1

RECOMMENDED FOR FULL-

Pursuant to Sixth Circ

ELECTRONIC CITATION: 2000 F

File Name: 00a0

UNITED STATES COU

FOR THE SIXTH 

____________

In re: DUBLIN SECURITIES,INC.,

Debtor.

______________________MYRON N. TERLECKY,

Trustee of the ConsolidatedBankruptcy Estate of DublinSecurities, Inc., DublinManagement, Inc., & DublinStock Transfer, Inc.,

Plaintiff-Appellant,

v.

SARAH HELMER (99-3337);

HELMER, LUGBILL, MARTINS

& NEFF COMPANY, LPA

(99-3344),

Defendants-Appellees.

Appeal from the United St

for the Southern District of 

Nos. 98-00646; 98-00647—E

District Jud
2 In re Dublin Securities, Inc. Nos. 99-3337/3344

*

The Honorable Todd J. Campbell, United States District Judge for

the Middle District of Tennessee, sitting by designation. 

Argued: April 18, 2000 

Decided and Filed: June 7, 2000

Before: MERRITT and DAUGHTREY, Circuit Judges;

CAMPBELL, District Judge.

*

_________________

COUNSEL

ARGUED: Mark W. Iannotta, STRIP, FARGO, HOPPERS& LEITHART, Columbus, Ohio, for Appellant. Frederick M.Morgan, Jr., HELMER, LUGBILL, MARTINS & NEFF,Cincinnati, Ohio, for Appellees. ON BRIEF: Mark W.Iannotta, Myron N. Terlecky, STRIP, FARGO, HOPPERS &LEITHART, Columbus, Ohio, for Appellant. Frederick M.Morgan, Jr., HELMER, LUGBILL, MARTINS & NEFF,Cincinnati, Ohio, Irving Harris, STATMAN, HARRIS &BARDACH, Cincinnati, Ohio, for Appellees. 

_________________

OPINION

_________________

MERRITT, Circuit Judge. The facts in this bankruptcy

statute of limitations case are not in dispute. DublinSecurities, Inc., the debtor in this case, filed a Chapter 11bankruptcy petition in August 1993. Under 11 U.S.C.§ 1107(a), Dublin Securities continued the operation of thebusiness and served the bankruptcy estate as a debtor inpossession. Nearly one year later the bankruptcy wasconverted from a Chapter 11 reorganization to a Chapter 7liquidation. Plaintiff, Myron Terlecky, was appointed trusteefor the estate on August 25, 1994. On May 29, 1996,approximately twenty-one months later, the trustee filed
6 In re Dublin Securities, Inc. Nos. 99-3337/3344

limitations against the trustee before one is appointed andbefore there is in fact any conversion to a straight bankruptcyfrom a Chapter 11 proceeding. A rule that runs the statute outbefore the trustee has an opportunity to act makes no sense. 

Based on these reasons, we hold that § 546(a)’s statute of

limitations for bringing avoidance actions, as it existed priorto the 1994 amendments, begins to run upon the actualappointment of a trustee. We, therefore, reverse the judgmentof the district court and remand to the bankruptcy court forfurther proceedings. 

Nos. 99-3337/3344 In re Dseparate adversary proceedings aHelmer, Lugbill, Martins & Nefdefendants were recipients of frtransfers in violation of 11 U.S.C. moved to dismiss the complaints obrought the avoidance actions beylimitations set forth in 11 U.S.C. were denied by the bankruptcy climitations period did not begin to of the trustee. Afterwards, the interlocutory appeal to the district court’s order denying their motiodefendants’ motions for leave to reversed the decision of the bankrthe trustee’s complaints on the period began to run when the depetition and became the debtor in than two years had passed since thpetition, the district court found thhad run against the trustee who htwenty-one months. The trustee anow reverse.

11 U.S.C. § 546(a), as it ex

amendments to the Bankruptcy Codstatute of limitations. It provides t

An action or proceeding under 548, or 553 of this title may not years after the appointment of 702, 1104, 1163, 1302, or 1202 

11 U.S.C.A. § 546(a) (West 199language of § 546(a) provides the tappointed pursuant to 11 U.S.C. § date of his appointment to bring aof the estate against recipients of preferential transfers.

Defendants argue on the basis o

11 U.S.C. § 1107(a), which co
4 In re Dublin Securities, Inc. Nos. 99-3337/3344

possession the same authority of a Chapter 11 trustee. Thatsection provides:

Subject to any limitations on a trustee serving in a caseunder this chapter, and to such limitations or conditionsas the court prescribes, a debtor in possession shall haveall the rights, . . . and powers, and shall perform all thefunctions and duties . . . of a trustee serving in a caseunder this chapter. 

11 U.S.C. § 1107(a). The defendants argue that a debtor inpossession not only has the same power as a trustee to avoidpreferences and fraudulent transfers, but also has all of thelimitations that the Code imposes upon trustees as well.Defendants then conclude that the language in § 1107(a)means that a debtor in possession is bound by § 546(a)(1)’stwo-year limitations period, and further – and here is the rub– that the statute accrues and begins run against a laterappointed trustee at the time the debtor in possession isappointed. In other words, the statute would have already runagainst a trustee if the debtor remains in possession for thefirst two years or more. But this is not what the statute says.First, nowhere does § 546(a) mention that a debtor inpossession is limited by the same two-year statute oflimitations. Section 546(a)(1) clearly states that its two-yearstatute of limitations applies to certain types of trustees whoare appointed under specifically enumerated code sections.Second, even if we were to find that §1107(a) imposes a twoyear limitations period on debtors in possession, it does notchange the plain meaning of § 546(a)(1). As found by anearlier panel of this court, “it would simply mean that asecond two-year period begins to run ‘after the appointmentof a trustee under section 702, 1104, 1163, 1302, or 1202. . . .’” In re W.M. Cargile Contractor, Inc., 145 F.3d 1335

(6th Cir. 1998) (unpublished) (quoting 11 U.S.C.A.§ 546(a)(1) (West 1993)). We need not here decide when thelimitations period runs against the debtor in possession.Instead, we conclude only that the plain meaning of the statuteis that a two-year limitations period begins on theappointment of a trustee. If there is no appointed trustee, then

Nos. 99-3337/3344 In re Dthere is no limitations period runnistatute does not run against a trustenothing else, the equitable doctrina viable defense to bar avoidaninexcusable delay by a debtor in p

For a number of reasons – other 

of running a statute of limitations agwho has as yet delayed nothing – start a statute running before thDebtors in possession are less likelactions than appointed trustees b“more interested in preserving creditors than in maximizing the Maxway Corp., 27 F.3d 980, 984 Gleischman Sumner Co. v. King, W69 F.3d 799, 801 (7th Cir. 19Contractor, Inc., 145 F.3d (unpublished). A debtor in successfully reorganize, creating invendors to continue business, whfrom legal action against those whpreceding a bankruptcy. Any exera debtor in possession does noreorganization because there is no of the firm; rather, use of avoiding claims among creditors at the pprospects. See Gleischman SumInterpreting § 546(a)(1)’s limitatioupon appointment of a trustee thus commencement of [an avoidanceunsecured creditors who would bea preferential or fraudulent transferF.3d at 984. Moreover, a debtor friends or family members he woubefore or during the reorganizatioargument all he would have to do tis to let the statute run before bankruptcy. It is not a good ideincentives for shady dealing by