Motion to Vacate Default and Authorize Compromise — Fisher v. Innovation Refunds (District of Maryland)

Summary

A Motion to Vacate Default and Authorize Compromise of Controversies filed March 10, 2026 as Doc 11 in Morgan W. Fisher, Chapter 7 Trustee versus Innovation Refunds LLC, Adv. Proc. No. 25-00441-der, in the Chapter 7 case of Canton & Company LLC, Case No. 23-19054-DER, in the United States Bankruptcy Court for the District of Maryland. It states that the Trustee sued Innovation Refunds LLC to avoid and recover three transfers totaling $192,426.39, and that the Court granted the Trustee's Motion for Default Judgment after the parties had settled. Under the compromise, Innovation has returned the full $192,426.39, its Proof of Claim 16 is deemed a timely general unsecured claim, and the default judgment is to be vacated. The motion is signed by Zvi Guttman, counsel to the Trustee.

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“Motion to Vacate Default and Authorize Compromise — Fisher v. Innovation Refunds (District of Maryland).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/11-motion-to-vacate-default-and-approve-compromise-df9779147a/, SHA-256 b9c35bb4599e4a2fb6e7a5bc982546de69d070afed2cbf1a8187cbeef698fcdb.

Full text

Case 25-00441 Doc 11 Filed 03/10/26 Page 1 of 4

In the United States Bankruptcy Court
For the District of Maryland
(Baltimore Division)

IN RE:

Canton & Company LLC CASE NO. 23-19054-DER

DEBTOR. (CHAPTER 7)
________________________________

Morgan W. Fisher, Chapter 7 Trustee

V. Adv. Proc. No.: 25-00441-der

INNOVATION REFUNDS LLC

MOTION TO VACATE DEFAULT AND
AUTHORIZE COMPROMISE OF CONTROVERSIES

Morgan W. Fisher, Trustee, by undersigned counsel, files this Motion to Vacate
Default and Authorize Compromise of Controversies by and between the Trustee on the
one hand and Defendant, Innovation Refunds LLC. ("Innovation") on the other hand, and
states:
Introduction
1. The Debtor commenced this case by filing of a voluntary petition for relief
under Chapter 11 (Sub-V) of the Bankruptcy Code on December 12, 2023 (the "Petition
Date"). On December 3, 2025, the Court entered an Order Granting Motion to Convert to
a Case Under Chapter 7 [Dkt. 208].
2. Morgan W. Fisher was appointed as the chapter 7 trustee (the "Trustee").
Background and Controversies
3. Upon information and belief, between September 12, 2023, and the Petition
Date, the Debtor made three transfers to the Defendant in the aggregate amount of
$192,426.39 (the "Transfers"). See Complaint at Exhibit A.
4. The Trustee filed a Complaint against Innovation seeking to avoid and
recover the Transfers pursuant to 11 U.S.C. § 544 et. seq. and 550.

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Case 25-00441 Doc 11 Filed 03/10/26 Page 2 of 4

5. No answer was filed. On February 11, 2026, the Trustee filed a Motion for
Default Judgment (the "Default motion") [Dkt. 8]. Thereafter, Defendant and the Trustee
settled this adversary proceeding. However, before the Trustee could withdraw the
Default Motion and file a motion to compromise, the Court granted the Default Motion
[Dkt. 9].
The Compromise
6. The Trustee and Innovation have reached a resolution of the claims raised
in the Complaint as follows:
a. Innovation has returned the full $192, 426.39 to the Trustee.
b. On March 10, 2026, Innovation filed Proof of Claim 16 in the amount
of $192,426.39.
c. The claim shall be deemed a timely filed general unsecured claim.
d. The default judgment shall be vacated.

Legal Standard And Request For Relief
7. Settlements are to be encouraged, and it should not be the intention of a
court to discourage settlements. U.S. ex rel. Rahman v. Oncology Associates, P.C., 269
B.R. 139 (D. Md. 2001).
8. In approving a settlement, this Court must determine whether such
settlement is in the best interests of the estate, which requires an examination of the
litigation's probable costs and benefits. While it is the obligation of a bankruptcy court to
review independently a proposed compromise to determine whether it is fair and
equitable and in the best interests of the bankruptcy estate, settlements are to be
encouraged. See Nussbaum v. United States (In re Smith), 210 B.R. 689, 692 (Bankr.
D. Md. 1997) (Derby, J.). When recovering assets that may involve "protracted
investigation or potentially costly litigation, with no guarantees as to the outcome, the
trustee must tread cautiously-and an inquiring court must accord him wide latitude should
he conclude that the game is not worth the candle." In re Mailman Steam Carpet
Cleaning Corp., 212 F.3d 632, 635 (1st Cir.), cert. denied, 120 S. Ct. 2661 (2000). When
a settlement agreement provides tangible benefits to the estate in return for a sacrifice of

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Case 25-00441 Doc 11 Filed 03/10/26 Page 3 of 4

uncertain claims against a creditor, a bankruptcy court does not err in approving the
settlement. In re Bond, No. 93-1410, 1994 WL 20107, *4 (4th Cir. Jan. 26, 1994).
9. A court must examine whether the Trustee's actions in settling fall within the
universe of reasonable action, not whether pressing onward might produce more funds
for the estate. See In re Ashford Hotels, Ltd., 226 B.R. 797, 802 (Bankr. S.D.N.Y. 1998)
(viewing settlement within the "lowest point in the range of reasonableness"). A court
may approve a settlement over objections unless the proposed settlement falls below the
"lowest point in the range of reasonableness." In re W.T. Grant Co., 699 F.2d 599, 608,
613 (2d Cir.), cert. denied, 464 U.S. 822, 104 S.Ct. 89, 78 L.Ed.2d 97 (1983). A
settlement should be approved if it provides for "the best possible realization upon the
available assets...without undue waste or needless or fruitless litigation." In re Bowman,
181 B.R. 836, 847 (Bankr.D.Md.1995)(citing In re Central Ice Cream, 59 B.R. 476, 487
(Bankr.N.D.Ill.1985)).
10. In determining the reasonableness of the proposed settlement, this Court
should consider the following factors:
a. the probability of success in the litigation;
b. the likely difficulties in collection;
c. the complexity of the litigation;
d. the expense, inconvenience and delay necessarily attending to the
litigation; and
e. the paramount interest of the creditors of the estate.

See In re Martin, 91 F.3d 389, 393 (3d Cir. 1996).
11. Here, the Trustee believes he would succeed in the litigation.
12. Collection would not be difficult.
13. The expense, inconvenience, and delay necessarily attending to the
litigation likely exceeds any further benefit available to the Trustee.
14. The Trustee submits that the proposed settlement is reasonable under the
circumstances, the paramount interest of the creditors is served by approval of the
settlement.
15. In the exercise of his reasonable judgment the Trustee submits that the
settlement proposed herein should be approved and consummated.

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Case 25-00441 Doc 11 Filed 03/10/26 Page 4 of 4

WHEREFORE, Zvi Guttman, Trustee, moves that the Court:
A. Enter the Order attached hereto approving the compromise set forth
herein;
B. Authorize the Trustee to take any and all actions and execute any
and all documents necessary and appropriate to effectuate and
consummate the terms of the compromise; and
C. Grant such other relief as this Court deems just and proper.

/s/ Zvi Guttman
Zvi Guttman (06902)
The Law Offices of Zvi Guttman, P.A.
Post Office Box 32308
Baltimore, Maryland 21282
(410) 580-0500 Phone
(410) 580-0700 Fax
Zvi@zviguttman.com

Counsel to the Trustee

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