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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-13-1333-PaTaKu

)

ALAMEDA INVESTMENTS, LLC, ) Bankr. No. 09-10348-PC

)

Debtor. )

______________________________)

)

PHOENIX, LLC, )

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

THE ALAMEDA LIQUIDATING TRUST;)

AKT INVESTMENTS, INC., )

)

Appellees. )

______________________________)

Argued and Submitted on February 20, 2014

at Pasadena, California

Filed - March 5, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Peter H. Carroll, Chief Bankruptcy Judge, Presiding 

Appearances: Chris D. Kuhner of Kornfield, Nyberg, Bendes &

Kuhner, PC, argued for appellant Phoenix, LLC;

Aaron B. Bloom argued for appellee Alameda

Liquidating Trust. 

Before: PAPPAS, TAYLOR and KURTZ, Bankruptcy Judges.

FILED

 Mar 5 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.
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Appellant Phoenix, LLC (“Phoenix”) appeals the order of the

bankruptcy court determining that appellee, the Alameda

Liquidating Trust (“the Trust”), succeeded to the entire interest

in West Lakeside, LLC (“West Lakeside”) held by chapter 112

debtor Alameda Investments, Inc. (“Debtor”), and that the Trust

enjoys the same Alameda membership interest in West Lakeside as

Debtor had prior to bankruptcy. We AFFIRM the bankruptcy court’s

order.

FACTS

The Woodside Group, LLC (“Woodside”) and its affiliates,

including Debtor, collectively formed one of the largest

privately held homebuilders in the United States. Together and

with its subsidiaries, Woodside engaged in homebuilding

operations in eight states. Woodside used Debtor as a “land

bank” to purchase, hold, and secure title to land that would then

be transferred to another subsidiary for development.

Debtor and Phoenix each owned a 50 percent membership

interest in West Lakeside, a California LLC; AKT Development Co.

(“AKT”), an entity apparently related to Phoenix,3 was the

manager of West Lakeside. 

2

 Unless otherwise indicated, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 

"Rule" references are to the Federal Rules of Bankruptcy

Procedure. All “Civil Rule” references are to the Federal Rules

of Civil Procedure.

3 Angelo K. Tsakopoulos is the manager and owner of AKT,

and the manager and controlling member of Phoenix (58.4% of

Phoenix membership interests owned by Tsakopoulos or his

controlled family trust).

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In May of 2003, Debtor, Phoenix, and AKT executed an

“Operating Agreement” for West Lakeside, an LLC created to

facilitate development of a 133-acre tract of land in Sacramento

County, California. Of note for this appeal is ¶ 16.1.1 of the

Operating Agreement, entitled “Prohibition Against Transfer,”

which states in part:

Basic Prohibitions. Alameda has entered into this

Agreement because of the trust and confidence it places

in Angelo K. Tsakopoulos, the sole owner of AKT, and

AKT and Phoenix have entered into this Agreement

because of the trust and confidence they place in

Alameda and its affiliates. . . . In light of the

parties’ reliance on the continuing interests of the

other Members . . . none of the following sales,

transfers, assignments or hypothecations (individually

and jointly, a “Transfer”), shall be permitted without

the prior written approval of a Majority of the

Members, and any such attempted Transfer shall be void

and ineffectual: (i) a Transfer, directly or

indirectly, for consideration or gratuitously, by a

Member or its successors or assigns, of all or any

portion of its Member Interest or Economic Interest;

(ii) a Transfer of beneficial interest of a Member to

any other individual or entity other than its

constituent owners as of the date of the execution of

this Agreement; or (iii) a Transfer which results in a

change in the “Principal Owner” of the Member or Member

Group, as applicable.

Article XXI of the Operating Agreement also provides two

pertinent definitions:

“Economic Interest” shall mean the right to receive

distributions of the company’s assets and all

allocations of income, gain, loss, deduction, credit

and similar items from the Company pursuant to this

Agreement and the Act, but shall not include any other

rights of a Member, including, without limitation, the

right to vote or participate in the management, or,

except as provided in Section 17106 of the Corporations

Code, any right to information concerning the business

and affairs of the Company.

“Member Interest” means a Member’s entire interest in

the Company, including the Member’s Economic Interest,

the right to vote on or participate in the management,

and the right to receive information concerning the

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business and affairs of the Company.

Involuntary chapter 11 petitions were filed against Woodside

and 184 of its affiliates, not including Debtor, on August 20,

2008. Orders for relief were entered in those cases

on September 16, 2008. In re Woodside Group, LLC, et al., case

no. 08-20682. Debtor, in turn, filed a voluntary chapter 11

petition on January 9, 2009. On January 16, 2009, the bankruptcy

court ordered that Debtor’s bankruptcy case be jointly

administered with the cases of Woodside and its affiliated

debtors. 

On November 25, 2009, the bankruptcy court confirmed the

Second Amended Joint Plan of Reorganization of Woodside Group,

LLC and Affiliated Debtors (the “Plan”). Debtor and its assets

were dealt with in the Plan, which became effective at the close

of business on December 31, 2009.

The Plan established the Trust in Plan § 6.3.1. The primary

purpose of the Trust is “liquidating and distributing [Debtor’s]

assets,” according to the Plan. The assets to be transferred to

the Trust are generally described in Plan § 6.3.2: 

Except as specifically set forth in the Plan, all of

[Debtor’s] right, title and interest in and to the

Alameda Trust Assets shall be, and shall be deemed to

be, irrevocably transferred, absolutely assigned,

conveyed, set over and delivered to the [Trust], in

trust to and in trust for the Alameda Trust

Beneficiaries[.]

The “Alameda Trust Assets” are defined at Plan § 1.22 to include: 

“All assets of Alameda and its Estate of any kind, except the

claims being assigned to the Reorganizing Debtors[.]” The

Alameda Trust Beneficiaries are defined in Plan § 1.23 to include

the holders of claims against Alameda, but not the other

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affiliated debtors.

From 2009 through mid-2011, the Trust and Hugh Scheffy, the

Liquidating Trustee, apparently were involved in the management

of West Lakeside. According to the declaration of the

Liquidating Trustee, he continued to receive operating reports

concerning West Lakeside until June 2011, and participated in

discussions with the manager of West Lakeside, AKT, regarding the

settlement strategy of a pending lawsuit. Natomas Unified School

Dist. v. Steiner, Sacramento Super. Ct. Case no. 34-2009-00058030

(the “NUSD Lawsuit”). The Liquidating Trustee, however, alleges

that, beginning in November 2011, AKT, as manager of West

Lakeside, started to question whether the Trust had voting rights

in West Lakeside, or was instead the holder of only an economic

interest. Eventually, West Lakeside and AKT ceased to provide

operating reports to the Liquidating Trustee or to involve the

Trust in management of its operations.

On June 5, 2013, the Trust filed a Motion for Order

Determining that Membership Interest in West Lakeside LLC was

Uneffected by Plan in the bankruptcy court. In it, the Trust

argued that the Plan transferred Debtor’s Membership Interest in

West Lakeside to the Trust. AKT responded to this motion,

asserting that, in the absence of an express court order,

Debtor’s Membership Interest could not be transferred to the

Trust without the consent of a majority of members of West

Lakeside, so that neither the plan, nor the bankruptcy court’s

Confirmation Order, could effectively transfer Debtor’s

Membership Interest to the Trust. Phoenix also filed a response

to the motion, essentially repeating the same arguments as AKT. 

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The Trust replied to both responses on June 5, 2013,

repeating its earlier arguments, disputing the allegations of AKT

and Phoenix, and suggesting that it would be prejudiced if it was

stripped of its voting rights and other non-economic rights in

West Lakeside. 

The bankruptcy court heard extensive argument regarding the

motion and thereafter entered a Memorandum Decision on June 25,

2013. In it, the court ruled that: (1) the Operating Agreement

was not an executory contract; (2) all interests of Debtor in

West Lakeside were transferred to the Trust through confirmation

of the plan; (3) § 541(c)(1)(A) prevented the enforcement of any

anti-assignment provisions of the Operating Agreement or Cal.

Corp. Code § 17301(a)(1); (4) the Liquidating Trust is a

representative of the bankruptcy estate within the meaning of

§ 1123(b)(3)(B); and (5) therefore, the Trust enjoyed the same

Membership Interest in West Lakeside that Debtor had prior to

filing its bankruptcy petition.

The bankruptcy court entered an order granting the relief

requested in the Trust’s motion on July 3, 2013. Phoenix filed a

timely appeal.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C.

§ 158.

ISSUE

Whether the bankruptcy court erred in determining that the

Trust succeeded to all of Debtor’s interest in West Lakeside.

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STANDARDS OF REVIEW

A bankruptcy court’s interpretation of the Bankruptcy Code

is reviewed de novo. Samson v. W. Capital Partners, LLC

(In re Blixseth), 684 F.3d 865, 869 (9th Cir. 2012).

The bankruptcy court's interpretation of the terms of a

confirmed plan is, in essence, an interpretation of its own

order, which we review under the abuse of discretion standard. 

JCB, Inc. v. Union Planters Bank, N.A., 539 F.3d 862, 869 (8th

Cir. 2008). A bankruptcy court’s interpretation of its own

orders is reviewed for abuse of discretion and to which we owe

substantial deference. Marciano v. Fahs (In re Marciano),

459 B.R. 27, 35 (9th Cir. BAP 2011). The bankruptcy court abuses

its discretion when it misapplies the correct legal standard or

if its factual findings are illogical, implausible or without

support from evidence in the record. United States v. Hinkson,

585 F.3d 1247, 1262 (9th Cir. 2009)(en banc).

DISCUSSION

I.

The bankruptcy court did not err in determining that Plan

§ 8.4 did not limit the Trust’s interest in West Lakeside to

an economic interest.

As an initial matter, Phoenix argues in this appeal that the

Operating Agreement prohibited the transfer of Debtor’s

Membership Interest and the Economic Interest to any third party

without the consent of a majority of West Lakeside’s members. 

Phoenix Op. Br. at 3. For support, Phoenix cites to § 16.1.1 of

the Operating Agreement, quoted at length, above. Phoenix also

maintains that Plan § 8.4 “expressly limits the Trust’s interest,

if any, in West Lakeside to an economic interest.” Plan § 8.4

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provides:

Effect of Confirmation Order. The Confirmation Order

shall constitute an order of the Bankruptcy Court:

(i) approving, as of the Effective Date, the assumption

or rejection by the Reorganized Debtors, Liberty or

Alameda, as the case may be, pursuant to

Sections 365(a) and 1123(b)(2) of the Bankruptcy Code,

all of executory contracts and unexpired leases

identified under this Article 8 of the Plan; and

(ii) that any provisions of a limited liability company

agreement or operating agreement of a limited liability

company or similar entity which purports to restrict

the transfer of an economic interest in such entity to

one of its members which is one of the Debtors herein,

or its assignee, is invalidated as an “ipso facto”

clause under Section 365(e) of the Bankruptcy Code, to

the extent that Section 365 applies. 

Phoenix notes that Paragraph (F)(3) of the Confirmation Order

uses identical wording to describe the effect of plan

confirmation on Debtor’s executory contracts or unexpired leases.

Based upon these provisions in the Operating Agreement,

Plan, and Confirmation Order, Phoenix reasons: “Since the plan

and the Confirmation Order invalidated the Operating Agreement

only with respect to the otherwise prohibited transfer of the

economic interest, and both documents are completely silent as to

the Membership Interest, it must follow that any purported

transfer of the Membership Interest was and remains prohibited,

void and of no force or effect.” Phoenix Op. Br. at 4. 

In response to Phoenix’s argument that Plan § 8.4 expressly

limited the transfer to the Trust of the economic interest of the

estate in West Lakeside, the bankruptcy court stated:

[B]y their respective terms, Section 8.4 and paragraph

(F)(3) of the Confirmation Order deal specifically and

exclusively with executory contracts and unexpired

leases. Having determined that the Operating Agreement

is not an executory contract, the court finds

Section 8.4 of the Plan and paragraph (F)(3) of the

Confirmation Order inapplicable to the Operating

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Agreement.

Memorandum Decision at 9. In our view, the bankruptcy court’s

analysis is sound and clearly supported by the record and case

law. In its Memorandum Decision, the court concluded that the

Operating Agreement was not an executory contract. Phoenix has

not appealed that conclusion. Plan § 8.4 is part of Article VIII

of the Plan, headed “Executory Contracts and Unexpired Leases.” 

Not surprisingly, it directly references § 365, which defines the

rights and obligations of parties solely with respect to a

debtor’s executory contracts and unexpired leases.4 Therefore,

because § 8.4 of the Plan deals only with executory contracts,

and since the Operating Agreement is not an executory contract, 

§ 8.4 does not support Phoenix’s argument. 

A chapter 11 plan is a contract, and courts look to state

law rules of contract interpretation to determine its meaning.

Dolven v. Bartleson (In re Bartleson), 253 B.R. 75, 84 (9th Cir.

BAP 2000) (holding that the law of the state in which the plan

was confirmed governs its interpretation.). This plan was

confirmed in California, which has a comprehensive system of

statutory and case law relating to contract interpretation. 

According to Cal. Corp. Code § 1641, "Effect [is] to be given to

every part of contract." The California Supreme Court has

4

 “Notwithstanding a provision in an executory contract or

unexpired lease, or in applicable law, an executory contract or

unexpired lease of the debtor may not be terminated or modified,

and any right or obligation under such contract or lease may not

be terminated or modified, at any time after the commencement of

the case solely because of a provision in such contract or

lease[.]” § 365(e)(1). Section 365 exclusively addresses

executory contracts and unexpired leases.

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interpreted this statute "to disfavor constructions of

contractual provisions that would render other provisions

surplusage." Boghos v. Certain Underwriters of Lloyds of London,

36 Cal.4th 495, 503 (2005). 

Phoenix’s construction of Plan § 8.4 ignores the context of

Article VIII, which only addresses executory contracts and

unexpired leases. Phoenix’s approach also renders meaningless

the plan’s explicit reference to § 365 in Plan § 8.4.

Cal. Civ. Code § 1641 must be read in conjunction with Cal.

Code Civ. Proc. § 1858 (where there are several provisions or

particulars in a legal instrument, such a construction is, if

possible, to be adopted as will give effect to all). Phoenix’s

analysis completely ignores Plan § 6.3.2, which provides:

[A]ll of Alameda’s right, title and interest in and to

the Alameda Trust Assets, shall be, and shall be deemed

to be, irrevocably transferred, absolutely assigned,

conveyed, set over and delivered to the Alameda

Liquidating Trust, in trust to and in trust for the

benefit of the Alameda Trust Beneficiaries for the uses

and purposes stated herein and in the Alameda

Liquidating Trust Agreement.

Precisely the same words are used in Paragraph (C) of the

Confirmation Order. 

Cal. Civ. Code § 1644 provides that “The words of a contract

are to be to be understood in their ordinary and popular

sense[.]” S. Pac. Transportation Co. v. Santa Fe Pac. Pipelines,

Inc., 74 Cal.App.4th 1232, 1238 (1999). Phoenix’s argument is

inconsistent with Cal. Civ. Code § 1644 because it ignores the

plain meaning of Plan § 8.4, that it only applies to executory

contracts and unexpired leases.

Cal. Civ. Code § 1650 provides that specific provisions in

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an agreement prevail over general provisions that are

inconsistent with it. Jackson v. Donovan, 215 Cal.App.2d 685,

688 (1963). Plan § 8.4 relates to all of the hundreds of

executory contracts engaged in by Woodside and its affiliates. 

Plan § 6.3.2, on the other hand, specifically deals with the

interests of the Trust. Plan § 6.3.2 prevails over Plan § 8.4.

For all these reasons, we conclude that the bankruptcy court

did not abuse its discretion in ruling that Plan § 8.4 did not

limit the Trust’s interest in West Lakeside to an economic

interest, nor did it abuse its discretion in applying its

analysis of § 8.4 to the identical wording in ¶ F(3) of the

Confirmation Order.

II.

The bankruptcy court did not err in ruling that assignment

of the estate’s interests in Alameda to the Liquidating

Trust was not a transfer to a third party, but rather an

assignment to a representative of the estate.

After concluding that the plan provisions and Confirmation

Order concerning § 365 were inapplicable, the bankruptcy court

turned to § 541(c), asking whether the plan’s transfer to the

Trust of the bankruptcy estate’s interest in West Lakeside failed

because it violated the Operating Agreement and the provisions of

Cal. Corp. Code 17301(a).5 

5 “Membership Interests; economic interests, assignments,

vote; rights and liabilities of assignees; duties and liabilities

of assignors. (A) Except as provided in the articles of

organization or the operating agreement: (1) a membership

interest or an economic interest is assignable in whole or in

part, provided, however, that no membership interest may be

(continued...)

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The parties do not dispute that certain tenets of bankruptcy

law apply to this case. First, they acknowledge that, under

§ 541(a)(1), the filing of a bankruptcy petition creates an

estate, comprised of “all legal or equitable interests of the

debtor in property as of the commencement of the case.” In other

words, Debtor’s interests in West Lakeside became property of its

bankruptcy estate when it commenced its case. 

Second, the parties agree that § 541(c)(1),6 in turn,

enables the bankruptcy estate to take a debtor’s assets free and

clear of prepetition contractual or statutory restrictions on

transfer. Fursman v. Ulrich (In re First Protection, Inc.),

440 B.R. 821, 830 (9th Cir. BAP 2010). Indeed, at oral argument

before the Panel, counsel for Phoenix conceded that, through the

operation of § 541(c)(1), all of Debtor’s prebankruptcy rights in

West Lakeside, both management and economic, became part of the

Debtor’s bankruptcy estate upon the filing of the bankruptcy

petition, without regard to any restrictions on transfer of the

interests under either the Operating Agreement or state law. 

While Debtor's interest in West Lakeside came into the

5

(...continued)

assigned without the consent of a majority in interest of the

members not transferring their interests, as required by

Section 17303.” Cal. Corp. Code 17301 (2003).

6 “Property of the estate. . . . (c) (1) Except as provided

in paragraph (2) of this subsection, an interest of the debtor in

property becomes property of the estate under subsection (a)(1),

(a)(2), or (a)(5) of this section notwithstanding any provision

in an agreement, transfer instrument, or applicable nonbankruptcy

law — (A) that restricts or conditions transfer of such interest

by the debtor[.]” § 541(c)(1)(A).

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bankruptcy estate without limitations, Phoenix disputes whether

the bankruptcy estate could transfer that asset to a third party

unencumbered by the prepetition restrictions. In short,

Phoenix’s basic position is that, while § 541(c)(1) avoids

transfer restrictions on Debtor’s LLC interest from impacting the

bankruptcy estate, those restrictions continue to be effective

concerning transfer of the estate’s interest to any third

parties. 

The bankruptcy court determined that neither the Operating

Agreement’s prohibition on transfer to a third party nor the

state law was implicated in this case because the transfer of

Debtor’s interest in West Lakeside was not to a third party, but

to an extension of the estate. The bankruptcy court ended its

Memorandum Decision by concluding that:

Even if the court were to find that either the

Operating Agreement or [Cal. Corp. Code] § 17301(a)

restricted the transfer of Alameda’s interest in West

Lakeside to a third party, the Alameda Liquidating

Trust is not a third party. See Motor Vehicle Cas. Co.

v. Thorp Insulation Co. (In re Thorp Insulation Co.), 677 F.3d 869, 890 (holding that the creation of a trust

under a confirmed plan for the purposes of resolving

certain asbestos-related claims was not a transfer to a

third party in violation of contractual anti-assignment

clauses in insurance contracts).

Memorandum Decision at 10. We agree with the bankruptcy court

that the Operating Agreement and state law were not violated in

this case. 

As the bankruptcy court recognized, the Code provides two

means by which a bankruptcy estate continues to be represented

after a chapter 11 plan is confirmed; the estate would ordinarily

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terminate. First, as is important here, § 1123(b)(3)(B)7

provides a mechanism for a liquidating trustee to serve as a

representative of the estate. 

The Ninth Circuit recognized that a liquidating trustee may

be appointed under § 1123(b)(3)(B), and that its duties are as

specified in the plan. Liquidation Est. of DeLaurentiis Entm't

Grp., Inc. v. Technicolor, Inc. (In re DeLaurentiis Entm't Grp,

Inc.), 87 F.3d 1061, 1063 (9th Cir. 1996). Indeed, in a somewhat

different context, the Ninth Circuit has described a liquidating

trustee appointed by the court under a confirmed plan as the

“functional equivalent” of a chapter 11 trustee, and a continuing

representative of the bankruptcy estate: 

“[C]ourt appointed officers who represent the estate

are the functional equivalent of a trustee.” [Allard

v. Weitzman (In re Delorean Motor Co.), 991 F.2d 1236,

1251(6th Cir. 1993)]. Here, as part of a liquidating

Chapter 11 reorganization proceeding, the bankruptcy 

court chose the mechanism of a liquidating trust to

liquidate and distribute the assets of the estate. The

bankruptcy court retained jurisdiction over the case.

In this context, the Liquidating Trustee is the

"functional equivalent" of the bankruptcy trustee[.]

Beck v. Ft. James Corp. (In re Crown Advantage, Inc.), 421 F.3d

963, 973 (9th Cir. 2005); see also, Starzynski v. Sequoia Forest

Indus., 72 F.3d 816, 820 (10th Cir. 1995) (noting that a

liquidating trustee may be appointed under § 1123(b)(3)(B) to

"retain and enforce any claim or interest belonging to the debtor

7 “(b) Subject to subsection (a) of this section, a plan

may– . . . (3) provide for– . . . (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. § 1123(b)(3)(B) (emphasis added).

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or the estate."); Alary Corp. v. Sims (In re Assoc. Vintage

Grp.), 283 B.R. 549, 560 (9th Cir. BAP. 2002) (explaining that “a

plan may provide for the retention and enforcement, by a trustee

or specially-appointed representative, of a claim belonging to

the estate. 11 U.S.C. § 1123(b)(3)(B).”). In this case, through

the confirmed plan, the Trust, acting through a liquidating

trustee, is vested with authority under § 1123(b)(3)(B):

On the Effective Date, the Alameda Liquidating Trustee

shall be a representative of the Alameda Estate within

the meaning of § 1123(b)(3)(B) of the Bankruptcy Code

and shall have the rights and powers provided for in

the Bankruptcy Code in addition to any rights and

powers granted in the Alameda Liquidating Trust

Agreement and herein.

Confirmed Plan, ¶ 6.3.1(d)8

The bankruptcy court also analogized the provisions of the

confirmed plan in this case creating a liquidating trust to a

8 The rights and powers granted to the Liquidating Trustee

by the Confirmed Plan at § 6.3.1 are listed in the Liquidating

Trust Agreement, including: “[T]he Liquidating Trustee shall have

the authority, power and obligation, in his capacity as

Liquidating Trustee or as Estate Representative, as applicable,

to: (a) to receive and hold the Alameda Trust Assets, including

the membership interests in the LLCs identified in Exhibit A

hereto [which includes West Lakeside], and exercise all rights as

a member of the LLCs . . . . (c) exercise rights of a

[chapter 11] trustee under Sections 704 and 1106.” Liquidating

Trust Agreement at 3.2 (emphasis added). At oral argument,

counsel for Phoenix was asked why it had not objected to the plan

or provisions for a liquidating trust. Counsel replied that

Phoenix was not involved in the case at that point. But

Phoenix’s position is disingenuous. Although Phoenix may not

have formally entered the bankruptcy case until after the plan

was confirmed, AKT, the manager of West Lakeside, owned and

controlled by the same person who controlled Phoenix, was

involved in the chapter 11 case and received notice of the

disclosure statement, Plan and Liquidating Trust Agreement and

did not raise any objection to them.

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trust created for the benefit of creditors to assume the

liabilities of a debtor which at the time of entry of the order

for relief has been named as a defendant in claims related to

asbestos under § 524(g)9. The bankruptcy court found that

§§ 1123(b)(3)(B) and 524(g) were close cousins,10 and therefore,

case law holding that a § 523(g) trust was not a third party for

purposes of the enforcement of anti-assignment clauses was

persuasive. In particular, the bankruptcy court quoted from the

Ninth Circuit’s decision In re Thorpe Insulation Co., in which

9 “After notice and hearing, a court that enters an order

confirming a plan of reorganization under chapter 11 may issue,

in connection with such order, an injunction in accordance with

this subsection to supplement the injunctive effect of a

discharge under this section. . . . (2)(B) The requirements of

this subparagraph are that– (i) the injunction is to be

implemented in connection with a trust that, pursuant to the plan

of reorganization– (I) is to assume the liabilities of a debtor

which at the time of entry of the order for relief has been named

as a defendant in personal injury, wrongful death, or

property-damage actions seeking recovery for damages allegedly

caused by the presence of, or exposure to, asbestos or

asbestos-containing products[.]”

§ 524(g).

10 Another recent case suggests that §§ 1123(b)(3)(B) and

524(g) may be closer than cousins and can actually be used in

tandem. In In re Plan Insulation Co., 2012 Bankr. LEXIS 1716

(Bankr. N.D. Cal. March 16, 2012), the bankruptcy court confirmed

a plan that included an asbestos trust under § 524(g). To avoid

certain complex anti-assignment provisions for pursuing

litigation, the court also appointed the asbestos trust as a

liquidating trust under § 1123(b)(3)(B) “as estate

representative. . . for purposes of pursuing” the litigation. 

Id. at * 14-15. See also In re W. Asbestos Co., 313 B.R. 456,

461 (Bankr. N.D. Cal. 2004) (confirming a plan with a § 524(g)

trust, and noting that pursuant to § 1123(b)(3)(B), the asbestos

trust could pursue litigation as a “representative of the

estate”).

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the court examined the status of a § 524(g) liquidating trust:

Here, however, the trust is not a third party. The

order confirming the plan provides that the trust is

appointed as the estate’s representative. The trust is

part of the debtor’s estate. Instead of attempting to

sell or assign anything to third parties, the debtor

was attempting to transfer its rights and property to

the trust [as] part of the estate.

Memorandum Decision at 18, quoting 677 F.3d at 890(emphasis

added). 

We think the bankruptcy court correctly concluded that the

Operating Agreement and state law were not violated by the

transfer of Debtor’s interests in West Lakeside to the Trust. At

bottom, there was no transfer out of the estate to a third party;

rather, under § 1123(b)(3)(B), the Trust was merely a

representative of the estate concerning enforcement of Debtor’s

interest in West Lakeside.

CONCLUSION

We AFFIRM the order of the bankruptcy court.

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