1RECOMMENDED FOR FULL-TEXT PUBLICATIONPursuant to Sixth Circuit Rule 206ELECTRONIC CITATION: 2000 FED App. 0191P (6th Cir.)File Name: 00a0191p.06UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT_________________In re: DUBLINSECURITIES,INC.,Debtor.______________________MYRONN.TERLECKY,Trustee of the ConsolidatedBankruptcy Estate of DublinSecurities, Inc., DublinManagement, Inc., & DublinStock Transfer, Inc.,Plaintiff-Appellant,v.SARAHHELMER(99-3337);HELMER,LUGBILL,MARTINS&NEFFCOMPANY,LPA(99-3344),Defendants-Appellees.;>1Nos. 99-3337/3344Appeal from the United States District Courtfor the Southern District of Ohio at Columbus.Nos. 98-00646; 98-00647—Edmund A. Sargus, Jr.,District Judge.2In re Dublin Securities, Inc.Nos. 99-3337/3344*The Honorable Todd J. Campbell, United States District Judge forthe Middle District of Tennessee, sitting by designation.Argued: April 18, 2000Decided and Filed: June 7, 2000Before: MERRITT and DAUGHTREY, Circuit Judges;CAMPBELL, District Judge.*_________________COUNSELARGUED: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 bankruptcystatute 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 filed6In re Dublin Securities, Inc.Nos. 99-3337/3344limitations 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 oflimitations 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. 99-3337/3344In re Dublin Securities, Inc.3separate adversary proceedings against Sarah Helmer andHelmer, Lugbill, Martins & Neff Co., LPA alleging thatdefendants were recipients of fraudulent and preferentialtransfers in violation of 11 U.S.C. § 544(b). Both defendantsmoved to dismiss the complaints on the basis that the trusteebrought the avoidance actions beyond the two-year statute oflimitations set forth in 11 U.S.C. § 546(a). Both motionswere denied by the bankruptcy court, which held that thelimitations period did not begin to run until the appointmentof the trustee. Afterwards, the defendants each filed aninterlocutory appeal to the district court from the bankruptcycourt’s order denying their motions to dismiss. Grantingdefendants’ motions for leave to appeal, the district courtreversed the decision of the bankruptcy court and dismissedthe trustee’s complaints on the basis that the limitationsperiod began to run when the debtor filed its Chapter 11petition and became the debtor in possession. Since morethan two years had passed since the filing of the Chapter 11petition, the district court found that the statute of limitationshad run against the trustee who had been in office for onlytwenty-one months. The trustee appealed to this court. Wenow reverse.11 U.S.C. § 546(a), as it existed prior to the 1994amendments to the Bankruptcy Code, contains the applicablestatute of limitations. It provides that:An action or proceeding under section 544, 545, 547,548, or 553 of this title may not be commenced . . . twoyears after the appointment of a trustee under section702, 1104, 1163, 1302, or 1202 of this title . . . .11 U.S.C.A. § 546(a) (West 1993). On its face, the plainlanguage of § 546(a) provides the trustee, Terlecky, who wasappointed pursuant to 11 U.S.C. § 702, two years from thedate of his appointment to bring adversary actions on behalfof the estate against recipients of allegedly fraudulent andpreferential transfers.Defendants argue on the basis of a complication added by11 U.S.C. § 1107(a), which confers upon a debtor in4In re Dublin Securities, Inc.Nos. 99-3337/3344possession 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, thenNos. 99-3337/3344In re Dublin Securities, Inc.5there is no limitations period running under § 546(a)(1). Thestatute does not run against a trustee yet to be in existence. Ifnothing else, the equitable doctrine of laches would providea viable defense to bar avoidance actions when there isinexcusable delay by a debtor in possession.For a number of reasons – other than the obvious paradoxof running a statute of limitations against a nonexistent personwho has as yet delayed nothing – it would be bad policy tostart a statute running before the trustee assumes office.Debtors in possession are less likely to commence avoidanceactions than appointed trustees because they are typically“more interested in preserving relationships with theircreditors than in maximizing the size of the estate.”In reMaxway Corp., 27 F.3d 980, 984 (4th Cir. 1994);see alsoGleischman Sumner Co. v. King, Weiser, Edelman & Bazar,69 F.3d 799, 801 (7th Cir. 1995);In re W.M. CargileContractor, Inc., 145 F.3d 1335 (6th Cir. 1998)(unpublished). A debtor in possession’s goal is tosuccessfully reorganize, creating incentives to accommodatevendors to continue business, which may mean forbearingfrom legal action against those who were paid in the monthspreceding a bankruptcy. Any exercise of avoiding powers bya debtor in possession does not assist in the goal ofreorganization because there is no increase in the net wealthof the firm; rather, use of avoiding powers simply reallocatesclaims among creditors at the potential cost of businessprospects.See Gleischman Sumner Co., 69 F.3d at 801.Interpreting § 546(a)(1)’s limitations period to begin runningupon appointment of a trustee thus “prevents any delay fromcommencement of [an avoidance] action from penalizingunsecured creditors who would benefit from the recovery ofa preferential or fraudulent transfer.”In re Maxway Corp., 27F.3d at 984. Moreover, a debtor in possession may havefriends or family members he would like to prefer or enrichbefore or during the reorganization. Under the defendants’argument all he would have to do to accomplish such a scamis to let the statute run before converting to a straightbankruptcy. It is not a good idea to create such a set ofincentives for shady dealing by accruing the statute of