United States Court of Appeals

For the First Circuit

03-2586

IN RE NTA, LLC, AND NTA II, LLC, Debtors

NTA, LLC, AND NTA II, LLC,

Appellants,

v.

CONCOURSE HOLDING COMPANY, LLC,

Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge]

Before

 Torruella, Lynch, and Lipez, Circuit Judges.

Charles R. Bennett, Jr., with whom Harold B. Murphy and Jesse

I. Redlener were on brief, for appellants.

Sabin Willett, with whom Julia Frost-Davies, Melissa G.

Liazos, and Gregory N. Kazarian were on brief, for appellee.

August 17, 2004
1The Membership Interests represent the rights to equity

ownership in Concourse. They are the only ownership interests in

Concourse. 

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LIPEZ, Circuit Judge. Appellants NTA and NTA II placed

their primary assets, the Membership Interests in a company, into

an escrow account as part of an agreement to avoid foreclosure by

a lender, appellee Concourse Holding Company. Appellants

subsequently filed for bankruptcy under Chapter 11. They now claim

that the Membership Interests placed in escrow are part of the

bankruptcy estate and not the property of the appellee. Both the

bankruptcy court and the district court ruled that the escrowed

assets were not part of the bankruptcy estate and were properly

distributed from escrow to the appellee. Interpreting the written

agreements that govern the relationship between the parties, and

applying both 11 U.S.C. § 541 and Illinois state law, we affirm.

I.

We glean the facts from the record before the bankruptcy

and district courts. While there is a long and complicated history

between the parties, we relate only those facts relevant to the

issues on appeal. 

NTA and NTA II (collectively, NTA) are holding companies.

NTA owned one hundred percent of the Membership Interests1 in

Concourse Communications (Concourse), a company that develops,

implements, and maintains wireless communication systems in

airports and other public venues. The Membership Interests were
2Holding Company was created by Cardinal Growth, a venture

capital fund, for the purpose of acquiring the loans to Concourse.

Prior to acquiring those loans, Holding Company had no affiliation

with Concourse.

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NTA's primary assets and entitled NTA to exercise total control

over Concourse. Based on its business contracts at the time of the

bankruptcy filing, Concourse had a value in excess of $20 million.

In August of 1999, Concourse borrowed approximately $14

million to finance its business. On August 15, 2002, Concourse

Holding Company (Holding Company) bought the rights to that loan

from Concourse's original lender.2 Concurrently with that

purchase, Holding Company entered into an agreement with Concourse

and NTA, providing that (1) Holding Company would provide up to

$4.1 million in additional financing to Concourse, and (2) Holding

Company would have the option to purchase NTA's Membership

Interests in Concourse. In a separate agreement, executed

simultaneously, NTA guaranteed Holding Company's loans to

Concourse, offering its Membership Interests in Concourse as

security. Under the terms of that agreement, if Concourse

defaulted on its obligations to Holding Company, NTA would transfer

its Membership Interests in Concourse to Holding Company.

In December 2002, Holding Company sent a notice of

default to Concourse, stating that Concourse had failed to make its

most recent scheduled interest payment. Concourse commenced a

civil action in Illinois state court seeking a determination that
3Although these agreements suspended litigation, they did not

resolve the question of whether Concourse was in default.

Concourse still maintains that it was not in default under the loan

agreement. 

4The Standstill Agreement provided that Concourse could extend

the period for completing the new financing until July 31, 2003, if

it requested an extension by June 15, 2003, and paid $100,000 to

Holding Company. Concourse never exercised this provision. 

-4-

it was not in default under the terms of its loan agreement with

Holding Company. In March of 2003, the parties suspended

litigation and entered into two agreements, the Standstill

Agreement and the Escrow Agreement.3

The Standstill Agreement was "intended by the parties to

provide the terms under which the indebtedness of Concourse owed

to, or held by Holding Company will either be paid off, or

alternatively, the business of Concourse and its related entities

transferred to Holding Company in satisfaction of the outstanding

indebtedness." Under the Standstill Agreement, Concourse had two

options: it could either (1) pay off its loan obligations to

Holding Company by April 30, 2003, or (2) obtain financing from

another lender and provide Holding Company with a Letter of Intent

from that lender by April 30, 2003, agreeing to pay off Concourse's

loan obligations to Holding Company. In the latter case, the new

financing would have to have been completed by June 30, 2003.4

The Standstill Agreement also required NTA and Holding

Company to place several documents in escrow. First, it required

both parties to submit a mutual release of liabilities. These
5Because the "Assignment of Interests" operated to transfer

title in the Membership Interests, we characterize the property

held in escrow as the "Membership Interests." 

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mutual releases were to be distributed to the parties if Concourse

satisfied its obligations to Holding Company in accordance with the

Standstill Agreement. Second, the Standstill Agreement required

NTA and Concourse to submit a "Confession of Judgment," conceding

that NTA and Concourse were liable to Holding Company for $13

million, to be released if Concourse failed to meet its obligations

under the Standstill Agreement. 

Finally, and most importantly for the issues on appeal,

the Standstill Agreement required NTA to submit an "Assignment of

Interests" that was "intended to transfer all right, title and

interest in Concourse to Holding Company." This provision

effectively required NTA to place its Membership Interests into

escrow.5 Paragraph 7 of the Standstill Agreement governed the

release of the Membership Interests. Under its terms, the Escrow

Agent would release the Interests to Holding Company if one of

several "triggering events" occurred. The "triggering events"

relevant in this case were (1) the failure of NTA to supply a

Letter of Intent to Holding Company by April 30, 2003, and (2) the

failure to close on new financing by June 30, 2003. 

The Escrow Agreement specified the procedure for

releasing the Membership Interests to Holding Company: the

Interests should be released "upon the earlier of (i) two (2)
6The Standstill Agreement contained a similar provision,

requiring the Escrow Agent to release the escrowed documents after

receiving written notice from Holding Company that a triggering

event had occurred, "provided, however, that the Escrow Agent may

not disburse without waiting 48 hours after written notice to

Concourse that it has been notified by Holding Company that one of

the triggering events has occurred." 

7Appellees argue that the sole purpose of the two business day

waiting period was to allow NTA to seek an injunction in Illinois

state court if it thought that Holding Company had improperly

notified the Escrow Agent of a triggering event. As discussed

infra, appellants sought such an injunction in Illinois state

court. Their pleadings to that court stated that "[t]he purpose of

the [two business day waiting period] was to permit Concourse to

appear before [the state court] to obtain injunctive relief against

disbursement." Nevertheless, appellants argue on appeal that,

because there was no express purpose stated in the Standstill

Agreement for the two business day waiting period, we should not

assume that it was only intended to give appellants time to seek an

injunction. As our decision does not rely on the purpose of the

two business day waiting period, we do not decide whether that

provision was available only to seek an injunction.

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business days after the Escrow Agent receives a copy of the written

notice from Holding Company to [Concourse] that a triggering event

has occurred within the meaning of paragraph 7 of the Standstill

Agreement, (ii) or July 31, 2003."6 Despite the provision

requiring the Escrow Agent to wait two business days before

disbursing the Membership Interests, neither the Standstill

Agreement nor the Escrow Agreement included any provision allowing

NTA to prevent the distribution of the Membership Interests to

Holding Company on any basis.7

On Friday, May 16, 2003, Holding Company sent a letter to

the Escrow Agent giving notice of a "triggering event," namely that

Concourse had not provided Holding Company with a Letter of Intent
8Concourse had provided a Letter of Intent on April 29, 2003.

Holding Company contended that the letter did not meet the

requirements of the Standstill Agreement. On May 7, 2003, Holding

Company challenged the sufficiency of the letter in Illinois state

court. On May 14, 2003, however, the letter was withdrawn by its

issuer, making the court proceedings moot. 

-7-

from another lender by April 30, 2003, in compliance with the

Standstill Agreement.8 On Monday, May 19, 2003, NTA sought a

temporary restraining order in Illinois state court to prevent

release of the escrowed documents. The Illinois court denied NTA's

motion, stating that NTA had "failed to present a fair question

regarding [its] likelihood of success on the merits." 

Several hours later, but before the expiration of the two

business days that the Escrow Agent was required to wait before

releasing the Membership Interests, NTA filed for Chapter 11

protection in U.S. Bankruptcy Court and claimed that the Membership

Interests were part of the bankruptcy estate. Holding Company

moved for relief from the automatic stay in order to receive the

Membership Interests from the Escrow Agent. After hearing

arguments, the bankruptcy court ruled that Holding Company's motion

was moot because the Membership Interests were not part of the

bankruptcy estate. In its bench ruling, the bankruptcy court

reasoned that "[t]he escrow arrangement says that the membership

interests would be transferred to Holding Company upon the delivery

of the notice of default, or within two days thereafter. In light

of the escrow agreement, the membership interests are no longer
9Since release of the Membership Interests, Holding Company

has exercised control of Concourse and its business operations.

-8-

property of the bankruptcy debtors." The bankruptcy court issued

an order to this effect on June 4, 2003, and the Escrow Agent

released the Membership Interests to Holding Company on the

following day.9

NTA appealed the June 4 order to the district court. On

July 8, 2003, before the district court could hear the appeal, NTA

filed a motion in bankruptcy court seeking to confirm that it held

"redemption rights" in the Membership Interests. The bankruptcy

court ruled that it had no jurisdiction to consider the motion

because the June 4 order was on appeal to the district court. NTA

appealed this second order to the district court. 

The district court consolidated the two appeals. On

November 12, 2003, the district court held that NTA's bankruptcy

estate had no rights to the Membership Interests, and that it did

not retain any right of redemption in those interests. The court's

order stated that "the membership interests in question left the

possession of [NTA] at the time they were transferred to the Escrow

Agent," and that "[a]t the latest, [NTA's] claim to [the]

membership interests (including any right of redemption) was

extinguished at the time of the triggering event."

NTA now appeals the ruling of the district court, arguing

that (1) the Membership Interests were part of the bankruptcy
-9-

estate at the time of the bankruptcy filing, and (2) in the

alternative, the bankruptcy estate retained a right of redemption

in the Membership Interests. It asks us to remand the case for

bankruptcy proceedings with the Membership Interests, or

alternatively the right of redemption, included in the bankruptcy

estate. "Like the district court, we review the bankruptcy court's

factual findings for clear error, and its conclusions of law de

novo." Haseotes v. Cumberland Farms, Inc. (In re Cumberland Farms,

Inc.), 284 F.3d 216, 224 (1st Cir. 2002).

II.

A. The Effect of the Standstill and Escrow Agreements on the

Interests of the Parties in the Membership Interests at the time of

the Bankruptcy Filing

The commencement of a bankruptcy case creates a debtor's

estate, which is comprised of "all legal or equitable interests of

the debtor in property as of the commencement of the case." 11

U.S.C. § 541(a)(1). Generally, state law determines what interests

the debtor holds in property. See, e.g., Butner v. United States,

440 U.S. 48, 54 & n.9 (1979) ("Congress has generally left the

determination of property rights in the assets of a bankrupt's

estate to state law."); Musso v. New York State Higher Educ.

Servs. Corp. (In re Royal Business School, Inc.), 157 B.R. 932,

940-42 (Bankr. E.D.N.Y. 1993) (looking to state law to determine

what rights the debtor had under an escrow agreement). A

bankruptcy estate cannot succeed to a greater interest in property
-10-

than the debtor held prior to bankruptcy. 11 U.S.C. § 541(d); see

also Ga. Pac. Corp. v. Sigma Serv. Corp., 712 F.2d 962, 968 (5th

Cir. 1983) ("[T]he rule is elementary that the estate succeeds only

to the title and right in the property that the debtor possessed .

. . .")(quotations omitted); TTS, Inc. v. Citibank, N.A. (In re

TTS, Inc.), 158 B.R. 583, 585 (D. Del. 1993) ("Section 541 does not

give the debtor any greater rights to property than the debtor had

before filing for Chapter 11."). Thus, in this case, the

bankruptcy estate's interest in the Membership Interests is the

same as--no more than and no less than--the interest that NTA held

in the Membership Interests at the time of the bankruptcy filing.

Prior to the state court litigation that led to the

signing of the Standstill and Escrow Agreements, NTA owned the

Membership Interests subject to Holding Company's interest in those

Membership Interests as security for Holding Company's loans to

NTA. When the parties signed the Standstill and Escrow Agreements,

however, those agreements superseded previous agreements between

the parties with respect to each party's rights to the Membership

Interests. At the time of NTA's bankruptcy filing, the bankruptcy

estate's rights to the Membership Interests were defined by those

agreements. See In re TTS, Inc., 158 B.R. at 586 (stating that the

court must "consider the escrow agreement to determine the extent

of each party's interest in the escrow account").
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The Standstill and Escrow Agreements significantly

altered the rights of the parties to the Membership Interests and,

concomitantly, to control over the business of Concourse itself.

NTA could no longer assign, sell, or use the Membership Interests

as collateral without the permission of Holding Company. Paragraph

7 of the Standstill Agreement allowed NTA to exercise operating

control over Concourse only so long as it avoided any of the

triggering events. The Standstill Agreement required Concourse to

provide detailed monthly cash flow statements to Holding Company

and prevented Concourse from making capital expenditures or taking

on new debt without Holding Company's approval. Whereas under the

loan agreement Holding Company merely had a security interest in

the Membership Interests, with no right to control the conduct of

Concourse's business, the Standstill Agreement permitted Holding

Company to exercise substantial control over Concourse's business

and the Membership Interests.

In essence, the Standstill Agreement left NTA with only

a limited right to the Membership Interests, best described as a

contingent right to reclaim the Interests by meeting certain

financing requirements. If NTA obtained new financing for

Concourse during the time frame set out in the Standstill

Agreement, it could pay off the balance of the loan and effectively

"buy back" the Membership Interests from Holding Company. If,

however, it did not obtain new financing in the time and in the
10Appellees argue that this conclusion requires us to find that

appellants' claim is moot. Appellants argue that appellees have

taken a contradictory position in prior proceedings and are thus

estopped from raising a mootness argument. We do not decide

whether appellants' claim is moot. However, in addressing the

merits of that claim, we must determine the specific rights to the

Membership Interests that appellants held under the Standstill

Agreement. These rights were, by the terms of that agreement, time

sensitive, i.e., the Agreement allowed NTA to reclaim the

Membership Interests only by securing new financing within a

limited time period. Thus, the question of whether the bankruptcy

estate has any interest in the Membership Interests necessarily

requires us to consider the time periods outlined in the Standstill

Agreement. 

-12-

manner specified by the Standstill Agreement, the Membership

Interests would be distributed from escrow to Holding Company.

Thus, after it signed the Standstill and Escrow Agreements, and

deposited its Membership Interests into escrow, NTA's right to the

Membership Interests was simply a contractual right to prevent

their distribution to Holding Company and to buy them back by

meeting the requirements for new financing outlined in the

Standstill Agreement. 

The bankruptcy estate can no longer exercise the

contingent interest that NTA held in the Membership Interests

pursuant to the Standstill and Escrow Agreements.10 NTA did not

provide a letter of intent by April 30, 2003, and therefore did not

fulfill the requirements necessary to prevent distribution of the

Membership Interests to Holding Company under the terms of the

Standstill Agreement. If NTA had not filed for bankruptcy, there

would be no dispute that the Membership Interests should be
11The parties agree that Illinois law governs both the

Standstill and Escrow Agreements. "Where the parties have agreed

to the choice of law, this court is free to forgo an independent

analysis and accept the parties' agreement." Hershey v. Donaldson,

Lufkin & Jenrette Sec. Corp., 317 F.3d 16, 20 (1st Cir.

2003)(quotation omitted). 

-13-

distributed to Holding Company. With this litigation, NTA

effectively seeks to expand its rights to the Membership Interests

by claiming that, through its bankruptcy filing, it could avoid the

distribution of the Membership Interests that would have occurred

under the terms of the Standstill and Escrow Agreements. However,

as we have stated, the bankruptcy estate cannot hold a greater

interest in property than the debtor held prior to bankruptcy. In

this case, NTA's contingent right, and therefore the bankruptcy

estate's contingent right, to "buy back" the Membership Interests

under the terms of the Standstill Agreement has expired.

Therefore, the bankruptcy estate has no remaining property interest

in the Membership Interests.

B. The Parties' Rights to the Membership Interests under Illinois

Law

We reach our conclusions regarding the Standstill and

Escrow Agreements under Illinois law, which we now describe in

greater detail.11 "The law in Illinois regarding conditional

delivery into escrow is well-established. Delivery of a deed into

escrow does not convey title when the conveyance is contingent upon

the occurrence of an event that entitles the grantee to the

possession of the deed." Miguel v. Belzeski, 797 F. Supp. 636, 641
12Illinois law in this area is similar to the law in other

states. See, e.g., In re Royal Business School, Inc., 157 B.R. at

940 ("In New York, as in most other states, legal title to property

placed in escrow remains with the grantor pending the fulfillment

of the conditions agreed upon in the escrow agreement.").

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(N.D. Ill. 1992).12 Although legal title does not transfer upon

placing property in escrow, the grantor does not necessarily hold

the same rights to the property as he did prior to the deposit.

Rather, "[w]hen property is delivered in escrow, a trust is

created." FDIC v. Knostman, 966 F.2d 1133, 1140 (7th Cir. 1992);

see Stark v. Chicago Title & Trust Co., 45 N.E.2d 81, 84 (Ill. App.

Ct. 1942) ("From the time the deposit is made the [Escrow Agent]

becomes the trustee of both the party making the deposit and the

one for whose benefit it is made."); Restatement (Second) of Trusts

§ 32 cmt. d (1959) ("At the time of the delivery in escrow there is

a presently created trust . . . ."). The beneficiary of the trust

holds an "equitable interest" in the property, consisting of the

right to obtain legal title to the property pursuant to the terms

of the contractual agreements between the parties. Merchant's

Nat'l Bank of Aurora v. Frazier, 67 N.E.2d 611, 617 (Ill. App. Ct.

1946) ("[A] trust may be said to exist where the legal estate is in

one person and the equitable estate is in another, or where there

are rights, titles and interest in property distinct from the legal

ownership thereof."); see also Berger, Shapiro & Davis, P.A., v.

Haeling (In re Foos), 183 B.R. 149, 158 (Bankr. N.D. Ill. 1995)

(stating that the beneficiaries "hold the equitable title to the
13Other states have a similar framework for the transfer of

property in escrow. See, e.g., Wilson v. United Sav. of Texas (In

re Missionary Baptist Found., Inc.), 792 F.2d 502, 504 (5th Cir.

1986) ("Texas courts hold that when a grantor executes an escrow

agreement and deposits the subject matter into escrow, he retains

legal title to the subject matter, with equitable title passing to

the ultimate grantee."); In re TTS, Inc., 158 B.R. at 586 ("Thus,

under New York law, [grantor] clearly holds legal title to the

escrow account subject to the equitable interest held by

[grantee]."); Zeigler v. Hathaway Ranch P'ship (In re Hathaway

Ranch P'ship), 127 B.R. 859, 863 (Bankr. C.D. Ca. 1990) ("Under

California law, once there is a binding and enforceable escrow

agreement between the parties, . . . the grantee acquires immediate

equitable title to the subject property, and upon satisfaction or

performance of the escrow conditions, legal title to the property

passes to the grantee.").

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trust property pursuant to the trust agreement") (applying Illinois

law). Thus, under Illinois law, when a grantor places property

into escrow, the grantee holds an equitable interest in the

escrowed property, defined by the agreements between the parties,

even before the property is released and the grantee takes legal

title.13

In this case, once the parties signed the Standstill and

Escrow Agreements and placed the Membership Interests in escrow,

Holding Company had an equitable interest in the Membership

Interests that consisted of the right to obtain legal title to the

Membership Interests pursuant to the terms of the Standstill and

Escrow Agreements. Similarly, NTA could only reclaim the

Membership Interests by fulfilling the terms for new financing

pursuant to the Standstill and Escrow Agreements. As stated above,

under the bankruptcy code, NTA's estate can only hold the interest
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that NTA held at the time of the bankruptcy filing. See, e.g.,

N.S. Garrott & Sons v. Union Planters Nat'l Bank of Memphis (In re

N.S. Garrott & Sons), 772 F.2d 462, 466 (8th Cir. 1985) ("[W]here

the debtor holds bare legal title without any equitable interest,

the estate acquires bare legal title without any equitable

interest."). Thus, the bankruptcy estate held only the right to

reclaim the Membership Interests pursuant to the parties'

agreements, while Holding Company held the right to obtain legal

title to the Membership Interests if NTA failed to obtain new

financing under the terms and within the time frame provided in the

Standstill and Escrow Agreements. 

When NTA filed for bankruptcy, the Illinois court had

already denied its request for an injunction, and the Standstill

Agreement required that the Membership Interests be released to

Holding Company in a matter of hours. Thus, at the time of the

bankruptcy filing, NTA's contingent right to reclaim the Membership

Interests had expired, with only the two business day waiting

period to lapse before the Membership Interests would be

distributed to Holding Company. Pursuant to both Illinois escrow

law and federal bankruptcy law, NTA's bankruptcy estate succeeded

only to this minimal interest. NTA's bankruptcy filing could not

prevent operation of the Standstill and Escrow Agreements by making

the Membership Interests the property of the bankruptcy estate.

See In re Prairie Crossing, 44 Collier Bankr. Cas.2d 1865 (N.D.
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Ill. 2000) ("Debtor gave up its legal rights to equity in the

property when it agreed to execute and deliver a deed pursuant to

the escrow provisions.") (interpreting Illinois law).

Our holding that the Membership Interests are not part of

NTA's bankruptcy estate is consistent with the treatment given by

other courts to property placed in escrow prior to a party filing

for bankruptcy protection. See 5-541 Collier on Bankruptcy §

541.09A (15th ed. rev. 2004) ("In general, most courts have held

that assets in escrow are not property of the estate, even though

the debtor may have certain rights under an escrow agreement and,

therefore, in the assets escrowed."); Gulf Petroleum, S.A. v.

Collazo, 316 F.2d 257, 261 (1st Cir. 1963) ("Courts of bankruptcy

recognize that money held in escrow is not property which vests in

the trustee in bankruptcy . . . ."). In general, an estate holds

only the same contingent rights to the escrowed property that the

debtor held prior to filing for bankruptcy. See In re Royal

Business School, Inc., 157 B.R. at 940 ("[T]he predominant rule is

that a subsequent judgment or release of escrow monies does not

deprive the estate of anything of value since the debtor reserves

only a contingent right to the escrowed funds."). In this case,

the Membership Interests are not part of the bankruptcy estate

because the bankruptcy filing could not prevent the distribution of

the Interests pursuant to the Standstill and Escrow Agreements.
14As stated supra Part I, the bankruptcy court did not address

the right to redeem issue. The district court ruled that NTA had

not waived this argument, but nevertheless decided that any right

to redemption had been extinguished prior to NTA's bankruptcy

filing. We assume, without deciding, that NTA has not waived this

argument and address it on the merits. 

-18-

III.

Appellants argue that, even if the Membership Interests

are not part of the bankruptcy estate, the estate at least owns a

right to redeem those interests. As noted, prior to the execution

of the Standstill and Escrow Agreements, Holding Company held only

a security interest in the Membership Interests. Arguing that the

execution of the Standstill and Escrow Agreements did not alter

this arrangement, appellants contend that, as a security agreement,

the Standstill and Escrow Agreements are governed by Illinois's

version of the Uniform Commercial Code, which provides a statutory

right of redemption pursuant to 810 Ill. Comp. Stat. 5/9-623.14

 The Standstill and Escrow Agreements did not preserve or

create a security interest in the Membership Interests. Under the

earlier loan agreements, Holding Company had a perfected security

interest in the Membership Interests, and it could have pursued

state court proceedings to foreclose on the collateral after

Concourse's alleged default. Instead, Holding Company and NTA

entered into new agreements--the Standstill and Escrow Agreements--

whereby NTA gave up control of its Membership Interests and

retained only a contingent right to "buy back" those interests by
-19-

obtaining new financing in the manner and within the time frame

described in the Standstill Agreement. From that point forward,

Holding Company's rights in the Membership Interests were defined

by the terms of the Standstill Agreement and consisted of a right

to take immediate title to the Membership Interests, subject to the

two business days condition, if Concourse failed to obtain new

financing. This substantial right to the Membership Interests

cannot be described as a mere security interest for Holding

Company's loans to Concourse.

Moreover, "in the absence of a separate written security

agreement, there must be some language reflecting the parties'

desire to grant a security interest." Eagle Bank v. Cmty. Bank of

Trenton (In re Zurliene), 97 B.R. 460, 464 (Bankr. S.D. Ill. 1989)

(interpreting Illinois law). There is no such language in the

Standstill and Escrow Agreements. The parties in this case were

sophisticated actors in a complex business transaction who had

previously executed a loan agreement granting Holding Company a

security interest in the Membership Interests. If they had

intended the Standstill and Escrow Agreements merely to grant a

security interest once again, they could have made that intent

clear in the text of the new agreements. They did not do so;

instead, they entered into new agreements that substantially

altered each party's rights to the Membership Interests. These
-20-

alterations preclude NTA's argument that the bankruptcy estate has

the right to redeem the Membership Interests. 

IV.

Our holding does nothing more than effectuate the

agreement between the parties. If NTA had not filed for

bankruptcy, the Membership Interests would have been released to

Holding Company pursuant to the Standstill and Escrow Agreements.

As the bankruptcy estate cannot hold a greater interest in property

than the debtor held prior to filing for bankruptcy, NTA's

bankruptcy filing could not prevent the operation of the parties'

valid agreements.

For the foregoing reasons, the judgment of the district

court is AFFIRMED. 

So ordered.