SOUTHERN DISTRICT OF FLORIDA FT ... - Trustee Services

Case 09-34791-RBR Doc 2629 Filed 02/16/12 Page 1 of 18 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

FT. LAUDERDALE DIVISION 

www.flsb.uscourts.gov 

In re: 

ROTHSTEIN ROSENFELDT ADLER, P.A., 

Case No.: 09-34791-RBR 

Chapter 11 Case 

Debtor. 

/ 

In re: 

BANYON 1030-32, LLC, 

Case No.: 10-33691-RBR 


Debtor. 

/ 

In re: 

BANYON INCOME FUND, LP, 

Case No.: 11-40929-RBR 


Debtor. 

/ 

TRUSTEES’ JOINT MOTION TO 

APPROVE (1) SETTLEMENT WITH GIBRALTAR 

PRIVATE BANK AND TRUST COMPANY, JOHN HARRIS, 

CHARLES SANDERS, LISA ELLIS AND CERTAIN OTHER OFFICERS 

AND DIRECTORS; (2) ENTRY OF BAR ORDERS; AND (3) SETTLEMENT AND 

ASSIGNMENT AGREEMENT BY AND AMONG THE TRUSTEES AND THE MORSES 

(Expedited Evidentiary Hearing Requested) 

Request for Expedited Hearing: The RRA Trustee and the Banyon Trustee 

(defined below) respectfully request an expedited hearing on or before 

FEBRUARY 29, 2012, because the continued prosecution of multiple 

lawsuits against Gibraltar stemming from Rothstein’s fraud, including the 

Razorback Suit (defined below) set for trial on March 1, 2012, requires 

Gibraltar to expend substantial sums daily, thereby eroding the funds 

available for this Settlement to the detriment of the Debtors’ bankruptcy 

estates and their creditors.


HERBERT STETTIN (“RRA Trustee”), the Chapter 11 Trustee of Rothstein Rosenfeldt 

Adler, P.A. (“RRA Estate”), and ROBERT C. FURR (“Banyon Trustee”), in his capacity as 

Chapter 7 Trustee and on behalf of the estate of Banyon 1030-32, LLC (the “Banyon 1030-32 

Estate”) , pending in this Court under Case No. 10-33691-RBR and Banyon Income Fund, LP, 

Case No. 11-40929-RBR (the “Banyon Income Estate”) (collectively, the “Banyon Estates”) 

(the RRA Trustee and Banyon Trustee are collectively referred to as the “Trustees”), pursuant to 

11 U.S.C. § 105 and Federal Rule of Bankruptcy Procedure 9019(a), move this Court 

(“Motion”) for entry of Orders (1) approving the compromise and settlement of controversies by 

and among the following parties: (a) as to the RRA Estate and the Banyon Estates (collectively, 

“Estates”): (i) the RRA Trustee on behalf of the RRA Estate, and (ii) and the Banyon Trustee on 

behalf of the Banyon Estates; and (b) as to the Settling Parties: (i) GIBRALTAR PRIVATE 

BANK AND TRUST COMPANY, and all of its current or former directors, officers, employees, 

and partners, including, the D&O Defendants defined below, and any successors and their 

partners, directors, officers, and employees, and Boston Private Financial Holdings, Inc. 

(collectively, “Gibraltar”), (ii) JOHN HARRIS, CHARLES SANDERS AND LISA ELLIS 

(“D&O Defendants”) (“Gibraltar and the D&O Defendants are collectively referred to 

hereinafter as the “Settling Parties”)(the “Gibraltar Settlement”); (2) entering bar orders in the 

RRA Estate and Banyon 1030-32 Estate connection therewith; and (3) Approving Assignment of 

Edward and Carol Morse and Morse Operations, Inc. (collectively, “Morses”) and Settlement 

and Compromise By and Among the RRA Trustee, the Banyon Trustee and the Morses. In 

support thereof, the Trustees state as follows: 

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Background 

1. The Rothstein Rosenfeldt Adler, P.A. case was commenced by four petitioning 

creditors as an involuntary Chapter 11 proceeding on November 10, 2009 [ECF No. 1]. The 

Court entered an Order for Relief on November 30, 2009 [ECF No. 66]. On November 20, 2009, 

this Court entered an order directing the appointment of a trustee [ECF No. 30]. On November 

20, 2009, the Office of the United States Trustee office selected Herbert Stettin as the Trustee in 

this case. [ECF No. 35]. On November 25, 2009, the Court ratified Mr. Stettin’s appointment as 

Trustee. [ECF No. 55]. 

2. On December 6, 2010, the RRA Trustee commenced an adversary proceeding 

against Gibraltar Private Bank and Trust Company, which is pending in this Court under 

Adversary No. 10-03767-RBR (“Bank Adversary”), by filing a Complaint seeking damages in 

excess of $60 million based upon claims for (i) avoidance and recovery of certain preferential 

and fraudulent transfers, (ii) turnover of property of the Estate and demand for accounting, (iii) 

unjust enrichment, and (iv) aiding and abetting breach of fiduciary duty and conversion, all as 

more particularly alleged in the Complaint. 

3. On November 29, 2011, the RRA Trustee commenced an adversary proceeding 

against the D&O Defendants, which is pending in this Court under Adversary No. 11-03021 

(“D&O Adversary”), by filing a Complaint seeking damages for claims based upon (i) aiding 

and abetting breach of fiduciary duty and conversion, (ii) negligence, and (iii) gross 

negligence/recklessness, all as more particularly alleged in that Complaint. 

4. On August 12, 2010, various parties filed an involuntary petition under the United 

States Bankruptcy Code (11 U.S.C. § 303) in the United States Bankruptcy Court for the 

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Southern District of Florida, Fort Lauderdale Division, against Banyon 1030-32, LLC, thereby 

commencing Case No. 10-33691-RBR (the “Banyon Case”). 

5. The Banyon petition was contested, and the order for relief was not entered until 

November 29, 2011 [Banyon Case, D.E. 329]. The Banyon Trustee was appointed Chapter 7 

trustee in the Banyon Case on November 18, 2011 [Banyon Case D.E. 322 and 323]. 

6. On November 4, 2011, various parties filed an involuntary petition under the 

United States Bankruptcy Code (11 U.S.C. § 303) in the United States Bankruptcy Court for the 

Southern District of Florida, Fort Lauderdale Division, against Banyon Income Fund, LP, 

thereby commencing Case No. 11-40929-RBR (the “Banyon Income Case”). 

7. The order for relief in the Banyon Income Case was entered on January 31, 2012 

[Banyon Income Case, D.E. 7]. The Banyon Trustee was appointed Chapter 7 trustee in the 

Banyon Case on February 6, 2012 [Banyon Income Case D.E. 6]. 

8. The Banyon Trustee, as Trustee for the Banyon Estates, has indicated an intention 

to bring claims against Gibraltar and the D&O Defendants similar to those brought by the RRA 

Trustee (the “Banyon Claims”), but has not yet commenced litigation. 

The RRA Trustee’s Collaboration with the Banyon Trustee 

9. The RRA Trustee and his undersigned counsel have collaborated closely with the 

Banyon Trustee and his undersigned counsel in jointly demanding that Gibraltar’s insurers pay 

the policy limits to facilitate settlement of the claims of both the RRA Trustee and the Banyon 

Trustee. The RRA Trustee demanded that Gibraltar’s insurance companies pay the policy limits 

in exchange for settlement of all of the RRA Trustee’s claims and contingent upon this Court's 

issuance of a bar order. 

By design and after collaboration with the RRA Trustee, the Banyon 

Trustee also indicated his intention to demand Gibraltar’s policy limits in exchange for 

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settlement of his claims, also contingent upon this court's issuance of a bar order. The Morses, 

pursuant to a Joint Prosecution Agreement with the RRA Trustee, simultaneously demanded that 

Gibraltar’s insurance companies pay the policy limits. 

Terms of the Gibraltar Settlement 

10. The Trustees and Settling Parties (collectively, “Agreement Parties”) have 

reached a resolution of all of the outstanding claims raised by the RRA Trustee in the Bank 

Adversary and the D&O Adversary, as well as the Banyon Claims raised, or to be raised, by the 

Banyon Trustee. The terms of the settlement are more particularly set forth in the Settlement and 

Assignment Agreement (“Gibraltar Settlement”) 1 attached hereto as Composite Exhibit A. 

11. Pursuant to the Gibraltar Settlement, (a) a cash sum totaling $20 million (“Initial 

Settlement Sum”) shall be paid to the Estates by Gibraltar ($10 million), Everest National 

Insurance Company (“Everest”) ($5 million) and Federal Insurance Company (“Federal”) ($5 

million), 2 (b) a judgment shall be entered in the Bank Adversary solely against Gibraltar and the 

D&O Adversary against the D&O Defendants in favor of the RRA Trustee in the amount of $50 

million, subject to the terms and conditions in the Gibraltar Settlement, in the form attached to 

the Gibraltar Settlement as Exhibit A; and (c) Gibraltar and the settling Directors and Officers 

shall assign to the RRA Trustee and the Banyon Trustee, in his capacity as trustee of the Banyon 

1030-32 Estate, all of their claims for (i) insurance coverage, “bad-faith” and similar claims 

against Gibraltar’s insurance companies which denied coverage for the claims asserted by the 

1 To the extent any provision of this Motion is inconsistent with any provision of the Settlement Agreement, such 

provision of the Settlement Agreement shall control. Any capitalized term not otherwise defined in this Motion 

shall have the definition ascribed in the Settlement Agreement. 

2 The portion of the Initial Settlement Sum being paid by Everest and Federal represents the full policy limits of 

their respective insurance policies for Gibraltar. The policy limits of a policy issued by American International 

Specialty Lines Insurance Company (“AISLIC”) have been exhausted by Gibraltar’s defense of the Rothstein related 

claims; accordingly, no additional sum is being contributed by AISLIC toward the Initial Settlement Sum. 

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RRA Trustee, and (ii) against its insurance broker, AON Risk Services Central, Inc. (“AON”). 

However, as detailed in the Gibraltar Settlement, the first one-third of any net recovery from any 

such claims shall be paid to Gibraltar up to a maximum of $5 million. See Gibraltar Settlement 

at 9.e. The division of the Initial Settlement Sum between the RRA Trustee and the Banyon 

Trustee does not involve Gibraltar or the D&O Defendants, but rather will be allocated between 

the Estates with the approval of the Bankruptcy Court. 

12. Gibraltar and the D&O Defendants are insured by a policy issued by National 

Union Fire Insurance Company of Pittsburgh, Pa. (“National Union”) with a liability limit of 

$10 Million, and which promises to pay the Loss of any Insured Person arising from a Claim 

made against such Insured Person for any Wrongful Act with respect to Claims first made 

against an Insured during the Policy Period or the Discovery Period for any Wrongful Act of 

such Insured Person. Gibraltar and the D&O Defendants are also insured by a policy issued by 

The Hartford (“Hartford”) with a limit of liability of $15 Million, and which promises to 

provide the Insured(s) with insurance during the Policy Period which is in excess of the total 

limits of liability and any retention/deductible under all Underlying Insurance. Following the 

RRA Trustee's demand for settlement, National Union and Hartford denied coverage for claims 

relating to the Rothstein litigation. As part of the Gibraltar Settlement, Gibraltar and the D&O 

Defendants have agreed to assign their causes of action against National Union and Hartford 

regarding the denial of insurance coverage, including causes of action for bad faith denial of 

coverage. In addition, Gibraltar will assign to the RRA Trustee and Banyon Trustee its claims 

against its insurance broker, AON, to be enforced in the discretion of the RRA Trustee and the 

Banyon Trustee. 

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Settlement Conditioned upon Entry of Bar Orders and Releases 

13. In consideration of, as a condition to, and integral to, the Gibraltar Settlement, 

Gibraltar and the D&O Defendants require the RRA Trustee and the Banyon Trustee to obtain 

Orders from the Bankruptcy Court (a) approving the Gibraltar Settlement (“Approval Orders”) 

as provided therein as a full, complete and unconditional settlement of any and all claims 

asserted or which could be asserted by the RRA Trustee and the Banyon Trustee; and (b) 

enjoining and permanently barring the prosecution of any and all claims by any person or other 

party in interest (the “Barred Claims”), of any kind and nature, whether claimed to be direct, 

indirect or derivative claims against Gibraltar and certain of Gibraltar's insurers (the “Settling 

Insurers”) in regard to any and all matters arising out of Gibraltar’s involvement whatsoever in 

transactions, acts or events in any manner related to Scott W. Rothstein (“Rothstein”) and/or 

RRA and/or Banyon 1030-32 LLC (“Banyon”), including but not limited to banking services 

provided to RRA, Rothstein, Banyon, and their predecessors, affiliates, successors, and related 

entities (“Bar Orders”). The forms of the Bar Orders are attached to the Gibraltar Settlement as 

Exhibit B and Exhibit C. 

14. The Gibraltar Settlement is intended to resolve and satisfy any and all claims by 

the RRA Trustee and the Banyon Trustee, the Debtors and the estates of the Debtors against 

Gibraltar, the D&O Defendants, and the Settling Insurers. The Gibraltar Settlement is contingent 

upon: (a) the entry of the Approval Orders and the Bar Orders; and (b) the entry of Bar Orders 

containing an injunction and a permanent bar of the prosecution of the Barred Claims. 

15. Should the litigation involving the Barred Claims be permitted to proceed during 

the pendency of any appeal of the Bar Orders, including as a result of a stay pending appeal of 

the Gibraltar Settlement, the Gibraltar Settlement shall be voidable by any Party giving written 

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notice to the other of its election to void the Gibraltar Settlement. The Agreement Parties shall 

jointly cooperate to enforce the terms of the Bar Orders if challenged by any person and/or 

entity. The Bankruptcy Court shall retain jurisdiction to enforce the terms of the Gibraltar 

Settlement and the Bar Orders. 

16. Upon the Approval Orders and Bar Orders becoming Final Non-Appealable 

Orders and the disbursement from the Escrow Account of the Initial Settlement Sum to the RRA 

Trustee and the Banyon Trustee and after the conclusion of the Assigned Actions: (i) RRA 

Trustee, the Banyon Trustee, the Debtors and the Debtors’ Estates shall grant a general release 

and discharge to the Settling Parties, as more fully detailed in the Gibraltar Settlement at 6, p. 7; 

and (ii) the Agreement Parties shall have no further obligations or liabilities between them, 

except as provided in the Gibraltar Settlement. 

17. Within 10 days of the Approval Orders and Bar Orders becoming Final Non- 

Appealable Orders, the RRA Trustee will cause to be filed stipulations for dismissal with 

prejudice, each party to bear its own fees and costs, in the form of Exhibit E attached to the 

Gibraltar Settlement, dismissing the Bank Adversary against Gibraltar, and dismissing the D&O 

Adversary against the D&O Defendants, such dismissals with prejudice subject to the Gibraltar 

Settlement and in a manner that permits the Bankruptcy Court to retain jurisdiction to enforce the 

Gibraltar Settlement. 

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The Separate/Integral Assignment of the Morses’ Claims and 

Settlement By and Among the Morses, the RRA Trustee and the Banyon Trustee 

18. The Morses have alleged that they were clients of RRA and Rothstein in a 

litigation involving Jan Jones International, Inc. (“Jan Jones”) which had provided them design 

services. The Morses assert that Gibraltar had knowledge that the Morses intended, and were led 

to believe by Rothstein, that approximately $27.5 million had been deposited in RRA accounts at 

Gibraltar referred to as “Client Trust Account” or “IOTA” accounts to post bonds, and for the 

prepayment of other amounts related thereto, in the Jan Jones litigation and that Gibraltar 

negligently permitted Rothstein’s diversion of such funds. 

19. The Morses, the RRA Trustee and the Banyon Trustee recognized the value of 

each of their respective claims against Gibraltar and the D&O Defendants. Each understood that 

the Gibraltar Settlement might not have been obtained absent an agreement respecting the 

assignment of the Morses’ claims, and a settlement respecting the amounts to be recovered by 

each of the RRA Estate, the Banyon Trustee and the Morses. Thereafter, the Morses, the RRA 

Trustee and Banyon Trustee, subject to Bankruptcy Court Approval, entered into the Assignment 

and Settlement Agreement attached as Composite Exhibit B (the “Morses/Trustees Settlement 

Agreement”). 

20. Pursuant to the Morses/Trustees Settlement Agreement, the Morses assigned to 

the RRA Trustee their claims against Gibraltar and the D&O Defendants. The Initial Settlement 

Sum ($20 million) to be paid, pursuant to the Gibraltar Agreement, shall be apportioned as 

follows: (a) three quarters ($15 million) to the RRA Trustee on behalf of the RRA Estate; (b) 

one-quarter ($5 million) to the Banyon Trustee on behalf of the Banyon Estates; and (c) $3.75 

million of the amount paid to the RRA Trustee to the Morses in consideration of the assignment 

of the Morses’ claims. 

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21. Any additional recovery in excess of the Initial Settlement Sum ($20 million) by 

the RRA Trustee and the Banyon Trustee in the pursuit of the claims assigned to the RRA 

Trustee and Banyon Trustee in his capacity as Trustee of the Banyon 1030-32 Estate, against 

additional insurance coverage, against its directors’ and officers’ insurers or any suit against 

AON, after payment of professional fees and costs expended or incurred (the “Net Recovery”), 

shall be apportioned as described below: 

a. The first $15 million of any Net Recovery shall be apportioned as follows: 

i. Gibraltar shall receive up to one-third from the first $15 million of any 

Net Recovery up to a maximum of $5 million; 

ii. the Trustees shall receive two-thirds of the first $15 million of any Net 

Recovery (up to $10 million) which shall be apportioned as follows 

1. The Banyon Trustee, for the benefit of the Banyon Estates, 

shall receive one-third of any such Net Recovery (up to $2.5 

million); and 

2. The RRA Trustee shall receive two-thirds of any such Net 

Recovery (up to $7.5 million) from which he will disburse 25% 

of any such proceeds to the Morses (up to $1.875 million). 

b. A further Net Recovery in excess of the first $15 million shall be apportioned 

as follows: 

i. the Banyon Trustee, for the benefit of the Banyon Estates, shall 

receive one-quarter (25%) of any such further Net Recovery; and 

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ii. the RRA Trustee shall receive three-quarters (75%) of any such further 

Net Recovery, from which he shall disburse one-quarter (25%) of any 

such proceeds to the Morses. 

c. After the Morses have been paid a grand total of $9.5 million (inclusive of 

payments from the Initial Settlement Sum and the Net Recovery), The Morses 

shall receive no further disbursements and any additional Net Recovery shall 

be apportioned as follows: 

i. the Banyon Trustee, for the benefit of the Banyon Estates, shall 

receive one-quarter (25%) of any such additional Net Recovery; and 

ii. the RRA Trustee shall receive three-quarters (75%) of any such 

additional Net Recovery. 

22. Except for the agreed distributions set forth herein, neither the RRA Trustee, nor 

the Banyon Trustee, nor their respective estates shall have any claims, as against each other, with 

respect to distributions of proceeds actually received by virtue of the Gibraltar Settlement. 

Provided however, that the RRA Trustee’s and Banyon Trustee’s agreement not to assert claims 

against the proceeds received by virtue of the Gibraltar Settlement shall not prejudice any claims 

that either estate may have against the other not involving proceeds of the Gibraltar Settlement. 

23. Pursuant to the Morses/Trustees Settlement, the Banyon Trustee shall exchange 

mutual releases with the Morses. 

Factors Supporting Approval of 

Gibraltar Settlement and Morses/Trustees Settlement Agreement 

24. The necessity of a global resolution of all the claims against Gibraltar and the 

D&O Defendants approved by the Bankruptcy Court, all of which arise from Gibraltar’s 

maintenance of accounts for RRA, Rothstein and Banyon, is demonstrated by the number of suits 

11


existing and threatened, each one of which would impair if not eliminate the ability of the 

Bankruptcy Court to resolve among competing claimants the appropriate interests to which each 

would be entitled. In addition to the Bank Adversary and the D&O Adversary, the following 

litigation is now pending against Gibraltar: 

• Razorback Funding, LLC, et al. v. Scott W. Rothstein, et al., 17 th Judicial Circuit in 

and for Broward County, Florida, Case No. 09-062943(07) (“Razorback Suit”); 

• Edward J. Morse, et al. v. Scott W. Rothstein, et al., 17 th Judicial Circuit in and for 

Broward County, Florida, Case No. 10-24110-CACE(19) (“Morse Suit”); and 

• Amy Adams, et al. v. Scott W. Rothstein, et al., United States District Court, 

Southern District of Florida, Case No. 11-cv-61688-COHN/SNOW (“Adams 

Suit”). 

25. The Razorback Suit involves multiple plaintiffs and defendants, is extremely 

complex and expensive litigation in which damages are sought against Gibraltar in an amount 

exceeding $180 million, and is scheduled for trial commencing March 1, 2012. The damages 

sought against Gibraltar in the Morse Suit exceed $50 million. The damages sought in the 

Adams Suit exceed $50 million. 

26. The cost to Gibraltar in continuing to defend itself and its officers and directors 

has consumed substantial parts of Gibraltar’s insurance coverage and, without the approval of the 

Gibraltar Settlement and the entry of the Bar Orders, the litigation described above would likely 

consume most, if not all, of the available insurance coverage before all litigation is concluded, 

regardless of the outcome. An award against Gibraltar and/or the D&O Defendants in any one of 

the cases for all of the damages sought would be catastrophic for Gibraltar and the D&O 

Defendants and, because it would be catastrophic, would result in the recovery of nothing for any 

claimants regardless of who prevailed. 

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27. The RRA Trustee has retained and consulted with an experienced former bank 

examiner to review Gibraltar’s financial condition and, subject to further due diligence, the 

Trustees are each independently satisfied that the benefits conferred on the RRA Estate, the 

Banyon Estates and any and all claimants against Gibraltar and the D&O Defendants by the 

payment of Initial Settlement Sum is believed to be the maximum that could be recovered on 

behalf of any and all claimants against Gibraltar and the D&O Defendants in a settlement. 

28. Approximately $96 million in Banyon investor claims have been filed in the RRA 

Estate. The Banyon entities themselves have also filed several claims in the RRA Estate. While 

the claims bar date has not occurred in either the Banyon 1030-32, LLC and Banyon Income 

Funds, LP cases, the Trustees believe that there will be substantial duplication between the 

Banyon related claims in the RRA Estate and the investors claims ultimately against in the 

Banyon bankruptcy estates. At the time of the filing of this Joint Motion, the Banyon Estates 

have very limited funds, have not as of yet engaged forensic professionals, and are not in a 

position to immediately commence litigation against Gibraltar and the D&O Defendants. 

29. Given these considerations and in the absence of other resources to satisfy a 

judgment against Gibraltar, the Trustees have each concluded, in the exercise of their 

independent business judgment, that the Gibraltar Settlement with Gibraltar and the D&O 

Defendants, including the payment of its full insurance policy limits with the Settling Insurers, 

the entry of the Bar Orders, the assignment of the Bad Faith Claims and the Morses/Trustees 

Settlement Agreement are warranted and in the best interests of the RRA Estate, the Banyon 

Estates, and their creditors, as well as the approval of the Morse/Trustee Settlement. 

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Legal Argument to Support the 

Gibraltar Settlement and the Morses/Trustees Settlement Agreement 

30. Bankruptcy Rule 9019(a) provides that after notice and a hearing, a court may 

approve a proposed settlement of a claim. The decision of whether or not to approve a 

compromise is within the sound discretion of the court. Chira v. Saal (In re Chira), 367 B.R. 

888, 896 (S.D. Fla. 2007); In re Air Safety Intern., L.C., 335 B.R. 843, 852 (S.D. Fla. 2005). 

31. In order to fulfill its duty to scrutinize any potential settlement, the bankruptcy 

court must determine whether a proposed settlement is “fair and equitable.” Chira v. Saal (In re 

Chira), 367 B.R. at 896; GMGRSST, Ltd. v. Menotte (In re Air Safety Int'l, L.C.), 336 B.R. 843, 

852 (S.D. Fla. 2005). In In re Justice Oaks II, Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990), the 

Eleventh Circuit provided additional guidance as to whether a compromise should be approved. 

Justice Oaks established a four-part test for approval: 

(a) 

(b) 

(c) 

(d) 

The probability of success in litigation; 

The difficulties, if any, to be encountered in the matter of collection; 

The complexity of the litigation involved and the expense, inconvenience 

and delay necessarily attending it; and 

The paramount interest of the creditors and a proper deference to their 

reasonable views in the premises. 

Id. 

32. The Gibraltar Settlement overwhelmingly satisfies the Justice Oaks standard. The 

RRA Trustee believes his Complaints against Gibraltar and the D&O Defendants set forth sound 

claims, as illustrated not only by the text of the Complaints, but also by his Motion for Partial 

Summary Judgment filed in the Bank Adversary [Adversary ECF No.131]. In contrast, Gibraltar 

and the D&O Defendants believe they have sound defenses and have denied and continue to 

deny that they committed any acts or failed to fulfill any duties with respect to the RRA and 

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Banyon depository accounts. The Trustees recognize that all litigation involves a measure of 

uncertainty and risk. Accordingly, the Trustees seek approval of the Gibraltar Settlement to 

eliminate this measure of uncertainty and risk and to benefit all creditors. 

33. Because the risk of catastrophic loss is always present in operating a financial 

institution, Gibraltar purchased policies of insurance intended to protect it from loss in the event, 

rightly or wrongly, it was faced with in claims such as those asserted against it in the litigation 

described above. As in any similar litigation, if not settled, these proceedings could and likely 

would become more complex, more document intensive, and more protracted. Continued 

litigation of these cases will inevitably involve delay above and beyond that provided for by the 

current Adversary pretrial order. Even if the case were to be litigated by the RRA Trustee to a 

successful conclusion, an appeal likely would follow, thus further delaying the Estates’ receipt of 

any recovery. By that time, the insurance policy proceeds may not be available. 

34. This Court is required to consider the “paramount interest of creditors,” and the 

Trustees have independently considered the terms of the Gibraltar Settlement, as well as the 

Morses/Trustees Settlement Agreement, with a view to the benefit of all creditors. The Official 

Committee of Unsecured Creditors of the RRA Estate has been kept fully aware of the 

developments in the Bank Adversary and D&O Adversary. 

35. It is evident that Gibraltar's most significant assets are its insurance policies (two 

of which have been tendered to effectuate the Gibraltar Settlement) and its claims against 

National Union, Hartford, and AON relating to denial of insurance coverage - the request for Bar 

Orders from Gibraltar and the D&O Defendants in return for the payment of the Initial 

Settlement Sum of $10 million, plus the payment of the Everest and Federal insurance policy 

limits of $10 million, plus the assignment of claims against National Union, Hartford, and AON 

15


relating to denial of insurance coverage was clearly and expressly contemplated by the RRA 

Trustee and Banyon Trustee as in the claimants' best interests. 

Bar Orders 

36. The terms of the Gibraltar Settlement include the issuance of Bar Orders in favor 

of Gibraltar and the D&O Defendants. This Court has the inherent power under the Bankruptcy 

Code, including section 105(a), to issue any order necessary or appropriate to carry out the 

provisions of Title 11. Munford v. Munford, Inc., (In re Munford), 97 F.3d 449, 454 (11th Cir. 

1996)(finding bankruptcy court had authority under section 105(a) to enter order barring claims 

against certain defendants). The Eleventh Circuit has expressly concluded that (i) public policy 

favors settlements, (ii) the cost of litigation can be burdensome on a bankruptcy estate, and (iii) 

“bar orders play an integral role in facilitating settlements.” Munford 97 F.3d at 455; accord In 

re S&I Investments, 421 B.R. 569, 583-586 (Bankr. S.D. Fla. 2009)(J. Ray) (approving bar order 

as part of a settlement with the estate); In re Certified HR Serv. Co., No. 05-22912-RBR, Order 

Granting Motion of Liquidating Trustee James S. Feltman To Approve Settlement and 

Compromise [ECF No. 2200] (Bankr. S.D. Fla. June 8, 2008)(J. Ray); In re First NLC Financial 

Serv. LLC., 2009 Bankr. LEXIS 1083 (Bankr. S.D. Fla. March 12, 2009)(J. Hyman). 

37. In fact, this Court has already approved bar orders in this case under similar facts. 

See In re Rothstein Rosenfeldt Adler, P.A., 2010 Bankr. LEXIS 3001, at *17 (Bankr. S.D. Fla. 

Sept. 16, 2010) (approving bar order as part of the Szafranski settlement); In re Rothstein 

Rosenfeldt Adler, P.A., 09-34791-RBR [ECF No. 910] (approving bar order as part of the 

Lippman settlement); and In re Rothstein Rosenfeldt Adler, P.A., 09-34791-RBR [ECF No. 

1320] (approving bar order as part of the Bereneld Spritzer Schechter & Sherr, LLP settlement). 

16


38. Here, the proposed Bar Orders are an essential and critical element of the 

Settlement Agreement. The approval of the Gibraltar Settlement and the Morses/Trustees 

Settlement Agreement and the issuance of the Bar Orders will result in a payment of a minimum 

of $20 million to the RRA and Banyon Estates and will both save the Estates the cost of 

litigating these claims both at the trial and appellate levels and eliminate any risk of an adverse 

ruling were the cases to be tried to verdict. 

Conclusion 

39. The Gibraltar Settlement and the Morses/Trustees Settlement Agreement are in 

the best interest of the RRA Estate, the Banyon Estates and all of their creditors. It will provide 

the RRA Estate and the Banyon Estates with significant cash from the $20 million Initial 

Settlement Sum as ultimately apportioned between the RRA Estate and Banyon Estates. The 

Settlement Agreement will also save the RRA Estate considerable expenses by avoiding the 

delays and uncertainties of trial and in recovering upon any judgment. 

WHEREFORE, the RRA Trustee and the Banyon Trustee respectfully request that the 

Court grant the relief requested herein such other relief as is just and proper. 

CERTIFICATE OF SERVICE 

WE HEREBY CERTIFY that on February 16, 2012, I electronically filed the foregoing 

document with the Clerk of the Court using CM/ECF. I further certify that the foregoing 

document was served on Feburary 16, 2012 by transmission of Notice of Electronic Filing 

generated by CM/ECF to those parties registered to receive electronic notices in the abovecaptioned 

cases. 

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Respectfully submitted, 

GENOVESE JOBLOVE & BATTISTA, P.A. 

Counsel to RRA Trustee 

100 S.E. Second Street 

Suite 4400 

Miami, Florida 33131 

Telephone: (305) 349-2300 

Facsimile: (305) 349-2310 

STICHTER RIEDEL BLAIN & PROSSER, P.A. 

Counsel to Banyon Trustee in the Banyon Case 

and proposed counsel in the Banyon Income 

Case 

110 East Madison Street 

Suite 200 

Tampa, Florida 33602 

Telephone: 813-229-0144 

Facsimile: 813-229-1811 

By: 

/s/ John H. Genovese 

JOHN H. GENOVESE 

Florida Bar No. 280852 

jgenovese@gjb-law.com 

By: 

/s/ Russell M. Blain 

RUSSELL M. BLAIN 

Florida Bar No. 236314 

rblain@srbp.com 

18

Case 09-34791-RBR Doc 2629-1 Filed 02/16/12 Page 1 of 95 

COMPOSITE 

EXHIBIT 

“A”

Case 09-34791-RBR Doc 2629-1 Filed 02/16/12 Page 2 of 95






























































































Case 09-34791-RBR Doc 2629-2 Filed 02/16/12 Page 1 of 36 

COMPOSITE 

EXHIBIT 

“B”

SOUTHERN DISTRICT OF FLORIDA FT ... - Trustee Services

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