In the

United States Court of Appeals

For the Seventh Circuit

No. 00-1743

Richard M. Fogel, as Trustee for the Estate

of Madison Management Group, Inc.,

Plaintiff-Appellee,

v.

Samuel Zell, et al.,

Defendants-Appellees.

Appeal of: City and County of Denver.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 93 CV 04777--Ann Claire Williams, Judge.

Argued June 9, 2000--Decided July 19, 2000

 Before Posner, Chief Judge, and Bauer and Rovner,

Circuit Judges.

 Posner, Chief Judge. A trustee in bankruptcy

settled an adversary proceeding that he had

brought against Samuel Zell and various

individuals and corporations associated with him,

claiming that they had looted the debtor’s

estate. As a condition of the settlement, the

district court, having taken over the adversary

proceeding from the bankruptcy court because the

defendants had requested a jury trial, see 28

U.S.C. sec.sec. 157(d), (e), enjoined Denver from

suing Zell and the other adversary defendants.

Denver’s appeal asks us to consider whether the

potential legal claim of a potential tort victim

is a "claim" within the meaning of the Bankruptcy

Code; if it is, what kind of notice such a

"claimant" is entitled to from the trustee; and

the extent to which a bankruptcy court can enjoin

the prosecution of claims against the defendants

in an adversary proceeding in order to facilitate

the settlement of the proceeding.

 The story begins with Interpace Corporation, a

manufacturer, now defunct, of prestressed

concrete pipe used in sewer and sanitation
systems. During the 1970s, the pipe that

Interpace sold to some 10,000 purchasers was

defective, though this was not realized at first.

Meanwhile, in the mid-1980s, through a complex

system of transactions unnecessary to describe,

Interpace was acquired by Madison Management.

Then the pipes began to burst, and Madison’s

owners--Zell and the other adversary defendants--

removed Madison’s assets, lest Madison be held

liable for its predecessor’s torts. The removal

left Madison a shell that declared bankruptcy

under Chapter 11 of the Bankruptcy Code in 1991.

Later, as so often happens, the Chapter 11

proceeding (reorganization) was converted to a

Chapter 7 proceeding (liquidation).

 By the time Madison declared bankruptcy, eight

purchasers of Interpace pipe, not including

Denver however, had sued Madison, seeking damages

in excess of $300 million, for harms caused by

the bursting of the defective pipe. Madison’s

trustee in bankruptcy, seeking to obtain assets

for distribution to the creditors, brought this

adversary proceeding, charging that Zell and

others had fraudulently conveyed Madison’s assets

to themselves in order to avoid having to make

good on the tort claims arising from the burst

pipes.

 The bankruptcy court set a deadline of April 5,

1993, for the filing of proofs of claim with the

trustee. A brief notice to that effect was

published in USA Today and Waterworld Review. The

deadline came and went without Denver filing a

claim. But its pipes hadn’t burst yet. That

didn’t happen until May 23, 1997. On the

following January 9, having confirmed that the

pipe had been manufactured by Interpace,

Madison’s predecessor, Denver filed a proof of

claim with the trustee. The claim was for more

than $17 million in damages for the harm caused

by the burst pipes and for the expense of

replacing the rest of the Interpace pipe that

Denver had bought, before it burst too. It

appears that Denver and the eight pipe claimants

that filed timely proofs of claim in the

bankruptcy proceeding are the only purchasers of

Interpace pipe who have as yet sustained damages

because of the defective pipe.

 The fraudulent-conveyance action brought by the

trustee against Zell and his fellow alleged

looters was settled a few months after Denver

filed its claim. In exchange for the trustee’s

agreeing to release his claim against them, the

adversary defendants agreed to pay him whatever

amount, estimated to be between $35 and $45

million, would enable creditors of Madison whose

claims had been filed by the April 5, 1993,

deadline to receive 70 cents on the dollar.
Claims such as Denver’s, however, that had been

filed later would receive nothing. The eight

timely pipe claimants are not among the creditors

benefited by the settlement either, but that is

because one of the adversary defendants in effect

bought their claims, paying $24 million, which

was less than 10 percent of what those claimants

had originally sought.

 The settlement between the adversary defendants

and the trustee was made expressly contingent on

the district court’s enjoining all of Madison’s

creditors, including pipe claimants, from suing

the adversary defendants. Denver had already

filed suit against those defendants in a state

court in Colorado. Its suit was closely modeled

on the trustee’s fraudulent-conveyance suit.

Because Zell and the other adversary defendants

were not the manufacturer of the defective pipe

or even the successor of the manufacturer

(Interpace), but rather the alleged looters of

the successor’s assets, Denver’s claim against

them, as distinct from the claim that it had

filed against Madison in the bankruptcy

proceeding, could not be, and was not, a

products-liability claim.

 The district judge found that Denver knew by

October of 1990 that the pipe it had bought from

Interpace might be defective, and so should have

filed a proof of claim with Madison’s trustee in

bankruptcy before the bar date two and a half

years later. Other Interpace pipe, bought at the

same time, had already burst; and Denver had even

played host to a conference at which

representatives of a number of municipalities

that had bought such pipe discussed the

likelihood that it would burst. The judge’s

finding that Denver knew about the defect in its

pipe before Madison went into bankruptcy is

contested, but for purposes of this appeal we can

assume that it’s correct. The judge ruled that by

failing to file a proof of claim by the bar date,

Denver had forfeited any right it might have had

to object to a settlement that gave it nothing.

And so the judge proceeded to consider whether

the settlement was in the best interests of the

debtor’s estate, Denver’s interest

notwithstanding. She concluded that it was,

because it would avoid costly and protracted

litigation and add sufficient assets to the

estate to enable a handsome recovery, by normal

bankruptcy standards, by those creditors (other

than the timely pipe claimants, who had settled

separately) that had filed timely proofs of

claim. Since the settlement was contingent on

enjoining suits by all pipe claimants against the

adversary defendants, the judge, to make sure

that the settlement would go through, granted the

injunction sought by the trustee and the
adversary defendants against Denver’s state court

suit against the latter. The consequence of the

judge’s rulings was to block Denver from

recovering any of the losses that it has

sustained as a result of the bursting of the

defective pipe, since Interpace no longer exists,

the Madison bankruptcy yielded nothing for

Denver, and Denver’s state-court suit against the

alleged looters is enjoined.

 Judges naturally prefer to settle complex

litigation than to see it litigated to the hilt,

especially when it is litigation in a bankruptcy

proceeding--the expenses of administering the

bankruptcy often consume most or even all of the

bankrupt’s assets. The trustee’s adversary

proceeding against Zell and the other alleged

looters promised to be hard-fought; the parties

had already been at each other’s throats for six

years. Much of the property of the debtor’s

estate might be eaten up in that litigation,

which in the end might fail to recover a penny

for the estate. It was natural for the judge to

prefer a $45 million bird in the hand to birds of

unknown number and value in dense thickets. But

this is on the assumption that Denver, whose

claim exceeds $17 million, and any other

purchaser from Interpace whose pipes burst after

April 5, 1993, deserved to receive zero cents on

the dollar because they should have filed claims

before that deadline. If the judge was wrong to

fault Denver for filing later, an essential

premise of her decision to approve the settlement

and issue the injunction collapses.

 On whether Denver filed its proof of claim too

late, it is uncertain, to begin with, whether it

could have filed a claim before its pipes burst,

which didn’t happen until 1997, long after the

bar date for filing proofs of claim. A "creditor"

in bankruptcy is anyone who has a "claim" against

the bankrupt estate that arose (so far as bears

on this case) no later than the filing of the

voluntary petition in bankruptcy. 11 U.S.C.

sec.sec. 101(10), 301; In re Chicago Pacific

Corp., 773 F.2d 909, 916 (7th Cir. 1985); In re

Gucci, 126 F.3d 380, 388-89 (2d Cir. 1997).

"Claim" is broadly defined to include equitable

as well as legal rights to payment, and even

"contingent" such rights. 11 U.S.C. sec.

101(5)(A); McClellan v. Cantrell, No. 99-3923,

2000 WL 876933, at *4 (7th Cir. July 5, 2000). A

claim implies a legal right, however, and before

a tort occurs the potential victim has no legal

right, "contingent" or otherwise, with an

exception, irrelevant to this case, noted in the

next paragraph, for the case in which the

potential tort victim incurs reasonable costs to

prevent the tort from occurring or to mitigate

its severity. A right that can be made the basis
of a claim in bankruptcy may be contingent on

something happening, such as the signing of a

contract, e.g., In re Remington Rand Corp., 836

F.2d 825, 827 (3d Cir. 1988); In re M. Frenville

Co., 744 F.2d 332, 336-37 (3d Cir. 1984), but if

the contingency can be the tort itself, this

spells trouble, both practical and conceptual.

Suppose a manufacturer goes bankrupt after a rash

of products-liability suits. And suppose that ten

million people own automobiles manufactured by it

that may have the same defect that gave rise to

those suits but, so far, only a thousand have had

an accident caused by the defect. Would it make

any sense to hold that all ten million are tort

creditors of the manufacturer and are therefore

required, on pain of having their claims

subordinated to early filers, to file a claim in

the bankruptcy proceeding? Does a pedestrian have

a contingent claim against the driver of every

automobile that might hit him? We are not alone

in thinking that the answer to these questions is

"no." See In re Chateaugay Corp., 944 F.2d 997,

1003 (2d Cir. 1991). Driving carelessly is not a

tort and neither is the sale of a defective

product. The products-liability tort occurs when

the defect in the design or manufacture of the

product causes a harm, and this didn’t happen to

Denver until the defective pipes burst. It is a

fundamental principle of tort law that there is

no tort without a harm, e.g., Blue Cross & Blue

Shield United of Wisconsin v. Marshfield Clinic,

152 F.3d 588, 592 (7th Cir. 1998); Janmark, Inc.

v. Reidy, 132 F.3d 1200, 1202 (7th Cir. 1997);

Jones v. Searle Laboratories, 444 N.E.2d 157, 162

(Ill. 1982); W. Page Keeton et al., Prosser and

Keeton on the Law of Torts sec. 30, p. 165 (5th

ed. 1984), and so until the harm occurs, the tort

hasn’t occurred.

 It is true that when Denver learned it had

installed defective pipe, it would have been

entitled by the doctrine of mitigation of damages

to remove the pipe or take other prophylactic or

reparative measures, and to seek restitution of

the expense of doing so from Madison, provided

the expense was prudent in the circumstances.

Adams v. U.S. Homecrafters, Inc., 744 So. 2d 736,

739 (Miss. 1999); Restatement (Second) of Torts

sec. 919(1) (1979). Had Denver incurred such an

expense before April 5, 1993, it would have had

to file a proof of claim for reimbursement by

then, provided it had received reasonable notice

of the bankruptcy proceeding, a question to which

we’ll return. But it did not incur any such

expense, and so until the pipes burst it had not

suffered a legal wrong at the hands of Madison.

No argument is made that it should have filed a

claim for breach of contract against Madison.

 There has been, however, understandable pressure
to expand the concept of a "claim" in bankruptcy

in order to enable a nonarbitrary allocation of

limited assets to be made between present and

future claimants. Consider the asbestos

bankruptcy cases. Many people who inhaled

asbestos in the workplace in the 1940s developed

serious diseases as a delayed consequence of this

inhalation. Some developed the diseases earlier

than others. It seemed arbitrary to devote the

entirety of the estates of the bankrupt asbestos

manufacturers to compensating those sufferers

whose diseases had happened to manifest

themselves before rather than after (perhaps

shortly after) the bar dates set in the various

bankruptcy proceedings. Since the inhalation had

occurred before the bar dates, there was a sense

in which the inhalers’ tort claims could be

thought to have accrued at that time even if they

couldn’t have sued to enforce the claims until

symptoms of disease, or at least discernible

changes in lung or other tissues (which might be

enough to constitute harm within the meaning of

the rule that there is no tort without a harm),

manifested themselves. To recognize a

"contingent" tort claim in these circumstances

would complicate bankruptcy proceedings some, and

perhaps a good deal, by requiring that provision

be made in the allocation of the assets of the

debtor’s estate for future claims that might be

difficult to value, but it might be a price worth

paying to eliminate an arbitrary difference in

treatment. In re UNR Industries, Inc., 725 F.2d

1111, 1118-20 (7th Cir. 1984). An analogy could

be drawn--we drew a similar analogy in an

insurance case involving defective pipes, Eljer

Mfg., Inc. v. Liberty Mutual Ins. Co., 972 F.2d

805 (7th Cir. 1992)--between inhaling a

potentially dangerous substance and installing

potentially defective pipe in the body politic;

each is a ticking-time-bomb kind of case.

 We did not need to resolve the "contingent" tort

claim issue in the UNR case. Several courts found

in 11 U.S.C. sec. 1109(b), which allows any

"party in interest" to raise and be heard on

issues relating to the bankruptcy proceeding, the

authority to appoint representatives for future

asbestos claimants. E.g., In re Amatex Corp., 755

F.2d 1034, 1041-43 (3d Cir. 1985); In re JohnsManville Corp., 52 B.R. 940, 943 (S.D.N.Y. 1985);

In re Forty-Eight Insulations, Inc., 58 B.R. 476,

478 (Bankr. N.D. Ill. 1986). Eventually Congress

stepped in and, in effect, ratified the

settlement terms that the representatives of

these future claimants had negotiated. 11 U.S.C.

sec. 524(g)(1)(B). In other cases, too, in which

mass tort claims had precipitated sellers into

bankruptcy, courts, including our own, began

allowing products-liability and nuisance claims

to be filed in bankruptcy as long as the conduct
giving rise to the claim (the manufacture or sale

of the defective product, in the case of products

liability) had occurred before the petition in

bankruptcy had been filed. E.g., In re UNR

Industries, Inc., 20 F.3d 766, 770-71 (7th Cir.

1994); In re Chicago, Milwaukee, St. Paul &

Pacific R.R., 974 F.2d 775, 782-86 (7th Cir.

1992); Epstein v. Official Comm. of Unsecured

Creditors of Estate of Piper Aircraft Corp., 58

F.3d 1573 (11th Cir. 1995); Lemelle v. Universal

Mfg. Corp., 18 F.3d 1268, 1274-78 (5th Cir.

1994); In re Jensen, 995 F.2d 925, 930-31 (9th

Cir. 1993) (per curiam); In re Chateaugay Corp.,

supra, 944 F.2d at 1005; Grady v. A.H. Robins

Co., 839 F.2d 198 (4th Cir. 1988); contra, Jones

v. Chemetron Corp., No. 99-3500, 2000 WL 558986,

*5 (3d Cir. May 9, 2000); In re M. Frenville Co.,

supra, 744 F.2d at 336-37. However, mindful of

the problem flagged by our automobile

hypotheticals, the courts in these cases have

suggested various limiting principles. We needn’t

go through them, for a reason that will appear in

a moment; and anyway we greatly doubt that the

issue is one that lends itself to governance by

formula. It may not be possible to say anything

more precise than that if it is reasonable to do

so, bearing in mind the cost and efficacy of

notice to potential future claimants and the

feasibility of estimating the value of their

claims before, perhaps long before, any harm

giving rise to a matured tort claim has occurred,

the bankruptcy court can bring those claimants

into the bankruptcy proceeding and make provision

for them in the final decree. This "test," if it

can be dignified by such a term, would exclude

the automobile hypotheticals; given that so far

only one out of every thousand pipes sold by

Interpace have burst, this case may be closer to

them than to asbestos and Dalkon Shield.

 This we need not decide and anyway could not

without knowing how serious the defect in the

pipe is; maybe all the pipe that Interpace sold

to these 10,000 purchasers is defective and must

be replaced long before the end of the normal

useful life of such a product. But that, as we

say, does not have to be decided. For even if

Denver was eligible to file a claim in the

Madison bankruptcy before it suffered any harm

from the defective pipe, it could not lawfully be

penalized for its failure to do so. The notice of

the bar date was culpably deficient. A trustee in

bankruptcy cannot subordinate late-filed claims,

as he did here, if the late filers "did not have

notice or actual knowledge of the case in time

for timely filing," 11 U.S.C. sec.

726(a)(2)(C)(i), and their claims were filed

before the estate had been distributed. sec.

726(a)(2)(C)(ii). If both conditions are met, the

late filer is entitled to parity with the other
unsecured creditors. E.g., Cooper v. Internal

Revenue, 167 F.3d 857, 858 (4th Cir. 1999); In re

Savage Industries, 43 F.3d 714, 721 (1st Cir.

1994).

 The statute says notice or actual knowledge, and

let us begin with the former. All the statute

says is that the notice must be "appropriate in

the particular circumstances," 11 U.S.C. sec.

102(1)(A), but the bankruptcy rules, a little

more helpfully, provide that "the court may order

notice by publication if it finds that notice by

mail is impracticable." Bankr. R. 2002(l). The

cases sensibly assume that the general norms of

fair notice, as set forth in Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306 (1950);

Tulsa Professional Collection Services, Inc. v.

Pope, 485 U.S. 478, 489-91 (1988); Mennonite Bd.

of Missions v. Adams, 462 U.S. 791, 797-800

(1983), and other such cases, apply to bankruptcy

as to other settings in which a person’s legal

right is extinguished if he fails to respond to a

pleading. In re Savage Industries, supra, 43 F.3d

at 721; In re Auto-Train Corp., 810 F.2d 270, 278

(D.C. Cir. 1987). So even if--which, for the

reasons explained in Creek v. Village of

Westhaven, 80 F.3d 186, 193 (7th Cir. 1996), we

doubt--municipalities (such as Denver) cannot

complain about a denial of due process even when

it isn’t their own state they’re complaining

about (which they can’t do, City of Newark v. New

Jersey, 262 U.S. 192, 196 (1923); City of East

St. Louis v. Circuit Court for Twentieth Judicial

Circuit, 986 F.2d 1142, 1144 (7th Cir. 1993)),

they are entitled to the equivalent protections

under the notice provisions of the Bankruptcy

Code. In re Hairopoulos, 118 F.3d 1240, 1244 n. 3

(8th Cir. 1997); see City of New York v. New

York, New Haven & Hartford R.R., 344 U.S. 293,

296-97 (1953).

 Fair or adequate notice has two basic elements:

content and delivery. If the notice is unclear,

the fact that it was received will not make it

adequate. Mullane v. Central Hanover Bank & Trust

Co., supra, 339 U.S. at 314, 318; Folger Adam

Security, Inc. v. DeMatteis/MacGregor, JV, 209

F.3d 252, 265 (3d Cir. 2000); In re Barton

Industries, Inc., 104 F.3d 1241, 1245-46 (10th

Cir. 1997); In re Linkous, 990 F.2d 160, 162-63

(4th Cir. 1993); In re Auto-Train Corp., supra,

810 F.2d at 279. That is not a problem here,

because the notice did identify Madison as

successor to Interpace. But unless received, the

notice was inadequate unless the means chosen to

deliver it was reasonable. Mullane v. Central

Hanover Bank & Trust Co., supra, 339 U.S. at 314,

319; Towers v. City of Chicago, 173 F.3d 619, 628

(7th Cir. 1999); Schluga v. City of Milwaukee,

101 F.3d 60, 62 (7th Cir. 1996).
 There are two basic means--the transmission of

the notice to the intended recipient and the

publication of the notice in a newspaper or

magazine or other medium likely (or at least as

likely as it is feasible to arrange) to come to

the attention of the person entitled to notice.

If his name and address are reasonably

ascertainable, he is entitled to have that

information sent directly to him, but, if not,

then publication of the information in the

newspaper or other periodical that he’s most

likely to see is permitted. In re Chicago,

Milwaukee, St. Paul & Pacific R.R., supra, 974

F.2d at 788; In re Crystal Oil Co., 158 F.3d 291,

297 (5th Cir. 1998); Chemetron Corp. v. Jones, 72

F.3d 341, 345-47 (3d Cir. 1995); In re Savage

Industries, supra, 43 F.3d at 721-22.

 The cases refer to creditors in the first class

as "known creditors" and creditors in the second

class as "unknown creditors," but this is

imprecise. The issue is not whether the creditor

is known to the trustee but whether the

creditor’s name and address can be readily

ascertained by the trustee, making it feasible to

send the creditor the notice directly and not

force him to read the fine print in the Wall

Street Journal. Apart from the cost of finding

the creditor’s name and address, the sheer number

of potential creditors in relation to the size of

their claims may make it excessively costly to

provide direct notice to all of them. In re GAC

Corp., 681 F.2d 1295, 1300 (11th Cir. 1982). The

cost of direct notice in such a case might eat up

the debtor’s estate, especially when the claims

are discounted to reflect their actual value. If

the assets of the estate are obviously

insufficient to pay more than 10 cents on the

dollar, an unsecured claim for $1 million is not

worth $1 million, but only $100,000. And if it is

a tort claim, a reasonable estimate of its value

may be much smaller than the amount claimed,

since tort damages, not being liquidated or

readily computable in most cases, are typically

exaggerated in the complaint.

 Notice by publication may thus be entirely

appropriate when potential claimants are

numerous, unknown, or have small claims (whether

nominally or, as we have just pointed out,

realistically)--all circumstances that singly or

in combination may make the cost of ascertaining

the claimants’ names and addresses and mailing

each one a notice of the bar date and processing

the responses consume a disproportionate share of

the assets of the debtor’s estate. E.g., Mullane

v. Central Hanover Bank & Trust Co., supra, 339

U.S. at 317-18; City of New York v. New York, New

Haven & Hartford R.R., supra, 344 U.S. at 296; In
re Chicago, Milwaukee, St. Paul & Pacific R.R.,

supra, 974 F.2d at 788; In re GAC Corp., supra,

681 F.2d at 1300. That isn’t this case. This is a

multimillion dollar bankruptcy, the potential

claimants were all purchasers of a product

manufactured by the debtor’s predecessor, and

Denver in particular was a large purchaser. (We

don’t know what it paid, but we know that it

bought and installed at least five miles of

Interpace pipe.) Other pipe claimants had filed

multimillion dollar claims. The suggestion that

the trustee could not have discovered that Denver

had purchased a large quantity of the defective

pipe strikes us as risible.

 Although Denver did not receive fair notice of

the bankruptcy proceeding, may it have had actual

knowledge of the proceeding? After all, the

proceeding had been pending for years before the

bar date. The general rule, moreover, is that the

only knowledge required is knowledge of a

critical stage of the proceeding from which the

bar date can be computed, see, e.g., In re Maya

Construction Co., 78 F.3d 1395, 1399 (9th Cir.

1996); In re Medaglia, 52 F.3d 451, 455 (2d Cir.

1995); cf. In re Sam, 894 F.2d 778, 781 (5th Cir.

1990), not of the bar date itself. Normally all

that is required in a Chapter 7 proceeding is

knowledge of when the petition for bankruptcy was

filed, because the statute requires that the bar

date be set at 90 days after the first creditors’

meeting, which must be held between 20 and 40

days after the petition for bankruptcy is filed.

Bankr. R. 2003(a), 3002(c). The cautious creditor

who knows only the date of the petition will

therefore file his proof of claim within 110 days

after that date.

 Here, however, the bar date was set at almost 18

months after Madison filed its petition for

bankruptcy. The reason is that the initial

petition was under Chapter 11, which doesn’t have

the 90-day rule. Bankr. R. 3003(c)(3); Pioneer

Investor Services Co. v. Brunswick Associates

Limited Partnership, 507 U.S. 380, 382 (1993).

After being converted to a Chapter 7 proceeding

on July 17, 1992, a "Notice of Commencement of

Case Under Chapter 7" was filed, fixing the bar

date 90 days later. Denver was not served with

that notice, and there is no indication that it

knew about it, which means that Denver would not

have known how to compute the bar date--and so

was entitled to notice of that date. Cf. In re

Chicago, Rock Island & Pacific R.R., 788 F.2d

1280, 1283 (7th Cir. 1986); In re Trans World

Airlines, Inc., 96 F.3d 687, 690 (3d Cir. 1996);

In re Maya Construction Co., supra, 78 F.3d at

1399; In re Spring Valley Farms, Inc., 863 F.2d

832, 834-35 (11th Cir. 1989); see also In re

Unioil, 948 F.2d 678, 683 (10th Cir. 1991); In re
Walker, 927 F.2d 1138, 1145 and n. 11 (10th Cir.

1991); but see In re Christopher, 28 F.3d 512,

517-18 (5th Cir. 1994). It received no notice.

Nor is there any reason to believe that it knew

Madison had acquired Interpace and therefore was

aware that it might have an interest in a Madison

bankruptcy. Nor, given the uncertainty whether

Denver even had a claim that it could file in a

bankruptcy proceeding before the pipes burst,

long after the bar date, can Denver be faulted in

the absence of notice for not having filed a

proof of claim before then.

 Had Denver never become a party to the Madison

bankruptcy proceeding, the injunction against its

prosecuting its own suit against Zell and the

others could not have been issued. Enjoining

nonparties is not completely out of the question

for a bankruptcy court, but it is a stretch. If A

has a claim against B, it is easy to see why B

would like to have a settlement that resolved not

only its dispute with A but its dispute with C as

well, and it is easy to see why A would be

delighted to agree to such a provision since by

making the settlement more valuable to B the

provision would enable A to get a larger

settlement--this is the reason the district judge

gave for approving the settlement. But two

parties cannot agree to extinguish the claim of a

third party not in privity with either of them--

let alone the potential claims of 10,000 third

parties. E.g., Martin v. Wilks, 490 U.S. 755,

761-62 (1989); Local No. 93, Int’l Ass’n of

Firefighters v. City of Cleveland, 478 U.S. 501,

529 (1986); United States v. Board of Education,

11 F.3d 668, 672-73 (7th Cir. 1993); Lindsey v.

Prive Corp., 161 F.3d 886, 891 (5th Cir. 1998).

 Like most legal generalizations, this one

requires qualification. If C is required to file

its claim against A in the litigation between A

and B, and fails to do so, the settlement of that

litigation can extinguish C’s rights. Martin v.

Wilks, supra, 490 U.S. at 762 n. 2. That is

paradigmatic of bankruptcy--and the defendants’

first argument, which we’ve rejected, for binding

Denver to the settlement. In addition, the court

can enjoin a third party from interfering with

the disposition of the property in the debtor’s

estate, Fisher v. Apostolou, 155 F.3d 876, 882

(7th Cir. 1998); Zerand-Bernal Group, Inc. v.

Cox, 23 F.3d 159, 161-62 (7th Cir. 1994), just as

an ordinary injunction can be made to run against

third parties who have notice of it, in order to

prevent interference with it. And thus when an

asset of the estate is sold by the trustee in

bankruptcy free and clear of any liens, the court

can enjoin a creditor from suing to enforce a

preexisting lien in the asset. 11 U.S.C. sec.

363(f); In re Penrod, 50 F.3d 459, 461 (7th Cir.
1995); Zerand-Bernal Group, Inc. v. Cox, supra,

23 F.3d at 163; Gotkin v. Korn, 182 F.2d 380, 382

(D.C. Cir. 1950); In re WBQ Partnership, 189 B.R.

97, 110 (Bankr. E.D. Va. 1995). Madison’s trustee

and the adversary defendants argue that the

trustee "owns" the fraudulent-conveyance claim

against those defendants--that it is an asset of

the debtor’s estate--and that he has "sold" it

(by releasing the claim) free and clear to them

for whatever amount is necessary to give the

timely unsecured creditors 70 cents on the

dollar, and that the suit Denver has brought in a

state court against them is an interference with

that asset. Let us see.

 It is true that the trustee "owns" Madison’s

claim in the loose sense that it’s part of the

debtor’s estate, which the trustee controls. 11

U.S.C. sec. 541(a); Pepper v. Litton, 308 U.S.

295, 307 (1939); Koch Refining v. Farmers Union

Central Exchange, Inc., 831 F.2d 1339, 1343-44

(7th Cir. 1987); In re Ionosphere Clubs, Inc., 17

F.3d 600, 604 (2d Cir. 1994). But the issue is

Denver’s claim, the claim that the adversary

defendants looted Madison so that it wouldn’t

have any assets out of which to pay tort claims

arising from the eventual bursting of the

defective pipe. Denver’s is thus a derivative

claim, the primary victim of the fraudulent

conveyance being Madison. It was Madison’s assets

that were conveyed away; Denver suffered only in

its capacity as a potential claimant to those

assets, assuming Madison was liable for

Interpace’s torts as Interpace’s successor--

though whether Madison would actually have been

liable for the torts of its predecessor,

Interpace, has not been determined; successor

liability is a confused area of the law.

Upholsterers’ Int’l Union Pension Fund v.

Artistic Furniture of Pontiac, 920 F.2d 1323,

1325 (7th Cir. 1990), quoting EEOC v. Vucitech,

842 F.2d 936, 944 (7th Cir. 1988).

 The right to bring a derivative claim, of which

the most common type is the shareholder

derivative suit, depends on showing that the

primary claimant has unjustifiably failed to

pursue the claim. E.g., Kamen v. Kemper Financial

Services, Inc., 500 U.S. 90, 95-96 (1991); Ross

v. Bernhard, 396 U.S. 531, 534 (1970); Stepak v.

Addison, 20 F.3d 398, 402 (11th Cir. 1994);

Spiegel v. Buntrock, 571 A.2d 767, 777-78 (Del.

1990). But that is this case. The trustee did

press the primary claim to settlement, but he did

so under the mistaken impression that the

settlement would give all deserving creditors 70

cents on the dollar. Had he realized that Denver

could not rightly be penalized for having failed

to file by the bar date--he was not likely to

realize this, of course, since he was responsible

for the defective notice--he would no doubt have
pressed Zell and the other defendants to make

provision in the settlement for Denver. He did

not do so, and therefore was not an adequate

representative of Denver’s legitimate interests,

Denver being as entitled as any of the other pipe

claimants to a share of any settlement.

 If a trustee unjustifiably refuses a demand to

bring an action to enforce a colorable claim of a

creditor, the creditor may obtain the permission

of the bankruptcy court to bring the action in

place of, and in the name of, the trustee. In re

Perkins, 902 F.2d 1254, 1258 (7th Cir. 1990); In

re Gibson Group, Inc., 66 F.3d 1436, 1445-46 (6th

Cir. 1995); Louisiana World Exposition v. Federal

Ins. Co., 858 F.2d 233, 247 (5th Cir. 1988); In

re STN Enterprises, 779 F.2d 901, 904 (2d Cir.

1985); In re Automated Business Systems, Inc.,

642 F.2d 200, 201 (6th Cir. 1981). In such a

suit, the creditor corresponds to the

shareholder, and the trustee to management, in a

shareholder derivative action. Cf. Parnes v.

Bally Entertainment Corp., 722 A.2d 1243, 1245

(Del. 1999); Kramer v. Western Pacific

Industries, Inc., 546 A.2d 348, 351 (Del. 1988).

 It makes no difference that the trustee probably

owned Denver’s derivative claim as well as the

direct claim (Madison’s claim as the immediate

victim of the looting of its assets by the

adversary defendants). Murray v. Miner, 876 F.

Supp. 512, 516-17 (S.D.N.Y. 1995), aff’d, 74 F.3d

402 (2d Cir. 1996), points out that Delaware

permits a subsidiary to sue its parent (the

subsidiary’s controlling shareholder) on the

complaint of the subsidiary’s minority

shareholder that the parent is looting the

subsidiary, and Madison corresponds to that

subsidiary and Denver to the shareholder. Madison

is a Delaware corporation, and under standard

choice of law rules that we may assume applicable

here despite persisting uncertainty as to whether

state or federal law supplies the choice of law

rules in a bankruptcy case, see In re Morris, 30

F.3d 1578, 1581-82 (7th Cir. 1994); In re

Stoecker, 5 F.3d 1022, 1028-29 (7th Cir. 1993),

the law of the state of incorporation determines

who can bring a derivative suit, Stromberg Metal

Works, Inc. v. Press Mechanical, Inc., 77 F.3d

928, 933 (7th Cir. 1996); Restatement (Second) of

Conflict of Laws sec. 307 (1971), and so implies

that the trustee owns Denver’s claim after all.

 No matter. The trustee "owns" the claims of the

unsecured creditors only in the sense that he

controls their prosecution. He is not the

beneficial owner, but rather is the fiduciary of

the creditors, including Denver. CFTC v.

Weintraub, 471 U.S. 343, 354-55 (1985); In re

Salzer, 52 F.3d 708, 712 (7th Cir. 1995); In re
Martin, 91 F.3d 389, 394 (3d Cir. 1996). One of

his fiduciary duties is to honor the relative

priorities of the unsecured creditors. Protective

Committee for Independent Stockholders of TMT

Trailer Ferry, Inc. v. Anderson, 390 U.S. 414,

441 (1968); In re American Reserve Corp., 841

F.2d 159, 162 (7th Cir. 1987); In re Cajun

Electric Power Co-op., Inc., 119 F.3d 349, 355

(5th Cir. 1997). If he fails to do so, the

creditor can proceed in his place and in his

name. Not having received the notice to which it

was entitled, Denver had the right to file a late

claim and participate in the estate equally with

the other unsecured creditors. 11 U.S.C. sec.

726(a)(2). Approving a settlement that

subordinated Denver’s claim was therefore an

abuse of the district court’s discretion and so

cannot stand. E.g., Depoister v. Mary M. Holloway

Foundation, 36 F.3d 582, 586-87 (7th Cir. 1994);

Jeffrey v. Desmond, 70 F.3d 183, 185 (1st Cir.

1995). Nor can the injunction, which is premised

on the settlement.

 What next? This bankruptcy proceeding is almost

a decade old, and we hope that on remand it can

be moved to an early conclusion. If the adversary

defendants are willing to sweeten the pot to the

extent necessary to induce Denver to drop its

claims (including its state-court suit), and to

take their chances with regard to any other

nonparty pipe claimants who may crop up later and

want to sue them, the case can still be resolved

by settlement--and the state-court suit enjoined.

The vice of the present injunction is not that it

was entered against a nonparty but that it was

premised on an invalid settlement. Denver became

a party to the bankruptcy proceeding when it

filed its proof of claim in 1998, and though we

cannot find a case on point, we think it a

sensible extension of cases like Zerand-Bernal

Group, Inc. v. Cox, supra, that as a party to the

bankruptcy proceeding Denver could be enjoined

from prosecuting in any other forum the claim

that it had filed in that proceeding. It was

stymied from prosecuting its claim in the

bankruptcy proceeding by the settlement that must

now be vacated. With the settlement out of the

way, it is free to proceed by demanding that the

trustee prosecute its claim. If he unreasonably

refuses, Denver can prosecute the claim itself,

in conformity with the procedure set forth in In

re Perkins, supra. If the trustee agrees to

prosecute the claim and negotiates a new

settlement that makes provision for Denver, then

Denver can if dissatisfied ask the district court

to reject the new settlement in the exercise of

the court’s discretion to reject an unreasonable

settlement. E.g., Depoister v. Mary M. Holloway

Foundation, supra, 36 F.3d at 585-86; Jeremiah v.

Richardson, 148 F.3d 17, 23 (1st Cir. 1998).
Reversed.