effective form for p h a to litigate its lender liability claims second argument i'd like to address is whether the second and third sale orders involve the same issues as the lender liability case which is on appeal or from district court and third whether the trustee and p h a were identical parties or even in privity regarding the second and sale of second and third sale orders in bankruptcy court the first issue was one of the how can they be is an authorized representative of the company for purposes of bankruptcy this is one of the fundamental problems with this case and this case i'd like to emphasize is unique this is a one off this case is not like any of the other chapter eleven cases in which trustees have an opponent is your answer that the trustee was not the authorized represent the trustee was the authorized representative but on race  the issue is whether the trustee m p h a were identical parties for a student caught a purposes rusty of the trustees authorized to represent providence hall he can make concessions he can enter into agreements he can core issue to the case in any bankruptcy case well let me back up in a chapter seven or chapter thirteen bankruptcy case a typical bankruptcy case in which there is a consumer or even  chapter seven rehab a company that's liquidating a trustee is appointed and the trustee is exactly what the court what judge niemeyer indicates that the trustee is the authorized representative of the doctor the authorize representative of that company but the debtor is also still there and the debtor is still a party and interest the debtor does not go away so in a chapter seven  or chapter thirteen case if there is an issue to be litigated i don't understand that the debtor doesn't go to the debtor is the company premise providence hall is the debtor yes sir the person that can make decisions for that  or is the trustee but i don't understand who's going away i mean most make it sound as if and i guess this is the theory of the idea that after a trust appointed someone can come still represent providence hall and filed papers independent of the trustee and that's true and that's the question or there's no other person they trust the represent providence all well with all due respect this is it i appreciate the question because it does get at the core issue in the case and the court is going to have to address this but if the court address it with all due respect if the court addresses in the way that you indicate then the court would be missing the the bankruptcy courts of the district court yes they did authorize the sale of this as approved by the trustee and we are not here to challenge the sale orders certainly if you take that position if you take that position then everything was an authorized another that we're not talking about the race judicata we're talking about whether the sale was legitimate and if the sale was not legitimate that's a different issue you seem to be saying yes or i mean i would and i again i appreciate the question let me unpack that a little bit though what we are here on is whether the lender liability claims which p h a has whether they are bar by race judicata because the trustee entered into sale orders so the issue here is a race judicata issue now our position is that the lender liability claims which p a has are not barred by race judicata by the trustee entering into the sale orders the trustee did have the authority to enter the sailors no question we're not saying he didn't do that i think not an accurate entirely accurate because what we're facing in this case are court orders approving the sales it's not the trustees conduct could just be presented to the court but the court approved the orders and the sales were conducted  under the approval of the bankruptcy court and the district court the question then is are those orders precludes of of a subsequent litigation that to challenge the  correct i mean that is a correct statement a question if i stated it in a different way than that i was wrong that is the question these the sail orders are valid waters where not saying that the sale orders aren't valid orders and we're with the the i read the orders they direct the sale proceeds to go to wells fargo and if if the pros if the net proceeds of the respective sales are going to be paid directly the wells fargo why wouldn't that be are all that clear indication that  on the merits wells fargo had the better claim otherwise how could it be receiving the proceeds of the oversight you know there are three reasons the first  the issues on a sale motion on earth section three sixty three there are six factors that have to be considered as to whether a sale can be approved the factor of those around the question up please i want to know why wells fargo would be receiving the proceeds of the sale if they didn't gauged in any kind of shading shady dealings in connection with the loan with in connection with you know if they had  if there was a some underhanded or illegal practice in connection with the loan it is impossible that they would be receiving the proceeds of the sale i disagree that it would be impossible an example and analogy indicated is that what the court held in winter versus fork is that a court order approving an attorney's fee and allowing the attorney to get paid is not race judicata as to the debtors later claim that the lawyer committed malpractise but what do you say was wills fargo's fraud in connection with this loan well there are a number of things there are a number of things those are not the one and one of them is that they overcharged the  interest that they were supposed to charge under the london interbank overnight write a lot more right through you had a chance to raise that in bankroll no sir and and this is very important well applies not only to arguments here in in any proceeding in bankruptcy court the sale orders that you're talking about the adversary proceeding which brought ph it was a party and  section eleven zero nine of the bankruptcy code defines parties and interest and p h a the debtor was a party in interest the trustee of course is also a party in interest and the trustee does have the powers that the court described but p h a is also a party in interest and has a right to be heard now on the sale orders it's lasting p h a is a party in interest and has the right to vote her he is the one that's going to present its arguments no sir that is not correct and that is an issue that is presented squarely to us courts start in the beginning the question is what is the authority of a trustee representing a debtor and bankruptcy a trustee does not represent a debtor in bankruptcy that is a represent the interests of the debtor he does have the authority to represent the interests of the debtor but the debtor also has the right to be heard as a party and interest in chapter eleven because section eleven o nine  unusual no sir it is not and it is not unusual it is typical it is normal this is the only case in which that has not occurred that is why this case is so confounding is because the court is looking at it it should have been allowed to litigate as lender liability claims even the trustee of been appointed to limit yes or or concede those claims it should have been allowed to litigate what's the point of having the trustee the trustee can come in and substitute executive and the debtors company can override the trustees decision to litigate or not litigate in the bankruptcy court well with all due respect we're not saying that the debtor has the right to override the trust trustee dismissed this trustee elected not to pursue these claims because in the trustees presumably in the trustees judgment they didn't have merit the trustee certainly had the right to do that if he was the plaintiffs in the a p now an example is this court sees cases come up all the time i mean it's just a common thing where you have the plaintiffs being or the defendant the party being so and so the trustee of a party a province hall was the plaintiff in the  right that's correct all right and that was initiated while the executives of the company were in charge of the company yes sir subsequently while that was pending in the court appointed a trustee to represent the company at that point well i mean the statute is quite clear so what's the statute is eleven u s c section eleven zero nine and what that say that says that the parties in interest are among other people the debtor and the trustee one does not exclude the other you have a debtor and you have a trustee your norm in the role of the trustee to represent the providence of all and make decisions no authority to do that no he didn't he will be what's his representation scope when he comes in and represents the debtor what is the trustees you are arguing derivative away from the fact that everybody is a part in interest therefore everybody has a position in be a plaintiff in bankruptcy if the debtor has an issue to dress though my question my question is if the providence holds the plaintiff in this adversary proceeding and the trustee is appointed can the plaintiff so he comes to the bankruptcy court he says on behalf of providence hall i want to dismiss he's acting with you come in there and you say on behalf of providence hall you do not want to dismiss i don't understand that's  scope scheme of the bankruptcy code it's unfortunate that it does level i mean with all due respect that it's removed from the actual nuts and bolts but that is how it works the trustee i am  the bankruptcy court entered in this case pursuant to section three sixty three of the bankruptcy case and they bar the appellant's current claims against wells fargo briefly a factual background i think is helpful though i think from the questions corps answer the court is well aware of the facts but there were providence hall three pieces of commercial property it also a subsidiary dixon principal the early in the case almost immediately after the case commenced mr greer engaged in improper activities  including transferring funds improperly out of the bankruptcy of state without court approval without disclosure the bankruptcy court because of that and a number of other actions took the over the debtor is no longer a debtor in possession it has no no control over assets management anything what is what is the debtors avenue for relief it thinks that the were that exactly and there are other parties an interest many other parties an interest in a bankruptcy that can take that action other already not just yet or not the debtor neither but other parties in interest including equity holders or statement directly contrary to suggest otherwise and there's there's and debtors have no separate existence once chapter eleven trustee is filed the chapter eleven trustee is the one states i mean the trustee is vested with all the rights and responsibilities he's the only one who can bring an action he's the only one who can ask the court for authorization to subtle an action  to sell property and to pay wells fargo and that the order that was entered granting that motion directed the set of the payment of the net proceeds to the second sale order that motion grow attended the first hearing and he asked the court to continue that hearing because he was considering coming in and bidding on that piece of property and the court continued the hearing to a later date  and as the record reflects mr grow then contacted the trustee said that he had decided not to bet on the property and that he did not object to the sale going forward the third motion the third s do have three final orders of the court authorizing the sales directing the payment of net proceeds to pay off the wells fargo obligation the obligations are a motion to dismiss the adversary and it was shortly thereafter that the trustee was appointed the trustee would have had to have filed in opposition to that much into this mess and i believe to extend the deadline for him to fall in opposition and then ultimately dismissed the case consensual o wells fargo and doesn't that implicitly say that there was a valid lien well i don't think there was any question there was a valid lane that's there's now or mr bowman races that and and and in this context what happened was you know the trustee review the adversary proceeding decided you know it did not it lacked merit so he dismissed it or agreed to dismiss or agreed with our motion which was granted in part to dismiss without prejudice but but it was dismissed and then he filed to sell motions and in the benefited from the sale exactly and in fact there was one piece of property that was never sold so that went back to providence all also and all all creditors were paid in full all administrative expenses were paid in full the trustee you know  i think what very often happens is the issue is whether or not only it is appealable but whether the appeal is moot because if the sale closes prior to with before exactly you are i believe my time has expired i appreciate your time well let me try to go back to the core issue in the case and mr tarkenton made the point which he makes in his brief that the debtor speaks to the trustee now he doesn't that is incorrect and when the the panel goes to write its opinion it will have to look at eleven u s c one thousand nine and there is no way to square an opinion that says that the debtor speaks to its trustee with the plain language of eleven who the parties are interested you can present claims and things at the end of the at the end of the section it says it has the party's interest it is may raise and appear and be heard on any issue in a case under this chapter a debtor is allowed to be heard in a case in chapter eleven even after the judge but in this case and this this is the point that seems to have a dropped out of the oral argument here in this case the bankruptcy court did not allow p h a to be heard at all or but the trustee and the debtor are both allowed to be heard again going back to my example you're basically saying that want to trustees a point of the trustees and not exclusively representing the debtor sitting now no sir that is not exactly what i'm saying i'm saying that the turley or i'm saying that the debtor has a right to be heard that is what i'm saying that the debtor is heard through the trustee no sir that is not correct the debtor has a right to be heard separately now on page thirty two of my brief there's a good opinion by drank rossi judge stone from the western district of virginia th sought the first sale he was aware of and didn't object to the second sale he was going to bid on it and the third sale he appeared and  wanted to speak in the bankruptcy court said you can speak on behalf of providence all wise and that all that presence can we take that into account in other words it seems to me the sale of the properties was something that he would have approved it anyway because he saw it with respect to one and he ultimately got the debts paid off the values seem to be good market because nobody objected to those and there was an that because here now you go ahead and execute on the default but the swap claim was basically provided for in the agreement right and that was paid to the swap was then a trustee was appointed ok mr guerrero himself personally but p h a did not want the second and third sale orders and turret but they weren't allowed to say so because the court would not allow at least p h a which is the party here party i represent wasn't allowed to say so because the court would not allow it to be heard and it had a right to be heard p h a had the right to be heard and what it would have said is the opposite of what the court said that the prices are adequate that's a good sale p h a would have said no it wasn't and presented evidence to that effect but couldn't because the court would not allow it to be heard now entitle to object to the proof of claim the trustee is also entitled to object to the proof a claim the trustees objection to the proof of claim does not preclude the debtor from also objecting to the proof of claim that's a basic simple thing exact same scenario here except that paradigm was not applied in this case because it was a chapter eleven case it got confusing because chapter eleven trustees are so rare you had a brand new judge his first hearing in the case