromise with court approval, and settlement is “favored.”
  • In re Rich Glob., LLC, 652 F. App'x 625: Provided the familiar standard that a settlement must be “fair and equitable and in the best interests of the estate,” and that courts assess whether it falls below “the lowest point in the range of reasonableness.” The panel relied on this to reject attempts to transform settlement approval into a merits trial.
  • In re Kopexa Realty Venture Co., 213 B.R. 1020 and In re Armstrong, 99 F. App'x 210: Framed the four-factor settlement evaluation tool (“Kopexa factors”) and supported the proposition that appellate courts need not address every sub-issue a litigant raises. The panel noted the Tenth Circuit has not adopted Kopexa in a published opinion but has approved/observed its use without criticism (including in Kearney).
  • Butner v. United States, 440 U.S. 48 and 11 U.S.C. § 541(a)(1): Structured the property analysis: state law defines the debtor’s interest; federal law determines whether that interest becomes property of the bankruptcy estate.
  • Colorado property-and-appeal authorities:
    • In re Marriage of Yates, 148 P.3d 304: Colorado Court of Appeals authority that appellate rights became property of the bankruptcy estate and were controlled by the trustee—used as the in-state anchor for the trustee-ownership conclusion.
    • AA Wholesale Storage, LLC v. Swinyard, 488 P.3d 1213: Cited by the debtor to cabin “property” to a “chose in action.” The panel rejected the debtor’s attempt to treat defensive appellate rights as categorically non-property.
    • In re Marriage of Graham, 574 P.2d 75: Supplied Colorado’s broad definition of “property” as “everything that has an exchangeable value or which goes to make up wealth or estate,” supporting classification of defensive appellate rights as property.
  • Out-of-circuit bankruptcy “defensive appellate rights” authorities:
    • In re Croft, 737 F.3d 372: Fifth Circuit decision holding defensive appellate rights are property of the estate under Texas’s broad definition of property; heavily influential to the Tenth Circuit’s Colorado-law prediction.
    • In re Mozer, 302 B.R. 892: Held that the right to appeal is “valuable in nature” and thus property of the bankruptcy estate under California law.
    • In re Bouzaglou, 2018 WL 4062299 (B.A.P. 9th Cir.), aff'd, 803 F. App'x 147: Reinforced that a Chapter 7 filing can place appellate rights under trustee control and permit relinquishment.
    • In re Morales, 403 B.R. 629: The debtor’s preferred authority holding defensive appellate rights were not estate assets (and expressing concern about impairing a debtor’s ability to object to claims). The panel expressly declined to adopt it, finding those concerns absent given the debtor’s ample opportunities to object in this case.
  • Claim-objection sequencing authorities:
    • In re DVR, LLC, 606 B.R. 80: Cited for the proposition that a bankruptcy court need not always resolve claim objections before approving a settlement, especially when objections do not implicate an objector’s distinct property rights (e.g., competing lien rights).
    • In re Fog Cap. Retail Invs. LLC, 2024 WL 659559: A Tenth Circuit unpublished decision recognizing the In re DVR, LLC distinction and approving settlement without resolving objections where no individual property rights were at issue.
  • Case-specific background decisions:
    • In re Roberts, 644 B.R. 220 (Bankr. D. Colo. 2022): Conversion to Chapter 7 after findings of extraordinary litigation misconduct.
    • In re Roberts, 667 B.R. 147 (B.A.P. 10th Cir. 2025): BAP’s detailed narrative and characterization of the “economic coup.”
    • In re Roberts, 2024 WL 1460287 (Bankr. D. Colo. Mar. 28, 2024): The settlement-approval order affirmed here.

Legal Reasoning

1. Settlement Approval Under Rule 9019 and the “Range of Reasonableness”

The court treated the appeal as what it was: review of a discretionary settlement approval, not a re-litigation of the underlying state-court merits. Consistent with In re Rich Glob., LLC, the bankruptcy judge was required to “canvass” the disputed issues sufficiently to evaluate risk and value, but not to decide “numerous issues of law and fact” as if conducting an appellate merits review.

The bankruptcy court’s process—two days of evidentiary hearing plus a closing-argument day, five witnesses, detailed credibility findings, and a nineteen-page order—was central to the Tenth Circuit’s conclusion that the decision was “informed” and “objective” under Reiss v. Hagmann.

2. Application of the Kopexa Factors

The bankruptcy court applied the “Kopexa factors” from In re Kopexa Realty Venture Co.:

  1. Probable success on the merits (here, success on state-court appeal): The court credited the movants’ expert and the record showing repeated losses and sanctions, concluding appellate prospects were negligible.
  2. Difficulties in collection: The bankruptcy court found this factor largely irrelevant in context.
  3. Complexity and expense: The court emphasized “cross-jurisdictional” complexity, ballooning fees, and litigation posture—importantly attributing much of the complexity to Roberts’s conduct.
  4. Interests of creditors: No creditors besides debtor’s counsel objected; the court considered that fact significant, particularly given the perceived conflicts.

The Tenth Circuit underscored the practical value captured by the settlement: stopping the compounding economic harm of ongoing litigation and judgment interest (identified as accruing at $1.5 million per year), and terminating a decade of “hotly contested” proceedings by having the trustee stipulate to the state-court judgment.

3. The Key Doctrinal Development: Defensive Appellate Rights as Estate Property

The most salient legal holding (albeit in an unpublished disposition) is the court’s Colorado-law prediction: “defensive appellate rights” are “property” and thus become part of the bankruptcy estate under 11 U.S.C. § 541(a)(1), meaning the Chapter 7 trustee controls them and can bargain them away in a settlement.

The court’s reasoning proceeds in classic Butner v. United States fashion:

  • State-law interest identification: Colorado defines property broadly. Citing In re Marriage of Graham, property includes “everything that has an exchangeable value.”
  • Rejecting narrow “chose in action” framing: While the debtor invoked AA Wholesale Storage, LLC v. Swinyard to argue only an affirmative “chose in action” counts as property, the panel declined to treat that as the outer boundary of “property” under Colorado law.
  • Functional valuation: The court characterized appellate rights as (i) a “right” to invoke the judicial system and (ii) a valuable “interest” with quantifiable exchange value, demonstrated by the debtor’s own litigation behavior and the economic stakes of reducing judgment exposure.
  • Persuasive federal analogues: The court aligned with In re Croft and In re Mozer, and cited In re Bouzaglou, while distinguishing and declining In re Morales (including Morales’s concern that trustee control would “destroy” a debtor’s right to object to claims).

This conclusion matters because it validates a settlement design in which the trustee “as owner of the appellate rights” ends the state-court fight by stipulating to the judgment and relinquishing appellate review—an approach that can be outcome-determinative in high-fee, high-interest judgment scenarios.

4. Claim Objections Need Not Always Be Resolved Before Settlement Approval

The court rejected the debtor’s sequencing argument (that the bankruptcy court had to adjudicate claim objections before approving the compromise). Drawing on In re DVR, LLC and the Tenth Circuit’s own In re Fog Cap. Retail Invs. LLC, it accepted the distinction between:

  • objections implicating an objector’s individualized property rights (e.g., competing lien rights), which may require resolution before settlement; and
  • objections that simply contest another creditor’s entitlement to distribution by re-arguing the merits, which need not be separately adjudicated before approving a global compromise.

Here, the bankruptcy court found the objections were “identical” to the anti-settlement arguments already heard and evaluated during the settlement hearing, making separate claim-objection adjudication duplicative and unnecessary for the Rule 9019 decision.

Impact

  • Trustee leverage in settling judgment-heavy cases: By treating defensive appellate rights as estate property under Colorado’s broad conception of “property,” the decision strengthens trustees’ ability to deliver finality. Creditors can negotiate for dismissal/waiver of appeals as part of a package that fixes allowed claim amounts and ends fee escalation.
  • Debtor loss of litigation control post-conversion: Once in Chapter 7, a debtor may be unable to continue appellate campaigns against adverse judgments if the trustee determines waiver is in the estate’s best interest. The ruling frames appellate rights as economically valuable estate assets to be administered like any other.
  • Settlement hearings remain “canvassing,” not re-trials: The opinion reinforces that the court’s job is to evaluate settlement reasonableness and litigation risk, not to decide every embedded legal issue or replay a state-court case.
  • Procedural efficiency in large bankruptcies: By endorsing approval of settlement without first deciding duplicative claim objections (where no individualized property rights are implicated), the decision supports streamlined administration and reduces opportunities for strategic delay.
  • Persuasive, not binding: The panel designated the disposition as nonprecedential, limiting formal binding effect. Still, given the detailed reasoning and alignment with In re Croft and In re Mozer, it is likely to be cited for persuasive value in Colorado bankruptcy practice and within the Tenth Circuit.

Complex Concepts Simplified

  • Chapter 7 trustee: A fiduciary appointed to collect and liquidate estate assets and distribute proceeds to creditors. The trustee can settle disputes to maximize value and reduce costs.
  • Bankruptcy “estate” (11 U.S.C. § 541): The pool of legal and equitable interests that becomes controlled by the bankruptcy system upon filing. If a right is “property of the estate,” the trustee—not the debtor—generally controls it.
  • Rule 9019 settlement: A compromise proposed by the trustee (or debtor-in-possession) that requires court approval after notice and an opportunity for objection.
  • Kopexa factors: A four-part checklist used to estimate whether settling is better than litigating: likelihood of winning, ability to collect, cost/complexity, and creditor interests.
  • “Lowest point in the range of reasonableness”: The settlement need not be the best imaginable outcome; it must be within a reasonable band given risk, cost, and delay.
  • Defensive appellate rights: The ability of a judgment debtor to appeal an adverse judgment (as opposed to pursuing an affirmative claim). This opinion treats that ability as a valuable property interest.
  • Comity: A doctrine about respecting foreign judgments/proceedings; here, invoked to argue Mexican proceedings should preclude Colorado adjudication.
  • Res judicata: Claim-preclusion; prevents re-litigating claims that were (or could have been) litigated in a prior final judgment. Roberts argued Mexican litigation precluded the Colorado claims.

Conclusion

Roberts v. Sender affirms a bankruptcy court’s broad discretion to approve a trustee’s settlement under Rule 9019 when the record shows an informed, evidence-based evaluation under the Kopexa framework. Its most notable doctrinal contribution is the conclusion that, under Colorado’s broad definition of property, defensive state-court appellate rights are property of the bankruptcy estate, empowering a Chapter 7 trustee to waive those rights to achieve finality and economic value for the estate. The decision also reinforces pragmatic administration: duplicative claim objections need not be separately adjudicated before settlement approval when they do not implicate individualized property rights.