Fallon Family, L.P. v. Goodrich Petroleum Corp.

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Fallon Family, as part of a settlement agreement with Goodrich, executed a ratification of a previously disputed mineral lease in favor of Goodrich. Goodrich then filed a Chapter 11 bankruptcy proceeding. The Fallon Family argued that because the bankrupt Goodrich failed to make payments under the promissory note made part of the settlement agreement, the Fallon Family had the right to dissolve the settlement agreement on grounds of non-payment, thus divesting Goodrich of its interest in the lease. The Fifth Circuit affirmed the bankruptcy court's holding that when Goodrich filed for bankruptcy, the debtor-in-possession became vested under 11 U.S.C. 544(a) with all the rights and powers of a bona fide purchaser of the real property rights of Goodrich, including the ratified lease. The court held that the lease as ratified may not be dissolved for nonpayment of the obligations in the settlement agreement because the public record reflects that consideration had been fully paid, and a third party was not placed on notice of the remaining payments. View "Fallon Family, L.P. v. Goodrich Petroleum Corp." on Justia Law