On April 2, 2026, the U.S. Bankruptcy Court for the District of New Jersey denied a minority lender group’s request to certify a direct appeal to the Third Circuit of its order approving a Del Monte Foods settlement. The court held the proposed appeal did not present a question of law lacking a controlling decision or any other ground for direct certification under 28 U.S.C. § 158(d)(2).
Del Monte Foods Corporation II Inc. and affiliates have been in Chapter 11 since July 2025 and are pursuing asset sales under a restructuring support agreement. After court‑ordered mediation and a two‑day evidentiary hearing, the bankruptcy court approved the mediated settlement on February 20, 2026, resolving disputes among the debtors, majority lenders, and the official committee of unsecured creditors. The settlement released certain avoidance actions arising from a 2024 liability management transaction (estimated at more than $200 million) and provided $8 million for general unsecured creditors. Applying Bankruptcy Rule 9019, the court found the compromise fair and in the estates’ best interests, over minority lenders’ objections. The court also credited evidence that the settlement supported three expected asset sales projected to generate nearly $500 million in cash, with buyers assuming substantial liabilities.
Seeking immediate appellate review, the minority lenders’ group argued that the court’s Settlement Approval Order raised unsettled legal issues, including whether a Rule 9019 settlement may impose distributional treatment that would be impermissible at plan confirmation under 11 U.S.C. §§ 1129(b)(1) and 1123(a)(4). They characterized the Settlement Approval Order as unfairly discriminating by providing recoveries to general unsecured creditors while excluding them despite their asserted secured position, and contended there was no controlling Third Circuit or Supreme Court authority on implementing such treatment through a settlement rather than a plan. The debtors, joined by the majority lenders, opposed certification, arguing the motion recast a discretionary, fact‑bound settlement approval into an abstract legal question.
The court concluded the Settlement Approval Order was a poor vehicle for direct appeal because Rule 9019 approval is inherently fact‑intensive and discretionary. The court noted the minority lenders’ proposed issues were largely fact‑bound, found no qualifying conflict, and construed “public importance” and “material advancement” narrowly on these facts. Accordingly, it denied certification.
The case is In re Del Monte Foods Corp. II Inc., No. 25-16984 (Bankr. D.N.J. Apr. 2, 2026). Del Monte is represented by Herbert Smith Freehills Kramer LLP and Cole Schotz PC. The minority group is represented by Pashman Stein Walder Hayden PC and Dechert LLP. The majority group is represented by Gibson Dunn & Crutcher LLP and Sills Cummis & Gross PC. The unsecured creditors committee is represented by Morrison Foerster LLP and Kelley Drye & Warren LLP. The opinion is available here.
