IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-51074

IN THE MATTER OF: UNITED OPERATING, LLC

Debtor

———————————

DYNASTY OIL AND GAS, LLC

Appellant

v.

CITIZENS BANK; CHARLES SPRADLIN; WILDCAT ENERGY, LLC;

ROGER L. BECKER

Appellees

Appeal from the United States District Court

for the Western District of Texas

Before JONES, Chief Judge and WIENER and CLEMENT, Circuit Judges.

EDITH H. JONES, Chief Judge:

Dynasty Oil and Gas (“Dynasty”) survived as a shell corporation after all

of its assets were liquidated in a Chapter 11 bankruptcy. The bankruptcy court

granted summary judgment against Dynasty’s post-confirmation attemptto sue

the Appellees for their alleged mismanagement of its property during the

reorganization. We affirm the judgment for the following reasons.

United States Court of Appeals

Fifth Circuit

F I L E D

August 12, 2008

Charles R. Fulbruge III

Clerk
No. 07-51074

2

BACKGROUND

In early 2004, Dynasty filed a Chapter 11 bankruptcy case. At the time

of filing Dynasty owned several oil and gas properties, which had been out of

production since late 2003. Citizens Bank (“Citizens”), Dynasty’s largest single

creditor, moved the court to appoint an operator to bring Dynasty’s properties

back into production. On Citizens’ motion, the court appointed Wildcat Energy,

LLC (“Wildcat”) and Wildcat’s manager and principal, Roger Becker, to operate

Dynasty’s oil and gas wells. Citizens was authorized to pay Wildcat’s fees and

expenses out of the debtor-in-possession account. Wildcat was responsible for

operations for approximately seven months, from April 2004 until the

confirmation of the Chapter 11 plan (“Plan”) in November 2004.

The Plan authorized another creditor, Saber Resources, LLC (“Saber”), to

purchase all of Dynasty’s assets in exchange for a lump-sum paymentto Citizens

in the amount of $2.5 million. Other unsecured creditors received cents on the

dollar, and Dynasty’s equity holders were allocated nothing, because the estate

lacked sufficient funds to pay all claims in full. Though Dynasty had been a

debtor-in-possession, the Plan specified that Dynasty would not be revested with

title to any estate assets at confirmation, because Saber was purchasing

substantially all of Dynasty’s assets. The Plan nonetheless provided that

Dynasty and the Official Unsecured Creditors’ Committee (“Committee”)

retained limited powers to pursue some claims on behalf of the estate.

After thePlan was confirmed, inFebruary 2005,the Creditors’ Committee

filed suit against Citizens and Wildcat (the “First Action”). The First Action

complaint alleged various claims under state law and the Bankruptcy Code (the

“Code”). Among other things, the Committee claimed that Wildcat completed

unnecessary work on various wells, and that Citizens wrongfully paid for this

work, needlessly depleting the balance of the debtor-in-possession account. The

court dismissed the Committee’s state-law claims under Rule 12(b)(6).
No. 07-51074

1 Because federal courts lack jurisdiction on the basis of Dynasty’s lack of standing, we

need not consider whether the bankruptcy court has subject matter jurisdiction over a statelaw controversy, albeit one related to the estate’s administration.

3

Thereafter, Wildcat was dismissed from the suit, and the remaining claims

arising under the Code were settled.

In March 2006, Dynasty filed the present action in Texas state court (the

“Second Action”), naming as defendants Citizens and Wildcat, as well as Roger

Becker, Wildcat’s principal, and Charles Spradlin, a loan officer with Citizens.

The Second Action petition states common-law claims against the Appellees for,

inter alia, failing to complete necessary work on some wells, completing

unnecessary work on other wells, and misrepresentation. Appellees removed the

Second Action, with no objection from Dynasty, to the district court, and the

district court referred the matter to the bankruptcy court. The bankruptcy

court, concluding that Dynasty’s claims in the Second Action were barred by the

resolution of the First Action, granted summary judgment to the Appellees on

the basis of res judicata and collateral estoppel. The district court affirmed the

bankruptcy court’s decision on both grounds, and Dynasty appeals.

DISCUSSION

It is unnecessary for us to reach the questions of res judicata or collateral

estoppel, because this case turns on the more fundamental question of Dynasty’s

standing. Standing is a jurisdictional requirement, and we are obliged to ensure

it is satisfied regardless whether the parties address the matter. Lang v.

French, 154 F.3d 217, 222 n.28 (5th Cir. 1998). Here, the question is whether

Dynasty, a reorganized debtor, has standing to pursue claims based on the

Appellees’ pre-confirmation management of the estate’s assets. We conclude it

does not.1

During its Chapter 11 case, Dynasty, as a debtor-in-possession, had most

of the powers of a bankruptcy trustee to pursue claims on behalf of the estate.
No. 07-51074

2

In re Avado Brands, Inc., 358 B.R. 868, 883 (Bankr. N.D. Tex. 2006).

3 Harstad v. First American Bank, 39 F.3d 898, 901-02 (8th Cir. 1994)

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11 U.S.C. § 1107(a). Upon confirmation of the plan, the estate ceased to exist,

and Dynasty lost its status as a debtor “in possession.” 11 U.S.C. § 1101(1);

In re Grinstead, 75 B.R. 2, 3 (Bankr. D. Minn. 1985). At that time, Dynasty’s

authority to pursue claims as though it were a trustee also expired. In re

Ice Cream Liquidation, Inc., 319 B.R. 324, 333 (Bankr. D. Conn. 2005)

(debtor-in-possession status, along with the relevant powers of a trustee,“ceases

on the effective date of a confirmed plan”).

Nonetheless, in some cases the Code allows a reorganized debtor to bring

a post-confirmation action on a “claim or interest belonging to the debtor or to

the estate.” 11 U.S.C. § 1123(b)(3). A debtor may preserve its standing to bring

such a claim (e.g., for fraud or breach of fiduciary duty,2or to avoid a preferential

transfer3) but only ifthe plan of reorganization expressly provides for the claim’s

“retention and enforcement by the debtor.” § 1123(b)(3)(B). “After confirmation

of a plan, the ability of the [debtor] to enforce a claim once held by the estate is

limited to that which has been retained in the plan.” In re Paramount Plastics,

Inc., 172 B.R. 331, 333 (Bankr. W.D. Wash. 1994); see also In re Tex. Gen. Petrol.

Corp., 52 F.3d 1330, 1335 n.4 (5th Cir. 1995) (citing Harstad, 39 F.3d at 902-03).

For a debtor to preserve a claim, “the plan must expressly retain the right

to pursue such actions.” Paramount, 172 B.R. at 333. The reservation must be

“specific and unequivocal.” Harstad, 39 F.3d at 902; see also Ice Cream, 319 B.R.

at 337-38 (holding that the plan’s categorical reservation of “preference” claims

was sufficiently specific; plan need not itemize individual transfers that may be

pursued as preferential). If a debtor has not made an effective reservation, the

debtor has no standing to pursue a claim that the estate owned before it was

dissolved. This is a logical consequence of the nature of a bankruptcy, which is
No. 07-51074

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designed primarily to “secure prompt, effective administration and settlement

of all debtor’s assets and liabilities within a limited time.” In re Kroh Bros.

Dev. Co., 100 B.R. 487, 495 (Bankr. W.D. Mo. 1989) (internal citation omitted).

To facilitate this timely, comprehensive resolution of an estate, a debtor must

put its creditors on notice of any claim it wishes to pursue after confirmation.

Harstad, 39 F.3d at 903 (“We view § 1123(b)(3) as, at least in part, a notice

provision.”). Proper notice allows creditors to determine whether a proposed

plan resolves matters satisfactorily before they vote to approve it — “absent

‘specific and unequivocal’ retention language in the plan, creditors lack sufficient

information regarding their benefits and potential liabilities to cast an

intelligent vote.” Paramount, 172 B.R. at 334.

Here Dynasty alleges, in short, that if the Appellees had discharged their

duties properly, Dynasty’s wells would have been more productive at a lower

cost, leaving more money in the debtor-in-possession account and commanding

a higher purchase price from Saber. Dynasty did not preserve its right to pursue

these claims post-confirmation. Neither the Plan’s blanket reservation of “any

and all claims” arising under the Code, nor its specific reservation of other types

of claims under various Code provisions are sufficient to preserve the commonlaw claims Dynasty now brings for, inter alia, fraud, breach of fiduciary duty,

and negligence. See Paramount, 172 B.R. at 335 (no standing to pursue

preference action where preference actions were not preserved in the plan);

Ice Cream, 319 B.R. at 333 (no standing to pursue turnover actions because the

plan “made no mention” of them). Nor can the bankruptcy court’s retention of

jurisdiction over a given type of claim preserve a debtor’s standing to pursue it.

Harstad, 39 F.3d at 902.

If Dynasty had wanted to bring a post-confirmation action for maladministration of the estate’s property during the bankruptcy, it was required

to state as much clearly in the Plan. Had that been the case, the creditors could
No. 07-51074

4

In fact, Dynasty sat by while the Creditors’ Committee pursued very similar, perhaps

identical, claims againstthe Appellees post-confirmation. This situation led to the bankruptcy

court’s adjudication of claim and issue preclusion.

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have reviewed the possible impact of future litigation on their claims and

liabilities before voting to confirm the Plan. As it happened, Dynasty did not

preserve those claims.4 The Plan has been confirmed and substantially

consummated;the estate no longer exists. Dynasty is without standing to assert

these claims.

Dynasty also lacks standing to pursue its misrepresentation claim.

Dynasty complains that Citizens agreed its claim against Dynasty would be

satisfied by Saber’s $2.5 million payment, yet the bank brought a subsequent

collection action against Dynasty’s guarantors. Dynasty, a discharged debtor,

has no standing to represent its guarantors, and has shown no injury of its own.

Dynasty has no liability on Citizens’ claim, nor is it potentially liable to its

guarantors for reimbursement of any payment they make to Citizens. During

the bankruptcy, Dynasty’s guarantors held a contingent claim against the estate,

which would have become fixed if and when they paid Citizens on the guarantee.

In re Boles, 150 B.R. 733, 736 (Bankr. W.D. Mo. 1993); Mid-State Fertilizer Co.

v. Exch. Nat’l Bank of Chi., 877 F.2d 1333, 1336 (7th Cir. 1989) (“Guarantors are

contingent creditors. If the firm stiffs a creditor, that creditor can collect from

the guarantor;the guarantor succeeds to the original creditor’s claim againstthe

firm.”) Dynasty’s liability to Citizens, including its contingent liability to its

guarantors on the same debt, was discharged in the bankruptcy. Dynasty has

no standing to raise this claim.

The bankruptcy court’s judgmentin favor ofthe Appellees, affirmed by the

district court, is therefore AFFIRMED.