(dissenting):
While I agree with Parts III and IV of the majority opinion, which conclude that the Irving Trust Company has standing in this case and that it is not barred from asserting its objections by res judicata considerations, I cannot agree that the district court’s action in approving the settlement on the merits constituted an abuse of discretion.
The majority, citing our opinion in Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), correctly notes that the abuse-of-discretion standard governs review of court-approved settlements. (Majority Op. at 1070). “We will reverse the district court’s approval of a class settlement only for a clear abuse of discretion.” Girsh, supra, at 156 n.7 (citations omitted.) More recently, this Court in Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir., 1976) (in banc), quoted the Ninth Circuit’s formulation: “discretion is abused only where no reasonable man would take the view adopted by the trial court.” Id. at 115, quoting Delno v. Market St. Ry., 124 F.2d 965, 967 (9th Cir. 1942). We concluded:
Stated negatively, the appellate court may not upset a trial court’s exercise of discretion on the basis of a visceral disagreement with the lower court's decision. Similarly, the appellate court may not reverse where the trial court employs correct standards and procedures, and makes findings of fact not clearly erroneous. In sum, “[i]f the district court has applied the correct criteria to the facts of the case, then, it is fair to say that we will defer to its exercise of discretion.” Katz v. Carte Blanche Corp., 496 F.2d 747, 756 (3d Cir.) (in banc), cert. denied, 419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974). But if the trial court has not properly identified and applied the criteria, the court’s determination will not be entitled to such deference.
Lindy Bros., supra, at 116. All of the factors which we have required to be considered by the district court in approving a settlement were considered by Judge Gorbey. As appellees point out,1 his order reflects consideration of the complexity, expense and duration of the litigation, App. at 77, 132; the reaction of the class, App. at 106, 112; the stage of proceedings and amount of discovery completed, App. at 70, 1111, 12; the risks of establishing liability, App. at 74-75, 130; the risks of establishing damages, App. at 75-76, 131; and the reasonableness of the settlement fund, App. at 74,129, App. at 77,1133, 34, App. at 76, 131(d).
Given that Irving assumes a “heavy burden”2 in urging that the settlement be overturned on this record, I am unable to *1071agree that it has sustained that burden. Indeed, on the record before us, approval of this settlement is clearly correct.
The district court’s approval of the settlement recognized that “the proposed settlement is fair to [P&LE] and all of its shareholders and is a proper compromise of the claims presented in light of the uncertainties and risks of continued litigation.” App. at 74. These imponderables attended both questions of liability, id. at 74-75, and questions of damages, id. at 75-77.
In particular, the district court considered the complexity and novelty of the issues presented; the prospective length of trial, which was estimated to require about one month in the Eastern District action; the fact that other trials would be required in California, Connecticut, Ohio, Florida, New Jersey and Virginia; the fact that appeals from adverse trial decisions would be brought to various Courts of Appeals and possibly to the Supreme Court; and the fact that additional collateral litigation could result from any or all of these actions. App. at 77.
The district court then went on to examine the terms of the settlement. It found that recovery could properly be limited to the 7 percent minority shareholders “[bjeeause Penn Central, the majority shareholder of P&LE, participated in and benefited from the challenged transactions.” Id. at 76. This solution prevented Penn Central from “benefit[ing] twice from overreaching made actionable by securities or antitrust laws.” Id. at 76. In short:
The amount to be distributed to minority shareholders, after payment of plaintiffs’ counsel’s legal fees and costs, is approximately equivalent to seven percent of the loans made to Penn Central and not repaid, plus interest, if some consideration is given to inflationary factors. The distribution of said amount will result in all shareholders of P&LE receiving an equal distribution of funds on a per share basis.
Id. at 77. The district court thus concluded that the interests of all parties were served by the settlement.
The majority disagrees. Its opinion apparently anticipates that Irving will participate pro rata in the proceeds of the settlement.3 But payment to Irving for the shares which are held as its collateral would represent precisely the kind of double payment that the district court praised this settlement for avoiding. As Irving is a creditor of Penn Central — and, for purposes of this litigation, it stands in such a posture to the extent of Penn Central’s bonded indebtedness to the bondholders represented by Irving — it has already benefited by Penn Central’s alleged self-dealing. Irving’s primary interest, after all, lies in receiving continued payments of bond interest by Penn Central, and the receipt of an alleged 30 million dollars for which value had not been given by Penn Central could only have had the effect of increasing that company’s ability to make payments on those bonds.
The district court was careful to note (and incorporate into its findings) the provisions of an agreement entered into by Irving and the Penn Central trustees pursuant to the order of the Reorganization Court. This agreement provides that Irving’s bondholders are to receive interest payments from an escrow account established from dividends on Irving’s pledged shares.4 The district court observed that the settlement would have no effect on this agreement, as P&LE’s ability to pay dividends would not be altered.
*1072Finally, the district court concluded that the settlement would not “materially affect the value of P&LE’s stock pledged to Irving Trust Company.” App. at 79.
On the state of this record it is obvious that these findings of the district court may not be disturbed by us, as they are not clearly erroneous. See Krasnov v. Dinan, 465 F.2d 1298, 1302-03 (3d Cir. 1972).
No one contests the provisions or applicability of the Reorganization Court’s order which assures dividend payments to Irving; furthermore, the record is completely silent as to what effect, if any, a payment of $2,100,000 by P&LE would have upon the stock held as collateral by Irving. It was Irving’s burden to establish (if it could) any dilution or diminution in the value of its collateral. It did not do so although it had opportunity to produce evidence. The majority opinion asserts that Irving’s equity “is being diluted to the extent of approximately $472,500,” Majority Op. at Í069, and concludes that this inflicts a substantial detriment upon Irving with no benefit. Obviously, the figure of $472,500 is derived by multiplying P&LE’s proposed settlement contribution of $2,100,000 by 22.5%, which is the percentage of the P&LE stock pledged by Penn Central with Irving. However, as I have indicated, Irving is not a shareholder and hence is not entitled to participate as a shareholder in the settlement proceeding. P&LE correctly points out that Irving, while claiming that the P&LE contribution to the settlement dilutes the value of its pledged shares, has offered no evidence to support this assertion, nor has it shown whether the P&LE contribution is to be derived from capital or surplus. P&LE’s brief continues:
Assuming that [the contribution] was from surplus, which at the end of 1974 was $119,772,369, Irving cannot be heard to complain since all of that amount may have lawfully been distributed as dividends. If it had been so distributed, under terms of its agreement with the Penn Central Trustees Irving would have been entitled to receive only so much thereof payable on the pledged shares as was needed to pay bond interest; the remainder would have gone to the Penn Central Trustees.
According to P&LE’s 1974 Annual Report, there are 708,638 shares of its stock outstanding. Of these, 161,698 are pledged to Irving to secure the bonds. The 1974 Annual Report shows total shareholders’ equity to be $160,603,310, or $225.79 per share. Thus, the pledged shares held by Irving have a book value of $36,509,931 to secure bonds outstanding as of thé date of the agreement with the Penn Central Trustees in the principal amount of $14,821,700. If the contribution by P&LE of the sum of $2,100,000 to the settlement fund is deducted from the shareholders’ equity, the book value of the shares pledged to Irving is reduced only by approximately $472,000. The book value of the P&LE stock held by Irving would still be over $36,000,000 to secure $14,800,000 worth of bonds. Under the circumstances it is difficult to see how the value of the collateral would be seriously diluted by the settlement. (Footnote omitted.)
Brief for Appellees at 14-15.
In the absence of any evidence showing “dilution” or “effect”, the district court was clearly correct in its finding that the settlement would not materially affect the value of P&LE stock pledged to Irving Trust Company.
Even had there been such proof of dilution, however, the mere showing of an adverse effect cannot of itself suffice to void a settlement.5 If this were so, the mere *1073grant of standing to object to a settlement would be tantamount to the rejection of any compromise. Hence, an allegation of an adverse effect may be sufficient to confer standing, but rejection of the settlement should follow only if the district court, upon completion of its inquiry, concludes that the settlement is inadequate or unfair. In short, “[t]he decision of whether to approve a proposed settlement ... is left to the sound discretion of the district court.” Girsh v. Jepson, supra, 521 F.2d at 156. Nothing in the majority opinion’s discussion persuades me that the district court’s approval of this settlement was an abuse of that discretion.
To the contrary. It appears to me that the majority has been guilty of the very process condemned by Judge Gibbons in his dissenting opinion in Linmark Associates, Inc. v. Township of Willingboro, 535 F.2d 786, 810 (3d Cir. 1976), where he stated, in referring to the majority decision in that case, that
the majority, by a disingenuous process of selection and omission, sifts through the record below to construct its own findings to justify a predetermined result. . [Its] opinion completely inverts the respective roles of the trial and appellate courts, and is an instance of ad hoc decision making.
Judge Gibbons’ comments in Linmark Associates, Inc., supra, addressed to the majority in that case, are just as relevant when applied to the majority opinion here. It is quite evident to me that P&LE is desperately anxious to terminate protracted and expensive litigation — litigation that not only has required expenditure of its time, energy and monies over a period of years, but is destined to sap even more of its time, energy and monies in the years to come. A fair reading of P&LE’s position — and of the district court’s findings and conclusions, which required some 21 pages — indicates to me that the settlement focused on P&LE’s efforts to halt this drain on its resources. The district court, having considered all aspects of future litigation expense, and having balanced this factor with the other settlement features, concluded that the settlement compromise was justified and fair.
The majority, however, totally ignores paragraph 326 of the district court’s order (which details the facts of continuing litigation and consequent expense), claiming that the district court has made no specific finding as to any relationship between the settlement sum and the benefits to P&LE to be achieved by freedom from continued participating as an involuntary litigant. However, we have never required the same quality or exactitude in findings supporting the approval of settlements as we have required when dealing with the final merits of a case. As we have previously held, the district court need only set forth the reasoning which supports its conclusion in sufficient detail to make meaningful review possible. See Bryan v. Pittsburgh Plate Glass, Inc., supra. In Bryan, a challenge was made to the district court’s approval of a settlement. Chief Judge Seitz, in affirming the district court’s approval of the settlement, said:
Here the district court’s opinion meets that requirement; it catalogues the parties’ contentions, indicates the court’s view of their strengths, and notes additionally the substantial delays likely in ascertaining appropriate back pay, should *1074plaintiffs win such relief. To require a fuller statement of the court’s views would turn a decision on approval of a proposed settlement into a determination on the merits in all but name.
494 F.2d at 804. To require a detailed analysis of litigational costs totalling the amount of the P&LE contribution would in the first instance be impossible; second, it would virtually require a separate and independent trial to determine how much it would cost to defend each of the pending cases; third, it would discourage rather than encourage settlements; and fourth, it would turn a decision on the approval of a proposed settlement into a decision on the merits.
In addition to the savings of litigational expense, P&LE summarized the result of the settlement by suggesting that the court ask itself
who paid or gave up what, and to whom, and is this fair under the circumstances?
—Since Penn Central owns 93 percent of the stock of P&LE, of the $2,100,000 contributed by P&LE, 93 percent or $1,950,000 comes from Penn Central’s share of P&LE’s assets, and 7 percent or $150,000 comes from the minority’s share of the assets.
—The minority recoups thé $150,000 depletion of its share of the assets through the contribution of the other defendants in that amount.
—The Penn Central benefits from the extinguishment of $12,800,000 principal indebtedness and accrued interest and through other provisions of the settlement.
Brief for Appellees at 17.
What is at issue here is whether the district court, faced with the prospect of requiring P&LE to remain as an involuntary litigant, took into account the various factors specified by us in Girsh v. Jepson, supra, made findings of fact based upon record evidence and then in its discretion concluded that the settlement constituted a proper compromise in light of the uncertainties and risks of continued litigation.
I am satisfied that Judge Gorbey employed the correct standards and procedures in his approval of the settlement, and that his findings of fact are not clearly erroneous. In so doing, he properly exercised his discretion and his decision approving the settlement should not be overturned because the majority of this panel has a visceral disagreement with his decision and with the settlement itself. See Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., supra, at 116 (set out at p. 1070 of this opinion.)
I believe that the majority has ignored the district court’s findings and has substituted its own version of the facts. See Linmark Associates, Inc., supra (Gibbons, J., dissenting). It is for that reason that I cannot join in the majority opinion. I therefore dissent from the holding of the majority opinion, and I would affirm the district court’s order approving the settlement.
. Brief for Appellees at 18.
. Lindy Bros., supra, at 116.
. See Majority Op. at 1068-1070.
. The district court summarized the agreement as follows:
(a) Dividends on the pledged shares are paid into an escrow account and used to the extent necessary to make interest payments due on the bonds under the Collateral Trust Indentures;
(b) If adequate provision is made for the interest payments so that they are no more than six months in arrears, any excess sums available from the dividends or accumulations thereon are payable to the Trustees; and
(c) The Trustees have the right to exercise the voting rights with respect to the pledged shares.
App. at 79.
. In Bryan v. Pittsburgh Plate Glass, Inc., 494 F.2d 799 (3d Cir. 1974), this Court held that
While the proportion of the class opposed to a settlement is one factor to be considered in assessing its fairness, see C. Wright & A. Miller, Federal Practice and Procedure Civil § 1797 and cases cited n.42 (1972), a settlement is not unfair or unreasonable simply because a large number of class members oppose it. The drafters of Rule 23 chose as a means of protecting the class the requirement that the district court approve the settlement. They did not require rejection of a *1073settlement on objection of a given part of the class.
Id. at 803.
. 32. In addition to the foregoing, continued litigation over the complex and novel issues presented herein will be protracted and expensive for all parties concerned. Trial is estimated to last approximately one month in the Eastern District action. Other trials will be set in California, Connecticut, Ohio, Florida, New Jersey and Virginia. Thereafter, appeals will lie to the respective circuit courts [sic ] involved and ultimately to the Supreme Court. In addition, the termination of this litigation, other than by settlement, would likely spawn additional litigation, to wit, litigation involving claims of indemnity by the defendants or some of them against P&LE and/or against Penn Central. A compromise of the claims as proposed herein will bring to an end, once and for all, further protracted and expensive litigation.
App. at 77.