Opinion ID: 2810535
Heading Depth: 3
Heading Rank: 2

Heading: chapter 11 trustee’s motion for instructions

Text: The Chapter 11 Trustee asserts that the debtor does not have standing to appeal the denial of the Chapter 11 Trustee’s motion for instructions. Only a “person aggrieved” has standing to appeal a bankruptcy order. In re LTV Steel Co. Inc., 560 F.3d 449, 452. In order to be a “person aggrieved,” the appellant must have “a financial stake in the bankruptcy court's order.” Fid. Bank, Nat'l Ass'n v. M.M. Grp., Inc., 77 F.3d 880, 882 (6th Cir. 1996) (citations omitted). In other words, an appellant “must have been directly and adversely affected pecuniarily by the order.” Id. Normally, “‘[d]ebtors, particularly Chapter 7 debtors, rarely have such a pecuniary interest because no matter how the estate's assets are disbursed by the trustee, no assets will revert to the debtor.’” Lunan v. Jones (In re Lunan), 523 Fed. App’x 339, 340 (6th Cir. 2013) (unpublished table decision) (citation omitted). While the debtor might have standing to appeal an order approving the Chapter 11 Trustee’s decision not to pay funds to the debtor, this is not the issue being appealed. Instead, the bankruptcy court declined to give instructions to the Chapter 11 Trustee on how to manage the estate. Consequently, the debtor is no better or worse off than he would have been if the motion for instructions had not been filed, and thus, the debtor has no standing to appeal the bankruptcy court’s ruling. Moreover, even if the debtor had standing, the appeal from the bankruptcy court’s order denying the Chapter 11 Trustee’s motion for instructions would be without merit. Pursuant to 11 U.S.C. § 1108, a Chapter 11 trustee has the authority to operate the debtor's business “[u]nless the court, on request of a party in interest and after notice and a hearing, orders otherwise.” Section 1108 contemplates that operation of the business is the rule, therefore, it is not necessary for the trustee to obtain an order authorizing operation. United States v. Deutcscher (In re H & S Transp. Co., Inc.), 115 B.R. 592, 597 (M.D. Tenn. 1990) (citing H.R. Rep. No. 95–595, 8 95th Cong., 1st Sess. 404; Sen. Rep. No. 95–989, 95th Cong., 2d Sess. 116, U.S. Code Cong. & Admin. News 1978, p. 5787). In this vein, a Chapter 11 bankruptcy trustee typically “has the discretionary authority to exercise his business judgment in operating the debtor's business akin to the discretionary authority to exercise business judgment given to an officer or director of a corporation.” See In re Holiday Isles, Ltd., 29 B.R. 827, 830 (Bankr. S.D. Fla. 1983) (citations omitted). Application of the business judgment rule “prevents courts from becoming entangled in complex corporate decisions by deferring to the judgment of skilled business persons provided that those persons comply with certain minimum standards.” In re Dalen, 259 B.R. 586, 610 (Bankr. W.D. Mich. 2001). A bankruptcy court is not to be involved in the day-to-day administration of the estate. Instead, the bankruptcy court’s role is “limited to only those instances where the Bankruptcy Code actually authorizes such involvement.” In re Shaffner, 320 B.R. 870, 878 (Bankr. W.D. Mich. 2005) (citation omitted). The operation of the debtor’s business is clearly within the discretion of the Chapter 11 Trustee, and therefore, the bankruptcy court correctly determined that such decisions must be made by the Chapter 11 Trustee rather than by the bankruptcy court.