Court Opinion

ID: 9925805
Source: CourtListenerOpinion
Date Created: 2024-01-23 01:00:43.439728+00
Date Added: 2024-06-11T09:21:36.559633
License: Public Domain

Case: 22-20536      Document: 00517039869         Page: 1     Date Filed: 01/22/2024

            United States Court of Appeals
                 for the Fifth Circuit
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                           FILED
                                 ____________
                                                                        January 22, 2024
                                  No. 22-20536                            Lyle W. Cayce
                                 ____________                                  Clerk

   In the Matter of South Coast Supply Company,

                                                                            Debtor,

   Briar Capital Working Fund Capital, L.L.C., as assignee of
   South Coast Supply Company,

                                                                        Appellant,

                                       versus

   Robert W. Remmert,

                                                                          Appellee.
                   ______________________________

                   Appeal from the United States District Court
                       for the Southern District of Texas
                            USDC No. 4:18-CV-2867
                   ______________________________

   Before Stewart, Dennis, and Wilson, Circuit Judges.
   James L. Dennis, Circuit Judge:
          This appeal arises out of a Chapter 11 Bankruptcy petition and raises
   a res nova issue for our circuit. Because we find that preference claims arising
   under 11 U.S.C. § 547 may be sold, we REVERSE the district court’s
   dismissal for lack of subject matter jurisdiction and REMAND for further
   proceedings.
Case: 22-20536       Document: 00517039869         Page: 2   Date Filed: 01/22/2024

                                    No. 22-20536

                                 I. Background
            South Coast Supply Company (“South Coast”), an industrial
   products distributor founded in 1972, began experiencing financial issues in
   2016, which it later attributed to mismanagement. South Coast was forced to
   borrow $800,000 from Robert Remmert, its then-CFO, pursuant to a loan
   agreement. South Coast issued forty-seven checks pursuant to the terms of
   the loan agreement, totaling over $320,628.04, until Remmert resigned from
   South Coast. After his resignation, on October 17, 2017, Remmert sent a
   demand letter requesting $405,261.87 to satisfy the loan, less than the actual
   $578,199.04 left on the original loan. On October 20, 2017, South Coast filed
   a voluntary Chapter 11 petition for bankruptcy in the Southern District of
   Texas.
            South Coast continued to operate its business as a debtor-in-
   possession, and the bankruptcy court appointed J. Patrick Magill as South
   Coast’s Chief Restructuring Officer (“CRO”). At the time the CRO was
   appointed, Briar Capital Working Fund Capital, L.L.C. (“Briar Capital”)
   was South Coast’s sole secured lender and had filed proof of claim in the
   bankruptcy proceeding, thereby asserting a claim for $2,563,191.07. Briar
   Capital’s proof of claim stated that it had a lien on property valued at
   $3,926,263.88.
            Five months into the bankruptcy case, South Coast was not generating
   enough cash flow to remain liquid and cash-flow-positive. South Coast
   sought post-petition debtor-in-possession (“DIP”) financing. It requested
   and received an order from the bankruptcy court authorizing it to obtain DIP
   financing from Solstice Capital, LLC (“Solstice”). The order specified that
   Briar Capital would have lien priority over Solstice as to property obtained by
   South Coast prior to the date on which Solstice advanced DIP financing to
   South Coast. Solstice, by contrast, would have lien priority over Briar Capital

                                          2
Case: 22-20536      Document: 00517039869           Page: 3    Date Filed: 01/22/2024

                                     No. 22-20536

   as to property obtained after that date. By doing so, the bankruptcy court
   found that Briar Capital’s interests in its collateral were sufficiently
   protected. Additionally, Briar Capital received junior liens on all Solstice
   collateral. Around this time, South Coast also filed the instant lawsuit against
   Remmert attempting to “avoid” more than $300,000 of allegedly
   preferential transfers made to Remmert right before the bankruptcy
   proceedings were initiated under 11 U.S.C. § 547, and to recover, i.e., claw
   back, the value of the avoided transfers under 11 U.S.C. §550.
          After obtaining DIP financing, South Coast filed its first proposed
   Chapter 11 plan. The first plan proposed to sell all South Coast’s “intangible
   assets,” including intellectual property, to Solstice for $500,000. Solstice
   also agreed to pay up to $200,000 to satisfy claims entitled to administrative
   treatment under the Bankruptcy Code. Additionally, the first plan provided
   for the transfer of some of South Coast’s property to Briar Capital to satisfy
   Briar Capital’s claim but did not provide for any payment of Briar Capital’s
   administrative expenses incurred in participating in the bankruptcy
   proceeding, which are traditionally prioritized and paid in full. The first plan
   also provided that unsecured creditors would receive $500,000 in cash.
          Briar Capital objected to the first plan, asserting the plan did not offer
   it fair compensation. South Coast and Briar Capital settled their issues and
   agreed to a second, modified plan. The second plan provided that Briar
   Capital would abandon its security interest in $700,000 of sale proceeds that
   South Coast planned to distribute to other creditors and would also waive its
   claim to recover administrative expenses incurred in participating in the
   bankruptcy proceedings. In exchange, Briar Capital received South Coast’s
   interest in this pending preference action against Remmert, which was
   seeking to avoid more than $300,000 of allegedly preferential transfers.

                                          3
Case: 22-20536      Document: 00517039869           Page: 4     Date Filed: 01/22/2024

                                     No. 22-20536

          At the confirmation hearing of the second plan, the CRO testified
   about the value of the assets to be transferred to Briar Capital, stating that “it
   was very difficult to give a concrete valuation of any kind of inventory,” that
   the estimate of the inventory transferred was “our best guess,” and that he
   was uncertain and concerned about the real value of the collateral. The CRO
   also testified that the value of the accounts receivable transferred to Briar
   Capital was $400,000, but it was possible they could be worth less. The CRO
   specifically testified that because of South Coast’s settlement with Briar
   Capital, the second proposed plan allowed the $700,000 of proceeds from
   the sale of South Coast’s assets to be distributed to unsecured creditors and
   administrative claimants, rather than to Briar Capital, the secured creditor.
   Remmert objected on a limited basis, arguing that the plan should explicitly
   provide that only this one existing preference lawsuit would be assigned to
   Briar Capital. The bankruptcy court approved the plan over Remmert’s
   objection, finding that the plan complied with the Bankruptcy Code, was
   proposed in good faith, and was not forbidden by law.
          The order confirming the plan contained a paragraph titled
   “Assignment of Claims,” which provided that “[a]s of the Effective Date of
   the Plan, [South Coast] and the bankruptcy estate assign and convey to Briar
   Capital and/or authorize to prosecute on their behalf” the preference action
   against Remmert attempting to avoid payments made prior to the filing of the
   bankruptcy petition. The plan itself specifically states that “[a]s of the
   Effective Date of the Plan, [South Coast] and the estate assign and convey to
   Briar Capital and/or authorizes Briar Capital to prosecute on their behalf all
   of [sic] their potential claims against Robert W. Remmert,” including the
   currently pending preference lawsuit. The plan also provided that Briar
   Capital was permitted to keep any amount it recovered from Remmert, even
   if the recovery exceeded the amount it was owed to satisfy its debt, stating

                                           4
Case: 22-20536      Document: 00517039869           Page: 5   Date Filed: 01/22/2024

                                     No. 22-20536

   that “[a]ny and all recoveries and proceeds of such recoveries shall be solely
   the property of Briar Capital.”
          As a result of the plan’s approval, Briar Capital was substituted as
   assignee of South Coast in this preference action against Remmert, leading
   to this instant suit. The parties litigated the case from January 2019 until
   August 2022. Eleven days before trial, Remmert filed a motion to dismiss
   under Rule 12(b)(1) of the Federal Rules of Civil Procedure, arguing that
   Briar Capital lacked standing to prosecute the preference action. The district
   court agreed, holding that since a successful recovery would not benefit
   South Coast’s estate or its unsecured creditors, Briar Capital lacked standing
   to bring the preference claim against Remmert as a representative of the
   estate under 11 U.S.C. § 1123(b)(3)(B) of the Bankruptcy Code.
   Acknowledging the absence of caselaw from our circuit, the district court
   followed cases from bankruptcy courts ruling that outright sales of preference
   actions under 11 U.S.C. § 547 are impermissible. Therefore, the district court
   dismissed the suit for lack of subject matter jurisdiction. This timely appeal
   followed.
                          II. Standard of Review
          We review a dismissal for lack of subject matter jurisdiction de novo,
   applying the same standards as the district court. In re S. Recycling, LLC, 982
   F.3d 374, 379 (5th Cir. 2020); Griener v. United States, 900 F.3d 700, 703 (5th
   Cir. 2018). “The burden of proving subject matter jurisdiction lies with the
   party asserting jurisdiction, and it must be proved by a preponderance of the
   evidence.” In re S. Recycling, LLC, 982 F.3d at 379 (citing Ballew v. Cont’l
   Airlines, Inc., 668 F.3d 777, 781 (5th Cir. 2012) (“The plaintiff must prove by
   a preponderance of the evidence that the court has jurisdiction based on the
   complaint and evidence.”)).

                                          5
Case: 22-20536         Document: 00517039869               Page: 6       Date Filed: 01/22/2024

                                           No. 22-20536

                                       III. Analysis
            While Briar Capital raises several issues on appeal, this appeal turns
   on whether preference claims—a type of avoidance action—may validly be
   sold.1
            A. Preference Claims Arising Under 11 U.S.C. § 547 May Be Sold
            Briar Capital argues the district court erred in finding that preference
   claims cannot be sold, and thus, that it did not have standing to bring this
   claim. The district court, relying on various bankruptcy court opinions in
   light of the “absence of explicit authorization from the Fifth Circuit for sales
   of 11 U.S.C. § 547 avoidance actions,” found that Briar Capital did not have
   standing, and dismissed its claims for lack of subject matter jurisdiction.
   “Avoidance actions are claims to avoid a transfer of property by the debtor
   that was made voidable by the Bankruptcy Code. Avoidance actions include
   claims to recover fraudulent transfers and certain preferential transfers made
   too close in time to the filing of bankruptcy.” In re Simply Essentials, LLC, 78
   F.4th 1006, 1008 (8th Cir. 2023). At issue is whether a preference action, a
   specific type of avoidance action, may be sold. This question of whether
   preference claims may be sold is indeed a novel issue for this circuit. The
   Fifth Circuit has expressly reserved the question of whether a debtor-in-
   possession may sell the power to avoid preferences under 11 U.S.C. § 547. In
   re Moore, 608 F.3d 253, 261 (5th Cir. 2010) (“A split of authority exists as to
   whether the trustee may sell causes of action that arise from his avoidance
   powers.”). We hold that 11 U.S.C. § 547 preference actions may be validly

            _____________________
            1
             The parties also disagree about the applicability of res judicata or claim preclusion
   in this case. Briar Capital contends that the August 2018 order confirming the Chapter 11
   reorganization plan should have preclusive effect. Remmert responds that this argument
   was not properly preserved for appeal. We do not address this issue as we decide this appeal
   on other grounds.

                                                 6
Case: 22-20536         Document: 00517039869                Page: 7       Date Filed: 01/22/2024

                                           No. 22-20536

   sold, and that Briar Capital has standing to bring this action for the following
   reasons.
                                             *        *        *
           As a general bankruptcy rule, a debtor-in-possession, “after notice
   and a hearing, may use, sell, or lease . . . property of the estate.” Title 11, United
   States Code, Section 363(b)(1) (emphasis added).2 Property of the estate, in
   turn, is defined in 11 U.S.C. § 541. Briar Capital argues preference claims are
   property of the estate—and therefore can be sold by a debtor-in-possession
   under § 363(b)(1)—because they fall within the definitions of property of the
   estate listed in §§ 541(a)(1) and 541(a)(7). We address each subsection in
   turn.
           Briar Capital first asserts that preference claims fall in the general,
   broad definition of property of the estate in § 541(a)(1) relying, in part, on the
   Supreme Court’s broad reading of § 541(a)(1) in United States v. Whiting
   Pools, Inc., 462 U.S. 198, 205 (1983). Section 541(a)(1) defines “property of
   the estate” to include “all legal or equitable interests of the debtor in
   property as of the commencement of the case.” In Whiting Pools, Inc., the
   Court held that the reorganization estate included property of the debtor that
   had already been seized by a creditor before the debtor filed for
   reorganization. Id. at 205. In interpreting “property of the estate,” the Court
   stated that § 541(a)(1) “is intended to include in the estate any property made
   available to the estate by other provisions of the Bankruptcy Code.” Id. The

           _____________________
           2
             As the bankruptcy court did not appoint a trustee in this case, and South Coast
   continued to operate its business as a debtor-in-possession, the rights and powers
   referenced in this opinion are those of a debtor-in-possession. See 11 U.S.C. § 1107 (“[A]
   debtor in possession shall have all the rights, other than the right to compensation under
   section 330 of this title, and powers, and shall perform all the functions and duties . . . of a
   trustee”).

                                                  7
Case: 22-20536      Document: 00517039869           Page: 8     Date Filed: 01/22/2024

                                     No. 22-20536

   Court also looked to the congressional report on the Bankruptcy Code and
   stated that the “congressional goal of encouraging reorganizations and
   Congress’ choice of methods to protect secured creditors suggest that
   Congress intended a broad range of property to be included in the estate.”
   Id. at 204. The Fifth Circuit has echoed this sentiment, asserting that “[t]he
   scope of property rights and interests included in a bankruptcy estate is very
   broad: The conditional, future, speculative, or equitable nature of an interest
   does not prevent it from being property of the bankruptcy estate.” In re Kemp,
   52 F.3d 546, 550 (5th Cir. 1995). Additionally, courts have generally noted
   that this broad definition includes causes of action. In re Greenshaw Energy,
   Inc., 359 B.R. 636, 642 (Bankr. S.D. Tex. 2007) (citing In re Equinox Oil Co.,
   300 F.3d 614, 618 (5th Cir. 2002) (“Section 541 is read broadly and is
   interpreted to ‘include all kinds of property, including tangible or intangible
   property’ [and] causes of action[.]”)).
          Reading § 541(a)(1) broadly, as we must, preference actions fall within
   its scope. A preference action is property, as it is a right of action created by
   federal bankruptcy law to avoid a transfer of property. In re Moore, 608 F.3d
   at 257–58 (“[T]he term ‘all legal and equitable interests of the debtor in
   property’ is all-encompassing and includes rights of action as bestowed by
   either federal or state law.”). Preference actions are a mechanism in the
   Bankruptcy Code by which additional property is made available to the
   estate, fitting squarely within the Whiting Pools definition. A successful
   preference claim voids the allegedly preferential transfer and returns that
   property to the estate. In re Tusa-Expo Holdings, Inc., 811 F.3d 786, 791–92
   (5th Cir. 2016) (“If a trustee establishes each of the requirements of § 547(b),
   the transfer is a preference, which must be returned to the bankruptcy estate
   . . .”). Additionally, claims to avoid allegedly preferential transfers arise with
   the filing of the bankruptcy petition, making them property that the debtor
   has an interest in as of the commencement of the case. See In re Simply

                                           8
Case: 22-20536      Document: 00517039869           Page: 9    Date Filed: 01/22/2024

                                     No. 22-20536

   Essentials, LLC, 78 F.4th 1006 (holding that avoidance actions are property
   of the estate under 11 U.S.C. § 541(a)(1) and (a)(7)). Thus, preference actions
   plainly fit the statutory definition of “property of the estate” and may validly
   be sold under § 363(b).
          Briar Capital also argues that preference actions generally may qualify
   as property of the estate under § 541(a)(7). Section 541(a)(7) provides that
   property of the estate includes “any interest in property that the estate
   acquires after the commencement of the estate.” Briar Capital contends that
   “a right of action that accrues post-petition is estate property if it is created
   with or by property of the estate or related to or arises out of property that is
   already part of the estate.” Similarly to Section 541(a)(1), the Fifth Circuit
   has held that “Congress enacted § 541(a)(7) to clarify its intention that § 541
   be an all-embracing definition and to ensure that property interests created
   with or by property of the estate are themselves property of the estate.” In re
   TMT Procurement Corp., 764 F.3d 512, 525 (5th Cir. 2014). Preference actions
   clearly qualify as “property of the estate” under this section. In re Simply
   Essentials, LLC, 78 F.4th 1006 (“the avoidance actions clearly qualify as
   property of the estate under subsection (7)”). Keeping in mind our own
   precedent mandates a broad reading of § 541(a)(7), it is apparent that “[t]he
   Bankruptcy Code makes these assets available to the estate after the
   commencement of the case.” Id. Thus, we also hold that the preference
   actions qualify as property of the estate under § 541(a)(7).
          Beyond the clear statutory language, we find that our decision is
   bolstered by other courts across the country. We join the Eighth and Ninth
   Circuits in finding that preference claims are property of the estate that can
   be sold. In re Simply Essentials, LLC, 78 F.4th at 1011 (“Chapter 5 avoidance
   actions are property of the estate”); In re Lahijani, 325 B.R. 282, 288 (9th
   Cir. 2005) (“While there is some disagreement among courts about the
   exercise by others of the trustee’s bankruptcy-specific avoiding power causes

                                          9
Case: 22-20536       Document: 00517039869              Page: 10      Date Filed: 01/22/2024

                                         No. 22-20536

   of action, the Ninth Circuit permits such actions to be sold or transferred.”)
   (first citing In re P.R.T.C., Inc., 177 F.3d 774, 781 (9th Cir. 1999); and then
   citing In re Prof’l Inv. Props. of Am., 955 F.2d 623, 625–26 (9th Cir. 1992)). In
   so deciding, the Eighth Circuit addressed Remmert’s chief argument in this
   case—that the avoidance powers are unique powers belonging to the trustee
   and that should not have been sold to someone who would not exercise those
   powers for the benefits of all creditors. Specifically, the appellants in In re
   Simply Essentials argued that “allowing the sale of avoidance actions would
   violate the trustee’s fiduciary duty or undermine the purpose of avoidance
   actions.” In re Simply Essentials, LLC, 78 F.4th at 1010. In response, the court
   succinctly explained that the trustee’s fiduciary duties require it to maximize
   the value of the estate, which may include and even require the sale of an
   avoidance action. Id. The court held that allowing the sale of avoidance
   actions “is consistent with the congressional intent behind including a
   fiduciary duty to maximize the value of the estate.” Id.
           The Ninth Circuit has also found that all avoidance powers, including
   preference actions, may be sold. In re P.R.T.C., Inc., 177 F.3d 774. A
   Bankruptcy Appeals Panel within the Ninth Circuit rejected the appellants’
   argument that the estate received no benefit where there was no specific
   portion of future recoveries reserved for the estate. In re Lahijani, 325 B.R. at
   288 (“We reject appellants’ argument that the avoiding power causes of
   action should not have been sold to one who would not exercise the powers
   for the benefit of all creditors.”).3 It decided that “[t]he benefit to the estate

           _____________________
           3
             While Bankruptcy Appeals Panel decisions are not binding precedent, we find the
   rationale persuasive. See In re Silverman, 616 F.3d 1001, 1005 n.1 (9th Cir. 2010) (noting
   that while decisions from the Bankruptcy Appeals Panel are not binding, they are
   persuasive authority given their expertise in bankruptcy law).

                                              10
Case: 22-20536       Document: 00517039869             Page: 11      Date Filed: 01/22/2024

                                        No. 22-20536

   in such circumstances is the sale price, which might or might not include a
   portion of future recoveries for the estate.” Id. at 287.
           In rejecting these arguments, the courts took a broad view of what
   benefits the estate, which we adopt here. This logic of maximization of the
   estate applies even under circumstances like these, where a creditor is not
   pursuing the claim for the benefit of all creditors. In this case, Briar Capital
   waived the right to recover administrative expenses and its security interest
   in $700,000 of sales proceeds, in exchange for the right to pursue this
   preference claim. Although Briar Capital does not owe any percentage of the
   possible recovery in this case to the estate, its waiver of the right to collect
   administrative expenses and its release of its claim to $700,000 are concrete
   benefits to the estate. Interpreting the Bankruptcy Code to allow the sale of
   preference actions does not undermine the purpose of avoidance actions.
   Rather, it is consistent with the trustee’s duty to maximize the estate.
           Remmert also raises concerns about equity, a general policy
   underlying the Bankruptcy Code. Specifically, Remmert argues that since
   “Briar Capital would be pursuing claims only for itself” it “would be
   potentially allowed to recover more than rightfully due to it.” We have
   already addressed this policy concern in a similar context4 by reiterating that
   the sale of avoidance actions “will not necessarily undermine core
   bankruptcy principles. In approving such sales, bankruptcy courts must
   ensure that fundamental bankruptcy policies of asset value maximization and
   equitable distribution are satisfied. Bankruptcy courts must make those
   decisions on a case by case basis in light of the factual circumstances.” In re
   Moore, 608 F.3d at 262 n.18; see also In re Lahijani, 325 B.R. at 288 (“The

           _____________________
           4
             While the In re Moore court did not address the sale of preference actions, the
   policy arguments underlying its holding apply with equal force in this case.

                                              11
Case: 22-20536        Document: 00517039869               Page: 12       Date Filed: 01/22/2024

                                          No. 22-20536

   court’s obligation in § 363(b) sales is to assure that optimal value is realized
   by the estate under the circumstances.”).5 Allowing the sale of preference
   actions will grant bankruptcy courts more flexibility in distributing assets,
   maximize the value of the bankruptcy estate, and in turn, allow for more
   equitable distribution of assets.
           In fact, allowing for the sale of preference claims may be the most
   equitable option. For example, in some cases, the estate may not have
   sufficient funds to pursue preference actions. By assigning the actions to
   creditors who may be able to pursue the actions, the bankruptcy court and
   the debtor have more flexibility in distributing the remaining assets and can
   most effectively maximize the bankruptcy estate. In re Simply Essentials,
   LLC, 78 F.4th at 1010 (“When an estate cannot afford to pursue avoidance
   actions, the best way to maximize the value of the estate is to sell the
   actions.”); see also In re P.R.T.C., 177 F.3d at 777 (allowing the sale where the
   estate did not have the funds to pursue the avoidance claims, but believed
   they may be valuable). Maximization of the bankruptcy estate certainly
   benefits all creditors, as there are more assets to be distributed. Here, the
   estate received a benefit by Briar Capital’s release of its claim to $700,000 as
   well as all administrative expenses, and the subsequent approval of the
   bankruptcy plan in exchange for the rights to the preference claim. We reject
   Remmert’s blanket contention that allowing the sale of preference actions
   clashes with general principles of equity articulated in the Bankruptcy Code
   and instead find that bankruptcy courts are capable of determining what is

           _____________________
           5
             In re Moore cited this proposition—that allowing the sale of preference actions
   gives bankruptcy courts flexibility to maximize the value of the estate—favorably in dicta,
   stating that “[b]ankruptcy courts may determine, in any given situation, whether a sum-
   certain offer maximizes estate assets or whether, instead, an offer that includes a portion of
   future recoveries is more appropriate.” In re Moore, 608 F.3d at 262 n.19 (citing In re
   Lahijani, 325 B.R. at 288).

                                                12
Case: 22-20536        Document: 00517039869              Page: 13       Date Filed: 01/22/2024

                                          No. 22-20536

   the most equitable under the specific circumstances of each case, which may
   include selling preference claims. As Briar Capital validly purchased the
   claim outright, it has standing to pursue the lawsuit as purchaser of the claim.
           B. One Need Not Be a Representative of the Estate to Pursue a Validly
   Purchased Preference Claim
           Though we find that avoidance actions are “property of the estate”
   which can be sold, Remmert still argues Briar Capital lacks standing to pursue
   such claims because it is not a “representative of the estate.” The district
   court had two related findings. First, it found that under § 1123(b)(3)(B), a
   statute by which a third party may pursue a claim belonging to the estate,
   Briar Capital was not a representative of the estate and had no authority to
   pursue this claim under this particular provision of the Bankruptcy Code.
   Secondly, the district court found that preference claims could not be sold,
   and so Briar Capital did not have standing to pursue this claim as a purchaser.
   Thus, it concluded that Briar Capital did not have standing under either
   avenue. Because we find that preference claims can be sold, we hold that
   Briar Capital has standing to pursue this claim as a purchaser of the claim
   regardless of whether it is a “representative of the estate.”
           Remmert appears to argue that the “representative of the estate”
   issue is dispositive: Briar Capital is not a representative of the estate and thus,
   has no standing to bring the preference claim.6 Remmert’s view is that even
   if preference claims are found to be property of the estate which may be sold,
           _____________________
           6
             While not explicit in Remmert’s brief, at oral argument we asked Remmert “if
   this claim is property of the estate, and property can be sold or conveyed . . . do they have
   to be a representative of the estate?” Remmert’s counsel responded “they do.” Remmert
   also stated in supplemental briefing to this Court that while one issue is whether avoidance
   actions are property which can be sold, a second issue is “when such a sale will confer
   standing because the purchaser’s responsibilities qualify it as a ‘representative of the
   estate.’”

                                                13
Case: 22-20536     Document: 00517039869            Page: 14   Date Filed: 01/22/2024

                                     No. 22-20536

   since they are unique powers entrusted to the estate under the Bankruptcy
   Code, there ought to be an additional requirement on purchasers of these
   claims: that they must be representatives of the estate to have standing to
   pursue the claim. Briar Capital, contrastingly, argues that these issues are
   “exclusive and independent.” We find that Briar Capital has the more
   compelling argument. Whether Briar Capital is a “representative of the
   estate” is irrelevant to this appeal.
          This conclusion is supported by the plain text of the Bankruptcy Code.
   Title 11, United States Code, Section 1123(b)(3) states that a Chapter 11
   bankruptcy plan may provide for the “settlement or adjustment of any claim
   or interest belonging to the debtor or the estate” or “the retention or
   enforcement by the debtor, by the trustee, or by a representative of the estate
   appointed for such purpose of any such claim.” On the other hand, 11 U.S.C.
   § 363 provides that a debtor-in-possession “after notice and a hearing, may
   use, sell, or lease . . . property of the estate.” Remmert relies upon 11 U.S.C.
   § 1123(b)(3), arguing that Briar Capital’s failure to meet the requirements of
   this section is fatal to its standing argument. This reliance is inapposite. The
   Bankruptcy Code provides different mechanisms by which a debtor-in-
   possession may liquidate its assets. There is no requirement in 11 U.S.C. §
   363 that the purchaser of a piece of the estate’s property also be a
   representative of the estate, only that the debtor-in-possession give notice
   and hold a hearing. These requirements were met in this case and the
   bankruptcy court found that the plan complied with the Bankruptcy Code,
   was proposed in good faith, and maximized the value of the estate. There is
   no additional requirement on the purchaser of a preference claim to qualify
   as a representative of the estate to have standing to pursue the validly
   purchased claim. In holding that preference claims may be sold, we also hold
   that the purchasers of preference claims have standing to pursue them.
                                IV. Conclusion

                                           14
Case: 22-20536     Document: 00517039869           Page: 15   Date Filed: 01/22/2024

                                    No. 22-20536

          We hold that preference actions may be sold pursuant to 11 U.S.C. §
   363(b)(1) because they are property of the estate under 11 U.S.C.
   §§ 541(a)(1) and (7). And, even if Briar Capital does not qualify as a
   representative of the estate, it has standing to pursue the preference claim as
   it validly purchased the claim outright. The district court therefore erred in
   finding that Briar Capital lacked standing to bring this claim. We REVERSE
   and REMAND for further proceedings.

                                         15