N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
In re : X-TR

EM E B ULLETS, INC .; e t a l ., De btors,

______________________________ J. M IC HAEL ISSA, a s Truste e of the HM T Liquida

ting Trust, Pla i ntiff-Appe lle e , v. C APITAL C AR TR IDGE, LLC ,

De fe nda n t-Appe l la

nt. No. 22-16141

D.C . No. 3:21-c v-00060-M M D
M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Distric t of Ne v a da M iranda M . Du, C hie f Distric t

Judge , Pre siding Subm i tte d Oc tobe r 5, 2023 ** La s Ve ga s , Ne v a d a 

# FIL ED DEC 11 2023 M OLLY C. DW Y E R, CLERK U. S. CO URT O F A PPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).B e fore : R

AW LINSON a

n d OW ENS, C irc uit Judge s, a nd PREGER SON, *** Distric t Judge
. C a pita l C a rtridge , LLC , (C a

pita l C artridge ) a

ppe a ls from

the de c ision of the distric t c o urt re ve rsing the ba nkruptc y c ourt’ s dism issa l for la c k of sta nding in a n
a dve rsary proc e e ding to a

void tra nsfe rs to C a

pita l C artridge , to re c ove r prope rty from C a pita l C artridge , and to disa llow c la im s . R e vie wing de nov o , we a ffirm the de c ision of thedistric t c ourt. Se e Educ . C re dit Mgmt. C

orp. v . C o l e man ( In re C ole man ), 560 F.3d 1000, 1003 (9th C ir. 2009). The a dve rsa

ry proc e e ding wa s brought by the C om m itte e of Unse c ure d C re ditors (C om

m itte e ), whic h w a s a

p pointe d by the Unite d State s Truste e “ to
re pre se nt a ll unse c ure d c re ditors of theDe btors pursua nt to [Se c tion] 1102 of the B ankruptc y

C ode .” The De btors “ c onse nt[e d] to the grant of de riva tive sta nding . . . to a sse rt, on be ha lf of the De btors’ e s tate s, the De rivative C a use s of Ac tion.” The de rivative sta

nding wa s a

pprove d by

the ba nkruptc y c ourt. C a pita l C a rtridge m ove d to dismiss the a dve rsary proc e e ding on the ba sis that J. M ic ha e l Issa , the Liquida ting Trust Truste e , 1 la c ke d sta nding. C a

pita l

* * * The Honora

ble De an D. Pre ge rson, Unite d State s Distric t Judge for the C e n tra l Distric t of C a lifornia , sitting by de s igna tion. 1 The C om m itte e c e a se d to e xist a s of the e ffe c tive date of the C ha p te r 11 Plan . As a re sult, thea dve rsary proc e e d ing a

n d a ll othe r c a

use s of a c tion “ transfe rre d to a

n d ve st[e d] in the Liquida

ting Trust[] for the be ne fit of C re ditors.” 2C artridge a lso sought re c onside ra tion of the gran t of de rivat ive sta nding to the C om m itte e . The ba

nkruptc y c o urt sum

m a rily grante d C a

pita l C artridge ’ s m otion. Issa a ppe a le d the dism issa l to the distric t c o urt. The distric t c ourt re v e rse d the ba nkruptc y c ourt’ s orde r granting them otion to dism iss a nd va c ate d the orde r de ny ing re c onside ra tion. W e re vie w the de c ision of theba nkruptc y c o urt with no de fe re nc e to the distric t c o urt de c ision. Se e Tillman v . W arfie ld ( In re Tillman ), 53 F.4th 1160, 1166 (9th C ir. 2022). “ W e a pply the sa m e sta nda rd of re vie w to the ba

nkruptc y
c ourt de c ision a s doe s the distric t c o urt: findings of fa c t a re re vie we d unde r the
c le arly e rrone ous sta

nda rd, a nd c onc lusions of la

w, de novo. . . .” In re C

ole man , 560 F.3d a

t 1003 (c ita

tion a nd a lte ra t ion om itte d). 1. W e are not pe rsua d e d by C a pita l C artridge ’ s a

rgum e n t tha

t the grant of de rivative sta

nding to the

C o m m itte e viola

te d the B ankruptc y

C ode . “ Although the B an kruptc y

C ode c onta ins no e xplic it a uthoriz a tion for the initia

t ion of a n
a dve rsary proc e e ding by

a c re ditors’ c o m

m itte e , a qua lifie d im

plie d a uthoriz a tion
e xists unde r 11 U.S.C . § 1103(c )(5).” Offic ial Unse c ure d C re d itors C o mm. v . U.S. N at’l Bank of Or. ( In re Sufolla, Inc

. ), 2 F.3d 977, 979 n.1 (9th C ir. 1993) (c ita tion
om i tte d). “ So long a s the ba nkruptc y c ourt e xe rc ise s its judic ia l ove rsight a nd
ve rifie s tha

t the litiga

tion is inde e d ne c e ssa

ry and be ne fic ia l, a llowing a c re ditors’
3c om

m itte e to re pre se nt the e sta te pre se nts no undue

c o nc e rns.” Libe rty

Mut. Ins. C o. v . Offic ial Unse c ure d C re ditors’ C

o mm. ( In re Spaulding C

omposite s C o., Inc
. ), 207 B .R . 899, 904 (B
. A.P. 9th C ir. 1997) (c ita tion om itte d). In Av alanc he Maritime

, Ltd. v . Pare k

h ( In re Parme t e

x , Inc
. ), we re

je c te d the p roposition tha

t c re ditors “ have no sta

nding to sue

be c a u se only the . . . truste e ha s a uthority to bring a dve rsa

ry proc e e dings unde r” the B an kruptc y C ode
. 199 F.3d 1029, 1030 (9th C ir. 1999). W e he ld tha t “ whe re the truste e stipula te d tha t the C re ditors c ould sue on his be ha lf a nd the ba nkruptc y c o urt a pprove d tha

t stipula tion[,] the C re ditors ha d sta nding to bring the

suit.” Id. a t 1031 (c ita

tions
om i tte d). Thus, theC o m

m itte e ha d de rivative sta

n ding pursua

nt to the stipula

tion be twe e n it a

nd the De btors, a s a

pprove d by

the ba nkruptc y c ourt. The a

uthority gran te d to the Unite d State s Truste e unde r Se c tions 323(a ) a nd (b) of the B ankruptc y

C ode did not pre c lude the grant of de rivative sta n ding to the C om m itte e . Se e 11 U.S.C . §§ 323(a )-(b); se e also id. § 1103(c )(5) (a uthoriz ing a

“ c o m m itte e a p pointe d unde r se c tion 1102”to “pe rform suc h othe r se rvic e s a s a re in the inte re st of those re pre se nte d” ). 2. The C om

m itte e w a s not re quire d to e sta b lish Artic le III sta

nding. The C om m itte e “ file d suit . . . on beha lf of the e sta t e ,” and “ [c ] o n se q

ue ntly
. . . a sse rt[e d] de rivative s ta

nding[,] ” obvia

ting the re quire m e nt tha

t the C om m i tte e
4de m onstra

te Artic le III sta

nding “ in its own right.” In re Spaulding C o m posite s C o., Inc
. , 207 B .R . a t

903; se e also In re Parme te x , Inc
. , 199 F.3d a

t 1031 (holding that c re ditors ha d sta

nding to pursue c la im s on be h a l f of the e sta te pursua nt to a stipula tion a pprove d by

the B an kruptc y C ourt). AFFIRM E D.

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