Opinion ID: 474519
Heading Depth: 2
Heading Rank: 2

Heading: The Committee's Standing

Text: 56 We find that the district court erred in its grant of summary judgment for Paribas-Suisse on the ground that the Committee lacked sufficient standing to sue it. The district court held that the January and April 1983 stipulations reached by Coral and the Committee granting the right to sue various creditors to the Committee were not effective to confer standing upon the Committee to sue Paribas-Suisse because these stipulations specifically covered only Paribas-London. The district court further held that section 1109(b) of the Bankruptcy Code governing the intervention rights of a creditors' committee was not available to confer standing upon the Committee to sue Paribas-Suisse because there were no extenuating circumstances. See Unsecured Noteholders Committee v. First National Bank and Trust Company of Oklahoma City (In re Amarex, Inc.), 36 Bankr. 59 (Bankr.W.D.Ok.1984). 57 We first note that the district court appears to have mistaken the January 1985 stipulation, which granted standing for the Committee to sue only Paribas-London, with the subsequent April stipulation, the terms of which are not explicitly limited to Paribas-London and, in fact, are quite broad in terms of the Committee's standing to sue. 13 We believe the district court confused these two stipulations because in our reading of the April stipulation we find no restriction on its face other than the one requisite that Coral failed to sue a creditor by April 1, 1985. 58 Second, even were we to hold that Coral had not consented to the Committee's bringing suit, we would nevertheless conclude that standing should have been granted. Section 1109(b) of the Bankruptcy Code provides that a creditors' committee may raise and appear and may be heard on any issue under this chapter. We had recent occasion to address the intervention rights of the creditors' committee in Fuel Oil Supply and Terminaling Co. v. Gulf Oil Corp., 762 F.2d 1283 (5th Cir.1985), where we held that section 1109(b) does not create an automatic right to intervention; rather, it places intervention under the Bankruptcy Code on the same footing as Fed.R.Civ.P. 24(a)(2), which allows intervention when a party with an interest in the proceeding would have its rights impaired if it were not allowed to intervene and those rights are not protected by the parties in the suit. In Fuel Oil, we further held that the intervention rights under section 1109(b) are quite broad in keeping with the policies of the Bankruptcy Code and the prior Bankruptcy Act. Id. at 1286 (Congress intended Sec. 1109(b) to carry forward to the Bankruptcy Code the broad rights to appear and be heard under the former Bankruptcy Code.). We also noted, however, that the right to intervene was not absolute because the bankruptcy court can stop redundant cases where the claimants' interests are already protected under the existing litigation. Id. at 1287. We expressly stated in Fuel Oil that bankruptcy cases concerning the right to initiate proceedings by a creditors' committee are analogous to intervention cases because courts in deciding these cases use the Fed.R.Civ.P. 24(a)(2) analysis. Here, Coral refused to sue, yet the Committee desired to bring an action. If a preference were to exist, then under section 547 the unsecured creditors' interests (which the Committee represents) are not protected. See 5 Collier, supra, p 1109.02(3) (a general right to be heard would be an empty grant unless those who had such right were allowed to act when those who should act did not). Thus we find that intervention should have been allowed. 14 However, because of our determination that no preference existed, we determine that this suit was properly dismissed.Conclusion 59 Having reviewed the record in the light most favorable to the Committee, we find that no genuine issue of material fact exists which would entitle the Committee to void the repayment of the Coral loan as a perference under section 547 as to either Paribas-Suisse or Paribas-London. Accordingly, we affirm the judgment of the district court. 60 AFFIRMED.