First Premier Capital LLC v. Republic Bank of Chicago

Bankruptcy Ct. did not err in approving settlement of adversary action seeking among other things avoidance of creditor's blanket lien on debtor's assets where terms of settlement included retroactive modification of blanket lien to correct typographical error by indicating that lien was on debtor's assets rather than creditor's property. Settlement of claim was proper since reformation of lien was at least possible outcome of case and settlement would avoid expensive litigation costs for bankruptcy estate. Moreover, while third-party creditor argued that settlement was improper since reformation of lien gave lien creditor potential advantage in pending state court lawsuit involving distribution of some of debtor's assets among other creditors, settlement would not preclude any creditor in state court lawsuit from litigating reformation issue since Bankruptcy Ct.'s approval of settlement was with understanding that issue of actual reformation of lien was not determined in adversary proceeding.