The proper way to calculate a Chapter 13 debtor's "projected disposable income" is through the "forward-looking approach," rather than the "mechanical approach." The forward-looking approach starts with the debtor's past average monthly disposable income (as shown on Form 22C) multiplied by the number of months in a debtor's plan. In the ordinary case, this figure will be the debtor's projected disposable income. However, in unusual cases, under the forward-looking approach, the Court has authority to review the debtor's actual (as opposed to averaged) monthly income and to calculate projected disposable income using actual income.

Here, the debtor's averaged 6-month pre-petition income was artificially inflated by a buyout received from here employer. The monthly payment that would have been required using the averaged income was hundreds of dollars a month more than the debtor's actual net income, thus making performance of the plan impossible. The bankruptcy court did not err in calculating the debtor's projected disposable income using the debtor's actual income, rather than the debtor averaged 6-month income.

Where a debtor was an insured under certain "non-eroding" insurance policies, and vendors of the debtor's products were "additional insureds" under such policies, the bankruptcy court erred in approving a settlement between the debtor and the insurance companies whereby: (i) injury liability limits were tendered to the debtor and (ii) the co-insured vendors' claims against the policies were enjoined. The court erred for several reasons, including: (i) impermissibly eliminating the vendor's claims for bad faith against the insurance companies for settling against their interests, (ii) not allowing the vendors' barred claims to become claims against insurance proceeds tendered to the debtor, (iii) barring co-insured claims when it was not necessary to the success of a reorganization, (iv) approving a settlement not in the best interests of the estate, since the insurance proceeds were only available to personal injury claimants (and not other creditors or even administrative claimants) and (v) approving a settlement of an adversary proceeding where the objecting vendors were also parties.

A "settlement" between only two parties to a multi-party lawsuit is not a settlement, and the procedure to approve a compromise under Fed. R. Bankr. P. 9019(a) cannot be used to impose an injunction on the non-settling parties. The debtor and the insurers no more have the power to reach a settlement of the matters at issue in the adversary proceeding than the vendors and the insurers would if they reached a settlement depriving the estate of its bargained-for rights under the policies. The opportunity to object to a settlement does not take the place of a trial on the merits.