Opinion ID: 546944
Heading Depth: 2
Heading Rank: 1

Heading: nipsco's standing

Text: 24 The decision of the district court dismissing NIPSCO from the case was proper except insofar as it prevented NIPSCO from pursuing the count of the adversary complaint requesting that the Bank's claim be equitably subordinated to those of the unsecured creditors. NIPSCO has no interest in this litigation except in its role as an unsecured creditor. The trustee in bankruptcy acts as representative of all the unsecured creditors. Koch Refining v. Farmers Union Central Exchange, Inc., 831 F.2d 1339, 1342-43 (7th Cir.1987), cert. denied 485 U.S. 906, 108 S.Ct. 1077, 99 L.Ed.2d 237 (1988). NIPSCO does not argue that it should have standing because the Trustee is not adequately representing its interests--on the contrary, NIPSCO is only interested in assisting the Trustee in maintaining actions the Trustee has already commenced. An unsecured creditor has no standing without first obtaining special authorization from the court. Matter of Perkins, 902 F.2d 1254, 1257-58 (7th Cir.1990). Absent court permission, creditors are without authority to pursue a claim of fraudulent conveyance, Matter of Xonics Photochemical, Inc., 841 F.2d 198, 202-03 (7th Cir.1988), to pursue a preference action, Koch Refining v. Farmer Union Central Exchange, Inc., 831 F.2d 1339 (7th Cir.1987), cert. denied, 485 U.S. 906, 108 S.Ct. 1077, 99 L.Ed.2d 237 (1988); Delgado Oil Co., Inc. v. Torres, 785 F.2d 857, 860 (10th Cir.1985), or to enforce the Trustee's strongarm powers under Sec. 544(a). Moyer v. Dewey, 103 U.S. 301, 26 L.Ed. 394 (1881); Boyd v. Martin Exploration Co., 56 B.R. 776 (E.D.La.1986). The state law claim of conversion does not charge that the Bank took anything belonging to NIPSCO, or even anything in which NIPSCO had a security interest. It is our considered opinion that NIPSCO is without standing to press that claim. Redman v. Gould, 7 Blackf. 361, 362 (Ind.1845) (plaintiff must have a property right in the converted goods). 25 On the appeal from the decision lifting the automatic stay, our review of the district court's dismissal of NIPSCO is taken using an abuse of discretion standard. Because NIPSCO's interests are identical with those of the Trustee in this matter, and because the Trustee had appeared to oppose the Bank's motion, NIPSCO's involvement is in the nature of intervention under Fed.R.Civ.P. 24(b). Our review of a decision denying intervention under that Rule is for abuse of discretion. United States v. 36.96 Acres of Land, 754 F.2d 855, 860 (7th Cir.1985). NIPSCO and the Trustee argue that the dismissal was an abuse of discretion because without NIPSCO's help, the Trustee would be overpowered by Champlin's and the Bank's financial and legal resources, and would thus be unable to get a meaningful hearing on the issues. This argument has no merit. NIPSCO is not prevented from volunteering its services to the Trustee. There is nothing to prevent the Trustee from accepting help from the creditors she represents. The Trustee is the proper party to press the estate's claims. If NIPSCO wishes to help the Trustee to do that, it may. But it is not a denial of due process to refuse to allow NIPSCO to sue in its own name to protect the interests of the estate. 26 However, NIPSCO does have standing to seek equitable subordination of the Bank's claim in bankruptcy under Sec. 510(c). Equitable subordination is not a benefit to all unsecured creditors equally, at least where the creditor whose claim is objected to is at least partially unsecured; it is a detriment to the creditor whose debt is subordinated. Thus, when a party seeks equitable subordination, it is not acting in the interests of all the unsecured creditors. While the Trustee may find that it is in the best interests of the estate to seek equitable subordination, individual creditors have an interest in subordination separate and apart from the interests of the estate as a whole. The individual creditor should have an opportunity to pursue its separate interest. We reverse the dismissal of NIPSCO as plaintiff in its claim for subordination of the Bank's debt.