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Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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PUBLISH 

FIT .. ED 

United St~t~ Court or Appeals Tenth Circuit 

DEC 2 6 1995 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT PATRICK FISHER 

Clerk 

JAMES S. STARZYNSKI, Liquidating Agent, ) 

Plaintiff-Appellant, ) 

v. 

SEQUOIA FOREST INDUSTRIES, doing 

business as Dinuba Timber Industries, 

Inc.; ROBERT E. WELCH; HAMPTON LUMBER 

SALES; ROBERT F. WELCH; TEMPLE-INLAND 

FOREST PRODUCTS CORPORATION, a 

subsidiary of Temple Eastex; CHESHIRE 

SALES COMPANY; LOUISIANA PACIFIC 

CORPORATION; PRECISION PINE & TIMBER, 

INC.; LUMBER, INC.; THUNDERBIRD STEEL 

CORPORATION; WESTAR TIMBER LTD; 

PONDEROSA TIMBER COMPANY; SHOLLENBARGER 

WOOD TREATING; RUST EQUIPMENT; HACIENDA 

HOME CENTERS, INC.; BEST LOG IND., 

Defendants-Appellees. 

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No. 94-2284 

Appeal from United States District Court 

for the District of New Mexico 

(D.C. Nos. CIV 93-120 LH/LFG, CIV 93-121, CIV 93-122, 

CIV 93-123, CIV 93-124, CIV 93-125, CIV 93-126, 

CIV 93-128, CIV 93-129, CIV 93-130, CIV 93-131, 

CIV 93-132, CIV 93-133, and CIV 93-1374) 

Douglas T. Francis and James S. Starzynski, of Francis & 

St-arzynski, P.A., Albuquerque, New Mexico, for the appellant. 

Paul M. Fish, of Modrall, Sperling, Roehl, Harris & Sisk, P.A., 

Albuquerque, New Mexico, for the appellees Sequoia Forest 

Industries; Temple-Inland Forest Products Corporation; Cheshire 

Sales Company; Lumber, Inc.; Westar Timber Ltd; Ponderosa Timber 

Company; Rust Equipment; and Hacienda Home Centers, Inc. (John F. 

Caffrey, of John F. Caffrey, P.A., of Albuquerque, New Mexico, on 

the brief for Hampton Lumber Sales, Precision Pine & Timber, Inc., 

Shellenbarger Wood Treating, and Thunderbird Steel Corporation; 

William Casey, of Keleher & McLeod, P.A., of Albuquerque, New 

Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 1 
Mexico, and David W. Hercher, of Miller, Nash, Wiener, Hager & 

Carlsen, of Seattle, Washington, on the brief for LouisianaPacific Corporation) . 

Before ANDERSON, HENRY, and BRISCOE, Circuit Judges.* 

BRISCOE, Circuit Judge. 

Appellant James S. Starzynski was appointed as liquidating 

agent of the debtor Sound Building Products, Inc., by confirmation 

of a liquidating Chapter 11 bankruptcy plan. The plan provided 

Starzynski with authority to prosecute and settle all claims to 

avoid any transfers, liens, or setoffs that Sound Building could 

make under the Bankruptcy Code. Starzynski brought these fourteen 

consolidated adversary proceedings, seeking to avoid preferential 

transfers made by Sound Building within one year of commencement 

of the bankruptcy proceedings. 

The bankruptcy court dismissed the adversary proceedings on 

the ground they were barred by the two-year statute of limitations 

of 11 U.S.C. § 546(a) (1) (1993) (amended 1994). Starzynski 

appeals the judgment of the district court affirming the decision 

of the bankruptcy court. We affirm after concluding an estate 

representative appointed under 11 U.S.C. § 1123(b) (3) (1993) is 

not a trustee within the meaning of§ 546(a) whose appointment 

* After examining the briefs and appellate record, this panel 

determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); lOth Cir. R. 34.1.9. Oral argument was vacated and the case 

was ordered submitted on the briefs. 

2 

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would commence the running of the two-year statute of limitations 

in which to file adversary proceedings. Here, adversary 

proceedings filed beyond two years after commencement of the 

Chapter 11 case are barred. While our resolution of this appeal 

turns upon statutory interpretation, we also deny Starzynski's 

motion to strike appellees' supplementary appendix and those 

portions of appellees' brief that rely on the supplementary 

appendix for support. 

Sound Building was experiencing financial problems and, in 

April 1989, one of its creditors filed an involuntary Chapter 7 

bankruptcy case against it. On June 5, 1989, Sound Building 

consented to entry of an order for relief, but converted the case 

to one under Chapter 11. The bankruptcy court entered the order 

for relief on June 26, 1989. A trustee was not appointed at any 

time. 

On August 18, 1990, the bankruptcy court confirmed a 

liquidating plan that provided for appointment of Starzynski as 

liquidating agent to pursue all causes of action of the debtor and 

the estate, including actions for voidable transfers. Starzynski 

filed these adversary proceedings on August 19, 20, and 24, 1992, 

seeking to avoid preferential transfers under 11 U.S.C. § 547 

(1993). 

Defendants moved to dismiss, arguing the claims were barred 

by the two-year statute of limitations of§ 546(a) (1), which under 

Zilkha Energy Co. v. Leighton, 920 F.2d 1520 (lOth Cir. 1990), 

3 

Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 3 
began to run on the date the order for relief was entered. 

Starzynski argued under Zilkha, 920 F. 2d at 1524, footnote 11, a 

new two-year period began to run upon his appointment as 

liquidating agent because he was the functional equivalent of a 

trustee. The bankruptcy court ruled the limitations period 

expired two years after entry of the order for relief, and the 

district court affirmed the ruling. 

The sole issue presented is whether the district court erred 

in ruling the adversary proceedings brought by the liquidating 

agent were barred by the two-year statute of limitations of 11 

U.S.C. § 546(a) (1) (1993) ,1 which provided: 

(a) An action or proceeding under section 544, 545, 547, 

548, or 553 of this title may not be commenced after the 

earlier of --

(1) two years after the appointment of a trustee 

under section 702, 1104, 1163, 1302, or 1202 of this 

title; or 

(2) the time the case is closed or dismissed. 

In Zilkha, this court held a Chapter 11 debtor-in-possession 

is subject to the two-year period of former§ 546(a) (1) because 

under 11 U.S.C. § 1107(a) (1993), a debtor-in-possession is the 

1 The statute now reads (11 U.S.C. § 546(a) (Supp. 1995)): 

An action or proceeding under section 544, 545, 547, 

548, or 553 of this title may not be commenced after the 

earlier of --

(1) the later of 

(A) 2 years after the entry of the order for 

relief; or 

(B) 1 year after the appointment or election of the 

first trustee under section 702, 1104, 1163, 1202, or 

1302 of this title if such appointment or such election 

occurs before the expiration of the period specified in 

subparagraph (A) ; or 

(2) the time the case is closed or dismissed. 

4 

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functional equivalent of a trustee. Because the debtor became the 

debtor-in-possession upon commencement of the case by filing its 

petition for reorganization, the period began running on the date 

of filing. Consequently, the preference actions filed by the 

debtor's successor company more than two years after that date 

were barred. 920 F.2d at 1523-24. 

Here, because the case began as an involuntary Chapter 7 

bankruptcy, and was later converted to Chapter 11 on the debtor's 

motion, the debtor became debtor-in-possession upon entry of the 

order for relief rather than upon filing of the involuntary 

Chapter 7 petition. See 11 U.S.C. §§ 301, 303(f) (1993). It 

follows from Zilkha that the two-year statute of limitations would 

run from the date of entry of the order for relief. That period 

expired more than a year before Starzynski filed the actions. 

I. Zilkha questioned. 

Starzynski contends Zilkha was wrongly decided and should be 

overruled. Three circuits have followed Zilkha. See In re 

Century Brass Products, 22 F.3d 37 (2d Cir. 1994); In re Coastal 

Group, 13 F.3d 81 (3d Cir. 1994); In re Softwaire Centre Int'l, 

994 F.2d 682 (9th Cir. 1993). 

Starzynski relies on In re Maxway Corp., 27 F. 3d 980, 982-85 

(4th Cir.), cert.denied 115 S. Ct. 580 (1994), where the court 

followed the "overwhelming majority" of bankruptcy and district 

courts in rejecting Zilkha and holding the two-year statute of 

5 

Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 5 
limitations of former§ 546(a) (1) does not apply to a debtor-inpossession. See. ~' In re National Steel Service Center, 170 

B.R. 745, 747-48 (Bankr. N.D. Ga. 1994); In re Pullman Const. 

Industries, 132 B.R. 359, 364 (Bankr. N.D. Ill. 1991). Zilkha has 

also been subject to criticism. See 5 Collier on Bankruptcy ~~ 

1107.02(3) (a) (Lawrence P. King ed., 15th ed. 1995); P. Carroll, 

Statutory Construction by the Ninth Circuit in Recent Bankruptcy 

Cases, 22 Cal. Bankr. J. 262 (1995); G. Smith & F. Kennedy, 

Fraudulent Transfers and Obligations: Issues of Current Interest, 

43 S.C.L. Rev. 709 (1992). 

In Maxway, the court reasoned that under the plain language 

of the statute, the limitations period applies only when a trustee 

is appointed under one of the specifically enumerated sections of 

the Bankruptcy Code. The court noted that debtors-in-possession 

are unlikely to commence avoidance actions because they are more 

interested in preserving relationships with creditors than in 

maximizing the size of the estate. The court further stated that 

if the two-year period applied, debtors might actively seek to 

delay a Chapter 11 case beyond the two-year period to prevent 

avoidance actions against family or friends. The court reasoned 

that postponing the start of the two-year statute until 

appointment of a trustee who is likely to bring an avoidance 

action prevents a debtor's delay in bringing the action from 

penalizing the unsecured creditors who would benefit from the 

action. 27 F.3d at 982-85. 

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While the rationale of Maxway is compelling on the question 

of whether the two-year statute of limitations should apply to a 

debtor-in-possession, we are bound by Zilkha for whatever 

precedent it may provide us to determine the liquidating agent 

question presented. One panel of the court cannot overrule the 

decision of another panel in the absence of en bane 

reconsideration or an intervening decision of the United States 

Supreme Court. See In re Smith, 10 F.3d 723, 724 (lOth Cir. 

1993), cert. denied 115 S.Ct. 53, reh'g denied 115 S.Ct. 615 

(1994). 

II. Applicability of statute of limitations of former§ 546(a) (1) 

to an estate representative appointed under§ 1123(b) (3) who is 

neither a trustee nor a debtor-in-possession. 

Starzynski also contends he had two years from the date of 

his appointment as liquidating agent in which to file the actions. 

In Zilkha, a trustee was never appointed, and the court noted: 

We take no position on whether a subsequent appointment 

of a trustee in a chapter 11 case would change the analysis. 

See Boatman v. E.J. Davis Co., 49 B.R. 719 (Bankr. D. Conn. 

1985) . While we perceive that to be a distinguishable 

circumstance requiring a different analysis, we leave the 

issue for a case in which that situation arises. 

920 F. 2d at 1524, n.ll. Starzynski argues this case presents the 

issue described in footnote 11 because, as liquidating agent, he 

is the functional equivalent of a trustee. As the court noted in 

Zilkha, it may be that under former§ 546(a) (1) a subsequently 

appointed trustee would have two years in which to file actions. 

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Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 7 
See In re C & R Beer & Soda, 186 B.R. 173, 178-79 (Bankr. E.D. 

N.Y. 1995). But see In re IRFM, F. 3d , 195 WL 69491 *2 

(9th Cir. 1995). However, Starzynski is not a trustee appointed 

under one of the listed sections of § 546(a) of the Bankruptcy 

Code, but is a representative of the estate appointed under § 

1123(b) (3) to retain and enforce any claim or interest belonging 

to the debtor or to the estate.2 

Whether former§ 546(a) (1) applies to an estate 

representative appointed under§ 1123(b) (3) is an issue of 

statutory construction. The starting point in analyzing this 

issue must be the language of the statute. If the language is 

clear and unambiguous, judicial inquiry is at an end in all but 

the most extraordinary circumstances. Unless the plain language 

of the statute would produce a result demonstrably at odds with 

the intention of its drafters, the court must give effect to the 

2 Several cases cited by Starzynski do not support his 

contention that appointment of a §1123(b) (3) estate representative 

starts the running of the statute of limitations. In Maxway, 27 

F.3d at 982-85, the court did not hold the statute of limitations 

began running upon appointment of an estate representative by a 

confirmed plan; the court held the statute never started to run 

because no trustee was appointed. In In re Royal Acquisition 

Corp., 167 B.R. 456 (Bankr. N.D. Ohio 1994), the court held the 

statute began running upon appointment of a liquidating trustee, 

but did not state the trustee was appointed under§ 1123(b) (3). 

National Steel, 170 B.R. at 749-50, supports the opposite 

proposition from that for which it is cited. The court held 

appointment of a§ 1123(b) (3) estate representative did not start 

the running of the statute of limitations. The court held the 

complaints timely after rejecting Zilkha, and held the statute did 

not begin running upon commencement of the chapter 11 case. Only 

in dicta did the court state that even if the statute started 

running upon appointment of the representative, the 

representative's complaints were timely because they were filed 

within two years of appointment. 

8 

Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 8 
clear meaning of the statute as written. United States v. Ron Pair 

Enterprises, 489 U.S. 235, 241-42 (1989). See Patterson v. 

Shumate, 504 U.S. 753 (1992). Cf. Dewsnup v. Timm, 502 U.S. 410, 

419-20 (1992) (Court reluctant to interpret ambiguous provision of 

Bankruptcy Code to work major change in pre-Code practice absent 

some discussion in legislative history) . 

There is no basis in the statutory language for restarting 

the two-year statute of limitations of § 546(a) (1) upon 

appointment of an estate representative under§ 1123(b) (3). The 

two-year statute of limitations of § 546(a) (1) expressly commenced 

upon "appointment of a trustee" under five specific sections of 

the Bankruptcy Code. As construed in Zilkha, it also commences 

when a Chapter 11 debtor first becomes a debtor-in-possession 

because § 1107(a) makes a debtor-in-possession the functional 

equivalent of a Chapter 11 trustee, which has all of the rights 

and powers of and is subject to the limitations on a Chapter 11 

trustee. See Century Brass, 22 F.3d at 39-40; Zilkha, 920 F.2d at 

153-24. This construction is controversial, see, ~, Maxway, 27 

F.3d 980, but is based on the language of the Bankruptcy Code. 

The language of § 1107(a) cannot be stretched to make an 

estate representative appointed under§ 1123(b) (3) a trustee 

within the meaning of§ 546(a) (1). Nor does§ 1123(b) (3) do so; 

it provides merely that a Chapter 11 plan may provide for: 

(A) the settlement or adjustment of any claim or 

interest belonging to the debtor or to the estate; or 

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(B) the retention and enfOrcement by the debtor, by the 

trustee,· or by a representative of the estate appointed for 

such purpose, of any such claim or interest. 

It is true that§ 1123(b) (3) permits an estate representative 

who is neither a trustee nor a debtor-in-possession acting as a 

trustee to bring preference claims under 11 U.S.C. § 547 (1993) 

that are ordinarily brought by the trustee or the debtor-inpossession. See In re Sweetwater, 884 F.2d 1323, 1327-29 (lOth 

Cir. 1989). However, the statutory language of §§ 546(a), 

1107(a), and 1123(b) (3) provides no basis for concluding a nontrustee appointed as an agent representative under§ 1123(b) (3) is 

a trustee within the meaning of § 546(a). Thus, appointment of an 

estate representative who is neither a debtor nor a trustee cannot 

start the running of the two-year statute of limitations of § 

546(a) (1). See National Steel, 170 B.R. at 749-50; In re Mars 

Stores, 150 B.R. 869, 878 (Bankr. D. Mass. 1993). But see In re 

Iron-Oak Supply Corp., 162 B.R. 301, 308-09 (Bankr. E.D. Cal. 

1993); In re Gibbens-Grable Co., 142 B.R. 164, 165-66 (Bankr. N.D. 

Ohio 1992). 

Because Zilkha starts the two-year statute of limitations 

running upon commencement of a Chapter 11 case as well as upon 

appointment of a trustee, an estate representative appointed under 

§ 1123(b) (3) will not have two years in which to file preference 

and other avoidance claims. Unless the appointment of a trustee 

starts the two-year period running anew, the estate representative 

must file preference and other avoidance actions that are subject 

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Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 10 
to§ 546(a) within two years of commencement of the Chapter 11 

case. If a trustee is appointed, the representative would have 

two years from that appointment in which to file actions. 

Although this construction gives estate representatives who 

are neither trustees nor debtors less than two years in which to 

file preference and other avoidance claims assigned to them under 

§ 1123(b) (3), it does not thwart an obvious legislative purpose by 

making it impossible for a representative appointed under § 

1123(b) (3) to timely enforce those claims. Here, for example, 

Starzynski was appointed approximately 14 months after 

commencement of the Chapter 11 action and had ten months in which 

to file the claims. Moreover, creditors are not helpless when a 

debtor-in-possession refuses to bring avoidance actions and the 

statute of limitations is nearing expiration. Under 11 U.S.C. § 

1104 (1993), any party in interest may request appointment of a 

trustee, and under 11 U.S.C. § 1109(b) (1993), a creditors' 

committee or even an individual creditor may, with leave of the 

bankruptcy court, initiate avoidance and other actions when the 

debtor-in-possession has failed to do so. See, ~, Louisiana 

World Exposition v. Federal Ins. Co., 858 F.2d 233, 247 (5th Cir. 

1988); In re Fugazy, 150 B.R. 103, 105 (Bankr. S.D. N.Y. 1993). 

But see In re Wilson, 77 B.R. 532, 535-36 (Bankr. W.D. va. 1987) 

(although§ 1109(b) is unavailable, §§ 105(a) and 1104 are 

available remedies when debtor-in-possession refuses to initiate 

adversary proceedings). Alternatively, parties could seek an 

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Appellate Case: 94-2284 Document: 01019280375 Date Filed: 12/26/1995 Page: 11 
order extending the deadline for filing. See P. Hoffman, Avoiding 

Powers: Special Bankruptcy Rights to Attack Claims or Liens and 

Recover Transfers, in Small Business Bankruptcy Reorganizations 

257, 281 (James A. Pusateri et al. eds., 1994). 

III. Alleged improper factfinding by bankruptcy court in 

determining whether Starzynski was functional equivalent of 

trustee. 

Starzynski argues the bankruptcy court's ruling that he was 

the functional equivalent of a trustee rather than the debtor-inpossession was a conclusion of law subject to de novo review. In 

the alternative, he contends the court improperly resolved an 

issue of fact in deciding a motion to dismiss and made findings of 

fact unsupported by the record on whether an estate representative 

appointed under§ 1123(b) (3) is the functional equivalent of a 

trustee. 

The issue before the court was whether the statute of 

limitations of § 546(a) (1) applies to a§ 1123(b) (3) estate 

representative who is neither a debtor-in-possession nor a trustee 

appointed under one of the listed sections of the Bankruptcy Code. 

Construction of a statute is an issue of law. See Onwuneme v. 

INS, 67 F.3d 273, 275 (lOth Cir. 1995). In resolving the issue, 

the bankruptcy court did not need to resolve issues of fact, and 

the record shows that it did not purport to do so. 

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IV. Whether the terms of the plan gave Starzynski two years from 

date of appointment to file the actions. 

Starzynski also contends the plan treated him as the 

functional equivalent of a trustee, giving him two years from the 

date of his appointment to file the actions. Whether Starzynski is 

the functional equivalent of a trustee or the debtor-in-possession 

is irrelevant. The issue is whether he is a trustee within the 

meaning of § 546(a) (1). As discussed, there is no statutory 

language that could make him a trustee under§ 546(a) (1). 

Starzynski argues the plan shows the creditors had no 

intention of limiting his power to prosecute avoidance actions to 

those of the debtor-in-possession. He argues the plan gave him 

all of the rights of a trustee, including two years from the date 

of his appointment in which to file the actions. He relies on the 

following provision of the order confirming the plan, which gave 

the agent 

all the rights and powers of a representative of the Estate 

and all the rights and powers set forth in the Plan including 

without limitation, the right to investigate, file, prosecute 

and settle any and all causes of action to avoid and recover 

any transfers, liens or setoffs the Debtor could avoid or 

recover under the provisions of the Bankruptcy Code, 

(including without limitation§§ 544, 545, 546 ... ) . 

(Appellant's appendix 233-34.) The order gave Starzynski all of 

the powers of a representative of the estate, but that could not 

make him a trustee within the meaning of§ 546(a) (1) or change the 

statutory language to include§ 1123(b) (3) estate representatives 

13 

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who are neither trustees nor debtors--in-possession. 

Nor do the order and the virtually identical corresponding 

provisions of the plan expressly provide that Starzynski would 

have two years from the date of appointment to file the actions, 

and the phrase "without limitation" in the order cannot reasonably 

be read to do so, especially in light of the bankruptcy court's 

subsequent ruling that the statute of limitations expired before 

Starzynski filed the actions. Moreover, it is questionable whether 

the plan could extend the period during which preference actions 

could be filed, which is provided by statute. See In re Millers 

Cove Energy Co., 179 B.R. 77, 85 (Bankr. E.D. Tenn. 1995) (§ 

546(a) is a jurisdictional provision); In re Calvanese, 169 B.R. 

104, 113-14 (Bankr. E.D. Pa. 1994) (§ 546(a) (1) is a statute of 

repose that cannot be extended by a plan) . But see, ~, Matter 

of Texas General Petroleum Corp., 52 F.3d 1330, 1337-38 (5th Cir. 

1995) (§ 546(a) is not jurisdictional); Iron-Oak Supply, 162 B.R. 

at 307 (§ 546(a) not a statute of repose); In reShape, 138 B.R. 

334, 337-38 (Bankr. D. Me. 1992) (§ 546(a) not jurisdictional and 

may be extended by agreement) . 

AFFIRMED. 

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