In Re Planned Protective Services, Inc.

MEMORANDUM OF DECISION

Planned Protective Services, Inc. (“PPS”), acting under its confirmed Chapter 11 plan of reorganization, seeks the Court’s approval for the compromise of a claim held by Julius and Gladys Levinson concerning their entitlement, as secured creditors, to proceeds from the sale of certain real property of debtor’s estate. The Court has jurisdiction over the proposed compromise pursuant to 28 U.S.C. § 157 (b)(1).

The facts underlying the Levinsons’ claim are not in dispute. On June 8, 1989, the Levinsons loaned $35,000 to PPS and received as security therefor a deed of trust on PPS’s real property located at 548 South Kingsley Drive in Los Angeles. PPS filed a Chapter 11 petition on June 12,1989. The Levinsons recorded their deed of trust on June 16, 1989. The court subsequently approved the sale of the property during the pendency of PPS’s Chapter 11 case, and creditors holding liens on the property were paid from the proceeds.

The Levinsons were not paid out of the sale proceeds, however, based on a dispute with the debtor concerning the validity of their lien under applicable law. During claims litigation between the parties PPS asserted that the Levinsons’…