Court Opinion

ID: 4194560
Source: CourtListenerOpinion
Date Created: 2017-08-09 19:00:42.228683+00
Date Added: 2024-06-11T14:13:38.045605
License: Public Domain

United States Court of Appeals
                        For the First Circuit

No. 16-9007

                       IN RE: PEDRO LÓPEZ-MUÑOZ

                                Debtor

                  UNITED SURETY & INDEMNITY COMPANY,

                              Appellant,

                                  v.

                          PEDRO LÓPEZ-MUÑOZ,

                              Appellee.

              APPEAL FROM THE BANKRUPTCY APPELLATE PANEL
                         FOR THE FIRST CIRCUIT

                                Before

                         Howard, Chief Judge,
                Torruella and Barron, Circuit Judges.

     Carlos Lugo Fiol, with whom Héctor Saldaña-Egozcue, José A.
Sánchez Girona, and Saldaña and Saldaña-Egozcue, PSC, were on
brief, for appellant.
     Luisa S. Valle Castro, with whom Carmen D. Conde Torres and
C. Conde and Associates, were on brief, for appellee.

                            August 9, 2017
             BARRON, Circuit Judge.      This case concerns an appeal

from a bankruptcy court's decision, under 11 U.S.C. § 1104(a), to

deny a creditor's motion to appoint a trustee for the bankruptcy

estate to replace the debtor in possession of that estate.         We

affirm.

                                   I.

             The appellee in this case is the debtor in possession of

the estate, Pedro López-Muñoz.        Prior to filing a petition for

bankruptcy under Chapter 11 of the Bankruptcy Code, López was an

owner, either in whole or in part, of two petroleum products

companies.     The two companies were Western Petroleum Enterprises,

Inc. ("WP"), of which López owned 50% of the shares, and Hi Speed

Gas Corp. ("HSGC"), of which López owned 100% of the shares.       In

re Muñoz, 544 B.R. 266, 269 (Bankr. D.P.R. 2016).       The appellant

in this case is United Surety and Indemnity Co. ("USIC"), which is

one of López's creditors.       USIC became a creditor of López by

obtaining an indemnity agreement that López guaranteed for certain

of WP's obligations.     Id.

             Although a debtor who has filed a petition for bankruptcy

under Chapter 11 generally continues to manage the bankruptcy

estate as the debtor in possession, the bankruptcy court may,

pursuant to § 1104(a), appoint a trustee to manage the estate

instead of the debtor.    Specifically, § 1104(a) provides that "the

[bankruptcy] court shall order the appointment of a trustee -- (1)

                                 - 2 -
for cause, including fraud, dishonesty, incompetence, or gross

mismanagement . . . ; or (2) if such appointment is in the interests

of creditors . . . ."    This appeal concerns the motion that USIC

filed under § 1104(a) to have the Bankruptcy Court appoint a

trustee of the bankruptcy estate to replace López.

          Given the large number of issues USIC asks us to resolve

in this appeal, we need to review in some detail the facts

underlying the dispute, the arguments that the parties made to the

Bankruptcy Court and the Bankruptcy Appellate Panel ("BAP"), and

the rulings that those courts made below.     This review will help

clarify the issues, if any, that USIC is now raising for the first

time in this appeal and thus that are not properly before us.

          We begin by recounting certain undisputed facts that

concern the run-up to López's filing of his petition for bankruptcy

under Chapter 11.   We then review the travel of the case following

that filing, including the decisions below.

                                 A.

          In March 2013, López owned 100% of the shares of HSGC.

Muñoz, 544 at 269.      At that time, HSGC owned a gas station in

Hormigueros, Puerto Rico ("Hormigueros station").     Id.   Also, at

the same time, López personally owned a gas station in Mayagüez,

Puerto Rico ("Mayagüez station").     Id. at 270.

          On April 8, 2013, López, acting on behalf of HSGC,

executed a 20-year lease of the Hormigueros station with Puma

                               - 3 -
Energy Caribe LLC ("Puma").      Id. at 269-70.       HSGC's lease to Puma

of the Hormigueros station called for an initial $32,000 monthly

rental payment from Puma to HSGC.        Id.     The HSGC lease to Puma of

that station also provided that Puma would make an advance payment

to HSGC of $125,000.       Id. at 270.       Under that lease, HSGC was to

repay the advance payment through a $500 per month reduction in

the monthly rental payment that Puma owed to HSGC under the lease

of that station.     Id.

             On the same day, April 8, 2013, López, acting on his own

behalf, executed a 20-year lease to Puma of the Mayagüez station

that he personally owned.      Id.    That lease provided for an initial

$18,000 monthly rental payment from Puma to López. Id. That lease

also provided for an advance payment of $125,000 from Puma to

López, which would be repaid to Puma by López by means of a $500

per month reduction in the monthly rental payment that Puma owed

to López under the lease on the Mayagüez station.         Id.   Both leases

to Puma made Puma responsible for "all costs related to their

operation," such that "the rents received by [HSGC] and by the

debtor under these leases were free and clear of any operating

expenses."     Id. at 272.

             On April 11, 2013, López transferred his interest in the

Mayagüez gas station, including the lease to Puma, to HSGC in

return for $5,000.     Id. at 270.     That same day, López transferred

his shares in HSGC by "donat[ing]" them to a trust.               Id.   The

                                     - 4 -
trust, named the "La Familia Trust," had been created by López's

son on April 1, 2013.             That trust named López as the sole

beneficiary of the La Familia Trust and López's children as

substitute beneficiaries.         The trustee of that trust was listed as

López's spouse.       Id. at 271.

             On May 17, 2013, after López had made the two transfers

(of the Mayagüez station to HSGC and of the HSGC shares to the La

Familia Trust), one of WP's creditors, Banco Santander Puerto Rico,

garnished $182,435.66 in funds from López's personal bank account.

Id. at 270.       Banco Santander Puerto Rico did so based on López's

personal guarantee of WP obligations to Banco Santander Puerto

Rico.   Id.       The amount garnished included the $125,000 that Puma

had paid to López as Puma's advance payment on the lease that Puma

had executed with López for the Mayagüez station.               Id.

                                      B.

             On    October   1,   2013,   López   filed   his    petition   for

bankruptcy under Chapter 11. In the initial statement of financial

affairs that he submitted with the filing, López disclosed the

pre-petition transfer of the Mayagüez gas station to HSGC and the

transfer of the HSGC shares to the La Familia Trust.                  López's

statement did not specifically disclose the revenue that was owed

by Puma under the two gas station leases that had been executed

with Puma.    Id. at 272-73.

                                     - 5 -
          In the initial statement of financial affairs, López

wrote that the date for the transfer of the HSGC shares to the La

Familia Trust was March 2013.       The date of the transfer was

actually April 11, 2013.    Id. at 273. López also represented in

the initial statement of financial affairs that the shares of HSGC

that had been transferred to the La Familia Trust had "no value."

Id. The statement also disclosed that, after filing the bankruptcy

petition, López collected $5,000 a month from HSGC in salary for

his work as an officer of the company and $10,000 a month in rent

from HSGC for office space that he leased to HSGC.     Id. at 272.

            On November 1, 2013, the first meeting of creditors in

connection with López's bankruptcy filing was held.    Id.   At that

first meeting of creditors, USIC inquired about the transfer of

the HSGC shares to the La Familia Trust that López had disclosed

on his initial statement of financial affairs.   Id.   López stated

at that meeting that the beneficiaries of the La Familia Trust

were his four children.    He did not state that he was in fact the

sole beneficiary of that trust and that his children were merely

substitute beneficiaries.   Id. at 272-73.

          On April 15, 2014, López filed a disclosure statement

with the Bankruptcy Court in which he indicated that his purpose

in transferring the Mayagüez station to HSGC was to "preserve the

property because of difficulties in making mortgage payments."

Id. at 273-74. This disclosure statement, like his earlier initial

                                - 6 -
statement of financial affairs, did not disclose either of the gas

station leases that Puma had executed.         And that statement did not

disclose the amount of money that Puma owed in connection with its

lease for either the Mayagüez station or the Hormigueros station.

Id. at 274.

          On   July   17,    2014,    USIC   filed   an   objection   to   the

disclosure statement that López had filed with the Bankruptcy Court

and a request that the Bankruptcy Court appoint a trustee under

§ 1104(a).     Id. at 268.     In that motion, USIC contended, among

other things, that the transfer of the Mayagüez gas station to

HSGC and the transfer of the HSGC shares to the La Familia Trust

constituted transfers to "hinder, delay, or defraud" a creditor

under 11 U.S.C. § 548(a)(1)(A).        That provision of the Bankruptcy

Code authorizes the trustee of the bankruptcy estate to avoid

certain pre-petition transfers made with such an intent.                   Id.

Accordingly, USIC argued that the bankruptcy estate had a cause of

action against HSGC to avoid the transfers under § 548 and recover

the assets for the benefit of the estate.            USIC further contended

that López, due to his ties to HSGC, had a conflict of interest

with respect to bringing that action.           USIC therefore requested

that the Bankruptcy Court appoint a trustee of the bankruptcy

estate under § 1104(a) "so that [the trustee] can pursue for the

benefit of the bankruptcy estate the avoidance and recovery" of

the challenged transfers.

                                     - 7 -
           On August 29, 2014, López rescinded the transfer of the

Mayagüez gas station to HSGC and the transfer of the HSGC shares

to the La Familia Trust.      Id. at 274.           On that same day, López

filed with the Bankruptcy Court an amended "disclosure statement,

schedules, and statement of financial affairs to disclose the

reversal of the asset transfers."          Id.    The filings also disclosed

the lease that López had executed with Puma for the Mayagüez

station.   Id.

           Notwithstanding López's rescission of the transfers of

the Mayagüez station to HSGC and of the HSGC shares to the La

Familia Trust, HSGC did not repay to the bankruptcy estate the

lease income that HSGC collected from Puma during the time that

HSGC owned the Mayagüez station in consequence of the prior

transfer by López of that station to HSGC. Id. at 274.

           After   the   rescission    of    the    transfers,   López     began

receiving only $5,000 a month in rent from HSGC for the office

space that he had leased to HSGC.                Id. at 272.     Prior to the

rescission, López had been receiving $10,000 a month in rent from

HSGC for the office space that he had leased to HSGC.                Id.    The

reduction reflected the fact that, after the rescission, HSGC was

managing only one gas station.        Id.

                                      C.

           On July 14 and 15, 2015, the Bankruptcy Court held an

evidentiary hearing on USIC's motion to appoint a trustee of the

                                 - 8 -
bankruptcy estate pursuant to § 1104(a).               At that hearing, López

testified as follows regarding the reason for the transfer of the

Mayagüez gas station to HSGC and the transfer of the HSGC shares

to the La Familia Trust: "I could not pay the mortgage.                 We were

losing money, that's why we took the decision, and also to protect

the income."1

               López then testified that, after he had transferred the

Mayagüez station to HSGC, he used the revenue that HSGC received

from Puma under its lease of the Mayagüez station to make the

payments for the mortgage on that station.               López also testified

that,       after   the   transfer   to   HSGC   of   that   station   had   been

rescinded, he continued to use that revenue to pay the mortgage on

the Mayagüez station.           In addition, López testified that the

incorrect date on the disclosure of the transfer of the HSGC shares

was an "honest mistake," and that the incorrect identification of

his children as the beneficiaries of the La Familia Trust was the

result of his thinking that "at first I'm the beneficiary.                   The

thing is that the law of life is that I'm supposed to go first so

at the end they will be the beneficiary; that's why I answer like

that."

        1
       It appears that López's object was to prevent Banco
Santander Puerto Rico from garnishing the income from Puma's lease
for the Mayagüez station in order to ensure that López could use
that income to make the mortgage payments that he owed on the
mortgage for the Mayagüez station.

                                      - 9 -
            López's       certified    public   accountant    ("CPA"),   Doris

Barroso, also testified at the evidentiary hearing.              Barroso had

performed a valuation of the shares of HSGC.               Barroso explained

that she based her valuation on audited financial statements of

HSGC that were dated June 30, 2013.             Barroso testified that HSGC

had a negative book value, because HSGC's liabilities exceeded its

assets.     Barroso also testified that, during the time that HSGC

owned both the Mayagüez and Hormigueros stations, the operation of

each station created negative cash flow because HSGC's expenses

for each station exceeded the lease revenue that HSGC received

from Puma for each station.           Barroso explained in this regard that

all of the lease revenue that HSGC received from Puma was "used to

pa[y] the . . . mortgage, to pay the minimum . . . operating

expense[s] that they have, and their rent to Mr. Pedro López" for

the office space that HSGC leased from López.

            In     addition,    Barroso    testified   that    she   found   no

evidence of fraud, diversion of funds, or hiding of assets in

López's bankruptcy filings.            She explained that López's filings

regarding    the    two    transfers     contained   "no   falsification     of

information" and "no omission of information."               Finally, Barroso

concluded that the transfers resulted in no "monetary loss" to the

bankruptcy estate.

            USIC's CPA, Rafael Pérez Villarini, also testified at

the evidentiary hearing.              Pérez testified only as a rebuttal

                                       - 10 -
witness.   In that capacity, Pérez testified that Barroso had not

established the appropriate "procedures and analysis" to perform

a valuation of HSGC.        Pérez was asked whether he agreed with

Barroso's conclusion that there was no monetary loss to the

bankruptcy estate as a result of the transfers.          Pérez replied

that he "ha[d] no basis to . . . reach a conclusion in that."

                                    D.

           Following the evidentiary hearing, on August 19, 2015,

both parties submitted to the Bankruptcy Court proposed findings

of fact and conclusions of law.          USIC subsequently withdrew its

proposed findings of fact and conclusions of law and refiled an

amended version on August 21, 2015.

           In   its     amended   filing,    USIC   contended   that   a

determination of fraud under § 1104(a)(1), such that a bankruptcy

court "shall" appoint a trustee, is made by reference to state or

territorial law.      USIC then contended that, under Puerto Rico law,

the transfer of the HSGC shares to the La Familia Trust was

presumed to be fraudulent because López had donated the shares.

Id. at 276; see P.R. Laws Ann. tit. 31, § 3498.        USIC also argued

that "the myriad of intentional omissions and misrepresentations

committed by [López] in this case clearly merits the appointment

of a trustee in this case."

           In the course of describing those alleged omissions and

misrepresentations, USIC stated that López, in his April 15, 2014

                                  - 11 -
disclosure statement, had "represented to the court that he had

transferred the Mayagüez station to [HSGC] because he could not

pay the mortgage."    But, USIC argued, that representation could

not be true.   USIC explained that López knew that he was slated to

receive more revenue from Puma under the lease to Puma of the

Mayagüez station than López would need in order to be able to make

the payments for the Mayagüez station's mortgage.

           USIC also argued that, because, during the time that

HSGC owned the Mayagüez station, HSGC had collected lease revenue

from the Mayagüez station in excess of the amount needed to make

the mortgage payments on that station, the "bankruptcy estate has

a cause of action for turnover of property in the amount of

$119,500 plus interest against [HSGC], which is solely owned by

the Debtor."   However, USIC contended that López faced a conflict

of interest because he was both the trustee of the bankruptcy

estate, which had a potential turnover action against HSGC, and

the sole owner of HSGC.      USIC then argued that "such conflict of

interest constitutes cause for appointment of a Chapter 11 trustee"

under § 1104(a).   USIC also argued that, even if the existence of

the turnover action did not give rise to a conflict of interest

that necessitated López's replacement as trustee of the bankruptcy

estate, López nevertheless "breached his duty to bring a turnover

action   against   [HSGC],    which   .   .   .   constitute[s]   gross

                                - 12 -
mismanagement of the affairs of the debtor and . . . grounds for

appointment of a trustee."2

          USIC separately contended that the operating expenses of

the Mayagüez station that Barroso had taken into account in her

analysis of the valuation of the HSGC shares were "completely

fabricated in order to artificially create a deficit in the

otherwise profitable [lease]."    USIC thus contended that "the

misapplication of these so-called costs to [HSGC's] revenue to

artificially devalue its shares constitutes gross mismanagement by

the debtor-in-possession of the most important of all of the

estate's assets, which merits the appointment of a trustee in this

case."

          For his part, López, in his proposed findings of fact

and conclusions of law, contended that he transferred the Mayagüez

station to HSGC and the HSGC shares to the La Familia Trust in

order to "protect the only income the Debtor had (the rent from

the leases) from the aggressive collections actions of just one

creditor in order to be able to pay his secured creditor and avoid

the foreclosure of the gas stations."    López further contended

that he "always acted with full honesty"; that "his actions

protected the income and the assets related to the leases"; and

     2 USIC did not raise the argument that it had made in its
first motion to appoint a trustee, that the bankruptcy estate had
a cause of action against HSGC under 11 U.S.C. § 548.

                              - 13 -
that "all income received from the transfers was traceable and was

used to pay the mortgages and maintain the operations."

                                           E.

             Having considered the parties' proposed findings of fact

and conclusions of law, the Bankruptcy Court on January 15, 2016

denied USIC's motion to appoint a trustee of the bankruptcy estate

under § 1104(a).          After making a series of factual findings

regarding,    among     other    things,        what     López    had     and   had      not

disclosed,     the    Bankruptcy     Court        laid    out     the     standard       for

appointing     a     trustee    of   the        bankruptcy       estate    under      both

§ 1104(a)(1) and 1104(a)(2).           Id. at 275.           The Bankruptcy Court

also noted that, under both subsections of § 1104(a), USIC bears

the burden of showing that a trustee should be appointed.                          Id.

             The Bankruptcy Court then summarized USIC's arguments in

favor of appointing a trustee to replace López.                         The Bankruptcy

Court characterized USIC as arguing that:

             (i) the debtor's donation of his [HSGC] shares
             to La Familia trust is presumed to be
             fraudulent under the Puerto Rico Civil Code;
             (ii) following the rescission of the transfer,
             the debtor's estate now has a cause of action
             against [HSGC] for the turnover of estate
             property in the amount of $119,500, plus
             interest; (iii) the transfers of assets
             disclosed by the debtor in his statement of
             financial affairs were done in April 2013, and
             not March 2013 as stated; (iv) the debtor
             falsely stated in his first disclosure
             statement that the reason that he transferred
             the debtor's gas station to [HSGC] was because
             he could not pay the mortgage with Banco

                                      - 14 -
           Popular; (v) the debtor falsely stated at the
           meeting of creditors that the beneficiaries of
           the La Familia Trust were his children and not
           him; (vi) the debtor falsely stated that his
           [HSGC] shares were worthless at the meeting of
           creditors and in the statement of financial
           affairs; and (vii) the leases with Puma for
           the gas stations were not disclosed in the
           first disclosure statement.

Id. at 276.   The Bankruptcy Court characterized López as arguing

that he

           always acted with honesty, neither hid any
           information   nor   diverted  any   asset   in
           detriment to the estate, showed that his
           actions were to protect the rents from the
           leases and the properties that produced that
           rental income, . . . that all rental income
           received from leases is traceable and was used
           to pay the secured creditor whose collateral
           generate that income and maintain the debtor's
           business operations . . . [, and] that he
           sought to protect his assets from the
           aggressive collection actions of just one
           unsecured creditor.

Id.

           Turning to the merits of the arguments presented, the

Bankruptcy Court first stated that, under the Puerto Rico Civil

Code, the transfer that López made of the HSGC shares to the La

Familia   Trust   was   presumptively   fraudulent.   Id.   But,   the

Bankruptcy Court found, López had rebutted the presumption that

López acted fraudulently in donating the shares.       The Bankruptcy

Court relied on what it deemed to be Barroso's "credible and

convincing" testimony that the two transfers -- the transfer of

the Mayagüez station to HSGC and the transfer of the HSGC shares

                                 - 15 -
to La Familia Trust -- had "no material effect" on the bankruptcy

estate.     Id.      In so concluding, the Bankruptcy Court noted the

testimony by USIC's CPA, Pérez, that he had "no basis" on which to

reach a conclusion about that assessment by Barroso.                    Id. at 277.

            The Bankruptcy Court also rejected USIC's argument that

the   estate    has    a   turnover    cause    of   action    against    HSGC   for

$119,500.      In rejecting that argument, the Bankruptcy Court relied

on its determination that "Barroso's testimony that the asset

transfers had no material effect upon the estate remains in the

court's view uncontested.            Thus, USIC did not meet its burden of

proof that such cause of action exists."                 Id.

            Finally, the Bankruptcy Court explained that it was "not

persuaded      by    the   several    other    grounds    raised   by    USIC"   for

appointment of a trustee under § 1104(a) because "they either were

not material to the [§ 1104(a)] analysis or do not rise to the

level of misconduct requiring the appointment of a chapter 11

trustee."      Id.    The Bankruptcy Court went on to conclude that "in

many instances, the debtor was able to provide an acceptable

explanation for his actions.           For example, the debtor was able to

show that he relied on an amended financial statement for the year

2010 when he indicated that the [HSGC] shares had no value."                     Id.

                                         F.

            USIC appealed the Bankruptcy Court's decision to the

BAP, which affirmed the Bankruptcy Court's ruling.                  In re López-

                                       - 16 -
Muñoz, 553 B.R. 179 (1st Cir. BAP 2016).         The BAP stated that it

reviewed the Bankruptcy Court's factual findings regarding the

appointment of a trustee for clear error, the Bankruptcy Court's

conclusions    of    law    de   novo,   and   the   Bankruptcy   Court's

determination of whether "the evidence is sufficient to establish

'cause' for the appointment of a trustee or such appointment is in

the interests and creditors and the estate under § 1104(a)" for

abuse of discretion.       Id. at 188-89.

           After describing the standard for appointing a trustee

under § 1104(a), the BAP reviewed USIC's argument that, under

§ 1104(a)(1), the Bankruptcy Court was required to appoint a

trustee   of   the   bankruptcy    estate.     Id.   at   190.    The   BAP

characterized USIC as arguing that "the Debtor's pre-petition

transfers of assets . . . are presumed to be fraudulent, citing to

Article 1249 of the Puerto Rico Civil Code," see P.R. Laws Ann.

tit. 31, § 3498, and that the appointment of a trustee was also

required under § 1104(a)(1) because of the various omissions and

misrepresentations by the debtor.        553 B.R. at 191.    The BAP then

stated that courts look to the "totality of the circumstances" in

determining whether a debtor acted "to defraud creditors."          Id.

           The BAP found "no reason to reverse" the Bankruptcy

Court's application of the Puerto Rico statutory presumption of

fraud -- which "did not prejudice USIC" -- but noted that the

Bankruptcy Court's exclusive reliance on that presumption "would

                                   - 17 -
be misplaced" because federal law, not Puerto Rico law, defines

the meaning of fraud under § 1104(a)(1).         Id. at 192.   Thus, the

BAP considered whether the Bankruptcy Court erred in ruling that

the transfers were not "undertaken to defraud" López's creditors

under the "broader" federal definition of fraud.         Id. at 191-92.

             The BAP began by listing seven "objective indicia" of

fraudulent    intent   from   a   slightly   different   bankruptcy-fraud

context.     Id. at 193 (quoting In re Marrama, 445 F.3d 518, 522

(1st Cir. 2006)).3     The BAP then concluded that:

             Although   the   bankruptcy   court   did   not
             specifically discuss the badges of fraudulent
             intent set forth in Marrama, we are satisfied
             from our review of the record, including the
             trial transcript, that the bankruptcy court
             fully considered all the evidence adduced at
             the two-day hearing and the totality of the
             circumstances in reaching its factual findings
             and its legal conclusions.        Its decision
             contains more than fourteen pages of factual
             findings . . . . We find no abuse of discretion
             in the bankruptcy court's determination that
             USIC failed to refute the Debtor's evidence
             that he did not intend to defraud his
             creditors and the estate suffered no loss as
             a result of the pre-petition transfers.
             Similarly, we find no reversible error in the
             bankruptcy court's acceptance of the Debtor's
             explanations as credible and reasonable,
             finding that the Debtor did not conceal
             information and any incorrect information
             provided by the Debtor was unintentional and

     3   Marrama  concerned   the   application   of   11   U.S.C.
§ 727(a)(2)(A), which limits the bankruptcy court's authority to
grant the debtor a discharge if the debtor transferred property
"with actual intent to hinder, delay, or defraud a creditor." 445
F.3d at 522.

                                   - 18 -
           not done with the intent to deceive or mislead
           his creditors."

Id. at 193-94 (footnote omitted).

           The BAP also rejected USIC's argument that, because the

Bankruptcy Court relied on its determination that the transfers

had no material effect on the bankruptcy estate in concluding that

López had not engaged in fraud under § 1104(a)(1), the Bankruptcy

Court had erred.        The BAP stated that "the bankruptcy court's

discussion of the lack of monetary loss to the estate as a result

of such transfers was by no means the sole factor it considered.

Nor can its finding of lack of intent by the Debtor to conceal

such   transfers   or    to   defraud   or   deceive   his   creditors   be

overlooked."   Id. at 195.

           Finally, the BAP reviewed USIC's argument that a trustee

for the bankruptcy estate should be appointed under § 1104(a)

because the estate had a cause of action for turnover against HSGC.

In so arguing, USIC reasoned that this cause of action created a

conflict of interest for López in his capacity as trustee of the

bankruptcy estate, because he was also the owner of HSGC.          Id. at

196.   The BAP rejected this argument on the ground that "there is

no clear error in the bankruptcy court's finding that there was no

such potential cause of action against [HSGC]," because USIC "did

not offer any evidence to contradict" Barroso's testimony that

                                  - 19 -
HSGC expended all of its monthly rental income to meet its monthly

business expenses.   Id.4

                                 G.

          After the BAP ruled against USIC, USIC filed a motion

for rehearing, which the BAP denied.    USIC then filed this appeal

to us.

                                 II.

          We review appeals from the BAP "under the same standards

of review as the BAP reviews appeals from the bankruptcy court."

In re Handy, 624 F.3d 19, 21 (1st Cir. 2010).       "We review the

bankruptcy court's legal conclusions de novo, its findings of fact

for clear error, and its discretionary rulings for abuse of

discretion."   In re Hoover, 838 F.3d 5, 8 (1st Cir. 2016).   Whether

to appoint a trustee under § 1104(a) is a discretionary ruling, so

we will review that decision for an abuse of discretion.          See

Tradex Corp. v. Morse, 339 B.R. 823, 832 (D. Mass. 2006); accord

In re Marvel Entm't Grp., Inc., 140 F.3d 463, 470 (3d Cir. 1998).

     4 The BAP did not separately address USIC's argument, which
it had also made to the Bankruptcy Court, that the the debtor's
failure to pursue the turnover action against HSGC constituted
"gross mismanagement" that justified appointment of a trustee,
independently of any conflict of interest. Presumably, the BAP
did not separately address that argument because the BAP affirmed
the Bankruptcy Court's finding that no such turnover cause of
action existed. The BAP also did not address USIC's argument to
the Bankruptcy Court that López artificially devalued the shares
of HSGC by including fabricated costs on its financial statements,
and thereby committed gross mismanagement, because USIC did not
raise this argument to the BAP.

                               - 20 -
In doing so, we are mindful that the burden is on the movant to

prove that a trustee should be appointed under § 1104(a), see In

re G-I Holdings, Inc., 385 F.3d 313, 317-18 (3d Cir. 2004), as

"[t]he appointment of a chapter 11 trustee is considered to be an

'extraordinary' act since, in the usual case, the debtor remains

a debtor-in-possession throughout the reorganization."    Petit v.

New Eng. Mortg. Servs. Inc., 182 B.R. 64, 68 (D. Me. 1995) (quoting

In re Ionosphere Clubs, Inc., 113 B.R. 164, 167 (Bankr. S.D.N.Y.

1990)).5

                                  A.

            We begin with USIC's arguments as to why the Bankruptcy

Court erred in determining that appointment of a trustee was not

justified under § 1104(a)(1).    In support of that argument, USIC

first contends that the Bankruptcy Court erred as a matter of law

in concluding that, because the transfers of the Mayagüez station

to HSGC and of the HSGC shares to the La Familia Trust had no

materially adverse effect on the bankruptcy estate, López did not

act fraudulently in making those transfers.      In pressing this

     5   The parties dispute whether the movant must meet this
burden by clear and convincing evidence, or by a preponderance of
the evidence. Courts are divided on this issue, and we have not
taken a position on this question before. Tradex Corp. v. Morse,
339 B.R. 823, 826-27 (D. Mass. 2006). But, here, the Bankruptcy
Court found that USIC did not carry its burden under either
standard, In re Muñoz, 544 B.R. at 275, and, even assuming the
more favorable standard for USIC applies, we still affirm. Thus,
we need not address the issue of which standard is the right one.

                                - 21 -
contention,   USIC   argues   that   courts   have   made   clear    that   a

fraudulent conveyance does not cease to be fraudulent merely

because the conveyance does not adversely impact the value of the

bankruptcy estate.     And thus, USIC argues, the Bankruptcy Court

erred as a matter of law by premising its ruling that no "fraud"

within the meaning of § 1104(a)(1) occurred on the absence of

evidence that the transfers in question had a material effect on

the value of the bankruptcy estate.

          The Bankruptcy Court did not find, however, that, even

though López made the transfers fraudulently, the fraud resulted

in no harm to the bankruptcy estate and thus was not "fraud" under

§ 1104(a)(1).   Rather, as the BAP explained, the Bankruptcy Court

took account of the transfers' lack of materially adverse impact

on the bankruptcy estate in making a judgment, under the totality

of the circumstances, that, in making the transfers, López did not

"engage[] in fraud upon creditors" for purposes of § 1104(a)(1).

In re Muñoz, 544 B.R. 275-77; In re López-Muñoz, 553 B.R. at 195

("Here the bankruptcy court's discussion of the lack of a monetary

loss to the estate as a result of [the] transfers was by no means

the sole factor it considered.").

          We have made clear, outside the context of § 1104(a)(1),

that a finding of fraudulent intent (or lack thereof) is one that

"normally is determined from the totality of the circumstances."

Williamson v. Busconi, 87 F.3d 602, 603 (1st Cir. 1996).            And USIC

                                 - 22 -
does not identify any authority to suggest that, in evaluating the

totality of the circumstances, the effect of the transfer on the

estate's     value      is   an   impermissible       consideration     under

§ 1104(a)(1).        In consequence, given that we have previously

concluded, albeit outside the context of § 1104(a), that "[e]ven

when the totality of the circumstances might plausibly support an

inference of skullduggery, the bankruptcy court's contrary finding

must be credited unless the evidence is so one-sided as to compel

the inference of fraud," we see no basis for reversal of this

aspect of the Bankruptcy Court's ruling.          In re Carp, 340 F.3d 15,

25 (1st Cir. 2003).

             USIC also argues that the Bankruptcy Court erred in

finding an absence of fraud for purposes of § 1104(a)(1) for

another reason.       USIC contends that, under the Supreme Court's

decision in Husky International Electronics, Inc. v. Ritz, 136

S. Ct. 1581 (2016), which was decided after the Bankruptcy Court

ruling in this case, USIC needed only to prove that López had

engaged in a "transfer to a close relative, a secret transfer, a

transfer of title without transfer of possession, or grossly

inadequate     consideration,     regardless   of     whether    the   scheme

involved   a    false    representation."      And,    USIC     contends,   it

"succeeded" in proving at least that much.

             Husky, however, concerned what must be proved to satisfy

11 U.S.C. § 523(a)(2)(A), which is a provision of the Bankruptcy

                                   - 23 -
Code that limits a debtor's ability to discharge certain debts.

As a result, Husky does not purport to address what constitutes

"fraud" under § 1104(a)(1).           136 S. Ct. at 1586.        Moreover, Husky

stated     that    "[f]raudulent       conveyances       typically      involve   'a

transfer to a close relative, a secret transfer, a transfer of

title    without    transfer     of    possession,       or   grossly    inadequate

consideration.'"         Id. at 1587 (emphasis added) (quoting BFP v.

Resolution Tr. Corp., 511 U.S. 531, 540-41 (1994)).                     And, as we

have just explained, our precedent outside of the context of

§ 1104(a)(1) emphasizes that a finding of fraud must rest on the

"totality of the circumstances."              Thus, in light of USIC's failure

to identify any precedent to the contrary under § 1104(a)(1), Husky

hardly suffices to establish that, under § 1104(a)(1), any transfer

to a close relative, secret transfer, transfer of title without

transfer    of     possession,    or    transfer        for   grossly    inadequate

consideration       is   necessarily      fraud     within      the     meaning   of

§ 1104(a)(1), regardless of the other circumstances.                      See Carp,

340 F.3d at 25.

            USIC next contends that the Bankruptcy Court erred in

assessing whether fraud within the meaning of § 1104(a)(1) occurred

because the Bankruptcy Court failed to appropriately consider

circumstantial       evidence.         USIC     first    contends     that,   under

§ 1104(a)(1), an intent to defraud a creditor through a prepetition

transfer of property may be proved by circumstantial evidence.

                                       - 24 -
And, USIC further contends, the facts found by the Bankruptcy Court

met   most   of   the     factors   that   we   identified   in   Marrama   as

circumstantial indicia of fraudulent intent in making a transfer.

             In Marrama, in applying 11 U.S.C. § 727(a)(2)(A), which

concerns limitations on a debtor's ability to obtain a discharge

of debts, we identified the following factors as indicia of fraud:

             (1) insider relationships between the parties;
             (2) the retention of possession, benefit or
             use of the property in question; (3) the lack
             or inadequacy of consideration for the
             transfer; (4) the financial condition of the
             [debtor] both before and after the transaction
             at issue; (5) the existence or cumulative
             effect   of   the   pattern   or   series   of
             transactions or course of conduct after the
             incurring of the debt, onset of financial
             difficulties, or pendency or threat of suits
             by creditors; (6) the general chronology of
             the events and transactions under inquiry; and
             (7) an attempt by the debtor to keep the
             transfer a secret.

445 F.3d at 522 (citation omitted).               USIC contends that the

Bankruptcy Court erred in concluding that López did not act

fraudulently      under   §   1104(a)(1)   because   the   Bankruptcy   Court

failed to consider those Marrama factors at all, notwithstanding

that the factors -- when applied to the facts that the Bankruptcy

Court did find -- indicated that López acted fraudulently.

             This argument fails, however, because USIC misapprehends

the Bankruptcy Court's ruling.        The Bankruptcy Court made findings

as to the relationships between the debtor, HSGC, and the La

Familia Trust, In re Muñoz, 544 B.R. at 271; the retention of the

                                     - 25 -
benefit of the Mayagüez station, id. at 272; the value of the

assets transferred, id. at 271; the financial state of the debtor

before and after the transfers, id. at 272; the chronology of the

transfers at issue, id. at 270; and the debtor's statements

disclosing    the   transfers,   id.   at   272-74.   Thus,   as   the   BAP

explained, "[a]lthough the bankruptcy court did not specifically

discuss the badges of fraudulent intent set forth in Marrama," the

record revealed that "the bankruptcy court fully considered all

the evidence adduced at the two-day hearing and the totality of

the circumstances in reaching its factual findings and its legal

conclusions . . . that [López] did not intend to defraud his

creditors and the estate suffered no loss as a result of the pre-

petition   transfers."      In   re    López-Muñoz,   553   B.R.   at    193.

Accordingly, USIC is wrong in contending that the Bankruptcy Court

failed to consider circumstantial evidence or the Marrama factors.

             USIC next contends that the Bankruptcy Court erred for

another reason. USIC points to López's statement to the Bankruptcy

Court -- made in his proposed findings of fact and conclusions of

law following the evidentiary hearing -- that López transferred

the Mayagüez station to HSGC and the HGSC shares into the La

Familia Trust in order to "protect his assets from the aggressive

collection actions of just one unsecured creditor."           In re Muñoz,

544 B.R. at 276.      USIC contends that López's admitted intent to

"protect" these "assets" from a creditor is precisely the intent

                                  - 26 -
required to show that López engaged in fraud for purposes of 11

U.S.C. § 1104(a)(1).        And thus, USIC contends, appointment of a

trustee of the bankruptcy estate was required under § 1104(a)(1)

in consequence of that admission by López regarding his intent.

           But, USIC did not make this argument to the Bankruptcy

Court.    USIC argued to the Bankruptcy Court only that López did

not in fact have the motivation to make the transfers that he

claimed   to   have   had   in   his   proposed   findings   of   fact   and

conclusions of law.     Thus, this argument is waived.        See Hoover,

828 F.3d at 11; In re Woodman, 379 F.3d 1, 3 n.1 (1st Cir. 2004).6

           We note that, in addition to the fact that neither the

Bankruptcy Court nor the BAP considered this issue, USIC identifies

no clear authority, from this court or from any other court, that

supports the proposition that López's claimed motivation with

respect to actions taken in response to the collection efforts of

     6 In pressing this contention, USIC relies on Husky, which
does not address § 1104(a)(1) and what constitutes fraud under it.
Husky held that "fraud" within the meaning of § 523(a)(2)(A),
which, as we noted, limits the debtor's ability to discharge
certain debts, need not involve a false statement.     136 S. Ct.
1585. While Husky was not decided until 2016, and was therefore
unavailable for USIC to rely on in its briefing to the Bankruptcy
Court, our circuit had already reached the same conclusion in In
re Lawson, 791 F.3d 214, 220 (1st Cir., July 1, 2015), which was
published prior to USIC's briefing to the Bankruptcy Court. Thus,
USIC could have raised an argument based on Lawson to the
Bankruptcy Court.

                                   - 27 -
one creditor for the benefit of other creditors automatically makes

his transfers fraudulent for purposes of § 1104(a)(1).7

               USIC's last argument with respect to its challenge to

the Bankruptcy's Court's ruling denying the motion to appoint a

creditor pursuant to § 1104(a)(1) is as follows.              USIC contends

that the Bankruptcy Court reversibly erred by not determining that

López       committed   fraud   through   a   "pattern   of   omissions   and

misrepresentations" that were "aimed at concealing" not only the

        7
       In arguing that the law is clearly in its favor, USIC relies
primarily on Husky. There, however, the Court held only that the
phrase "actual fraud" under 11 U.S.C. § 523(a)(2) did not impose
the requirement that a false statement have been made in order for
a fraudulent conveyance to qualify as actual fraud. 136 S. Ct. at
1588. Thus, Husky does not resolve the question we confront here
concerning whether López's statements concerning his reasons for
making the transfer at issue reveal that the transfer was an act
of fraud under § 1104(a)(1). Nor is the lower court authority on
which USIC relies -- none of which involves a motion to appoint a
trustee under § 1104(a)(1) -- clear as to whether an intent to
make a transfer to protect the interests of many creditors from
the aggressive collection efforts of one creditor is automatically
a fraudulent intent for purposes of § 1104(a)(1).       USIC relies
chiefly on In re Villani, 478 B.R. 51 (1st Cir. BAP 2012) and In
re Barry, 451 B.R. 654 (1st Cir. BAP 2011), two cases applying 11
U.S.C. § 727(a)(2)(A), which limits the bankruptcy court's
authority to grant the debtor a discharge if the debtor transferred
property with "intent to hinder, delay, or defraud a creditor."
In Barry, however, the bankruptcy court evaluated the totality of
the circumstances before finding that the debtor acted with the
requisite intent under § 727(a)(2)(A), rather than finding that
the debtor's stated intent to pay one creditor automatically
constituted an intent to hinder, delay, or defraud a creditor.
451 B.R. at 659-62. And, in Villani, the panel held that a debtor's
purported justification of paying some creditors does not bar a
finding that the debtor also acted with the intent to hinder,
delay, or defraud other creditors; we did not hold that an intent
to pay some creditors is necessarily an intent to commit fraud.
See 478 B.R. at 61.

                                    - 28 -
transfer of the Mayagüez station to HSGC and the transfer of the

HSGC shares to the La Familia Trust but also the existence of the

leases to Puma.   Our review of this claim is for clear error, as

USIC challenges both the Bankruptcy Court's factual finding that

López had presented acceptable explanations for his omissions and

factual misstatements, and the Bankruptcy Court's factual finding

that these omissions and misstatements were not made with the

intent to conceal the transfer of the Mayagüez station to HSGC

(and the attendant revenue from the lease of that station to Puma)

or the transfer of the HSGC shares to the La Familia Trust.

However, as the BAP explained:

          The [bankruptcy] court declined to make the
          inferences USIC argued should be made because
          of what [USIC] maintained was deliberate
          concealment of material information and
          misleading information by the Debtor from the
          outset of the case.     The testimony of the
          Debtor and CPA Barroso adequately support the
          bankruptcy court's contrary findings and
          conclusions that USIC failed to prove its
          contentions. Again the court found reasonable
          the Debtor's explanation for the incorrect
          listing of the dates of the transfers in the
          statement   of   financial   affairs   as   an
          unintentional mistake which he corrected in
          the disclosure statement. It also accepted as
          credible the Debtor's testimony that in
          completing his schedules and statement of
          financial affairs and discussing the value of
          [HSGC] at the Creditor's Meeting he had relied
          on an amended 2010 financial statement showing
          a negative value for [HSGC]. And the Debtor
          emphasized that immediately after he rescinded
          the transfers, he amended his schedules and
          the disclosure statement to include the
          [Mayagüez] Station, the Puma lease, the [HSGC]

                              - 29 -
           shares, the rental income from the [Mayagüez]
           Station, and the operating expenses associated
           with the administration of the Puma and [HSGC]
           leases, and attached copies of the rescission
           deed and the Puma leases as exhibits to the
           latter.   USIC did not submit evidence that
           would cause us to conclude that the court's
           credibility assessments and factual findings
           were clearly erroneous.

In re López-Muñoz, 553 B.R. at 194.    Thus, USIC's argument on this

front also fails, given the deference we owe the Bankruptcy Court

on credibility findings regarding intent.     See Carp, 340 F.3d at

25.8

       8In pressing this challenge, USIC does point to the
Bankruptcy Court's statement that "the debtor's counsel informed
[the Bankruptcy Court] that the debtor 'receives rental income
from two real estate properties that are being leased'" at a status
conference. In re Muñoz, 544 B.R. at 273. USIC argues that the
Bankruptcy Court erroneously interpreted that statement by
debtor's counsel to be a disclosure of the rental income from Puma,
whereas the statement was actually a reference to rental income
that the debtor received from other properties. But, nothing in
the Bankruptcy Court's opinion indicates that the Bankruptcy Court
was under that mistaken impression. And, even assuming that USIC
is correct regarding which lease income was being referenced by
López's attorney at that status conference, USIC points to no
support in the record for the proposition that López's failure to
disclose the Puma lease income was not an honest mistake -- and
certainly none that can overcome the weight of the Bankruptcy
Court's decision to credit López's explanation of why he failed to
appropriately disclose all of the facts surrounding the two
transfers at issue.     See Carp, 340 F.3d at 25 ("Because the
determination of intent depends largely on an assessment of the
debtor's credibility, respect for the bankruptcy court's factual
findings is particularly appropriate in this context.").

                              - 30 -
                                    B.

            USIC also argues that the Bankruptcy Court erred in

finding that the appointment of a trustee would not be in the

"interests of creditors," which is the standard for appointment of

a trustee under § 1104(a)(2).        USIC argues in this regard that,

contrary to the Bankruptcy Court's finding, the bankruptcy estate

has a turnover cause of action against HSGC for the lease income

that HSGC received from Puma pursuant to Puma's lease of the

Mayagüez station from HSGC during the period of time between López's

transfer of the Mayagüez station to HSGC and López's execution of

a rescission of that transfer.           And, USIC contends, it is the

consensus among federal courts that the appointment of a trustee

is in the best interests of the creditors when the principals of

the debtor are also the principals of other transferee companies

against whom the estate has a "potential cause of action."

           The turnover cause of action exists because, USIC argues,

"[u]nder Puerto Rico law, rescission obliges the return of the

things which were the objects of the contract, with their fruits

and the price with interest."       And, USIC contends, the rescission

that López executed was incomplete, because HSGC, in the rescission

of the transfer of the Mayagüez station to HSGC, did not return the

lease revenue that HSGC received from Puma pursuant to Puma's lease

of the Mayagüez station during the period of time that HSGC owned

the   Mayagüez   station.   Thus,    USIC   argues,   in   virtue   of   the

                                - 31 -
incomplete rescission, the bankruptcy estate has a turnover cause

of action against HSGC to recover that revenue.

           USIC   did   argue   to   the   Bankruptcy   Court   that   the

bankruptcy estate had a cause of action for the turnover of $119,500

plus interest -- which was the difference between the mortgage cost

of the Mayagüez station and the revenue that HSGC received from

Puma under the lease of the Mayagüez station to Puma, during the

time that HSGC owned the Mayagüez station.         But, the Bankruptcy

Court did not dispute that, if HSGC did retain a surplus from the

Mayagüez station pursuant to the lease of that station to Puma

during the period that HSGC owned the Mayagüez station, then the

estate would have a turnover cause of action against HSGC to recover

that surplus.     The Bankruptcy Court instead simply determined,

based on the testimony by CPA Barroso, who concluded that all the

lease revenue was "used to pa[y] the . . . mortgage, to pay the

minimum . . . operating expenses that they have, and their rent to

Mr. Pedro López," that there was no surplus for HSGC to turn over.

In re Muñoz, 544 B.R. at 274-75, 277.        The Bankruptcy Court also

relied, in making that finding, on the fact that the expert witness

provided by USIC, CPA Pérez, stated that he had "no basis to . . .

reach a conclusion" regarding Barroso's testimony that the transfer

of the Mayagüez station did not have a material impact on the

estate.   Id. at 275.   As the Bankruptcy Court explained, "there was

no surplus owed by [HSGC] to the estate for the period [HSGC]

                                 - 32 -
operated the debtor's gas station since [HSGC] paid the debtor's

mortgage . . ., assumed the operating expenses of the lease, and

paid the salary and rent to the debtor."                 Id. at 274.

             It is unclear whether, on appeal to us, USIC means to

challenge the Bankruptcy Court's factual finding that no surplus

exists.      But, to the extent that USIC does so, that challenge

fails.      Our review of that finding is only for clear error, and

the Bankruptcy Court supportably found, based on the testimony of

Barroso, that there was no surplus.                     Nor does USIC point to

anything     in     the   record    that        sufficiently   undermines       that

conclusion.

             USIC     does   contend       to    us,    however,    that     various

provisions of the Bankruptcy Code precluded the Bankruptcy Court,

as a matter of law, from concluding that there was no surplus.                    As

USIC puts it, "[i]n essence, [the Bankruptcy Court] found that the

estate and [HSGC] owed mutual debts to each other," the mutual

debts being that HSGC owed the bankruptcy estate the lease revenue

(after deducting the value of the monthly mortgage payments for

the Mayagüez station) and that the bankruptcy estate owed HSGC the

operating expenses of the "administering the lease."                       And, USIC

goes on, the Bankruptcy Court found that "the amounts allegedly

owed   by    the    estate   to   [HSGC]    due    to   so-called   'expenses     of

administering the lease' were greater than those owed by [HSGC] to

the estate due to return of rents.                Therefore, it concluded that

                                      - 33 -
HSGC was entitled to offset them and keep the difference."                      But,

USIC    contends,     various     provisions       of   the    Bankruptcy       Code

prohibited the Bankruptcy Court from so ruling.

              Specifically, USIC relies on 11 U.S.C. § 362(a)(7), the

provision of the Bankruptcy Code that extends the automatic stay

in bankruptcy to setoff actions against the debtor.                 USIC argues,

in this regard, that the setoff of the lease expenses against the

"so-called 'expenses of administering the lease' was forbidden by

the automatic stay" because HSGC "never sought, let alone, was

granted relief from the automatic stay by the bankruptcy court to

take a setoff."      USIC also contends that this "offset" of expenses

was prohibited by 11 U.S.C. § 503(a) and (b), the provisions of

the Bankruptcy Code that control the payment of administrative

expenses. USIC argues in this regard that "only parties who timely

file a request for administrative expenses to the bankruptcy court

can be allowed to recover them against the estate after notice and

a hearing," but HSGC "never filed before the bankruptcy court, let

alone   was    granted,   any    request     for   administrative        expenses."

Finally,      USIC   argues     that   the      operating     expenses    for    the

administration of the leases could not have been approved as

administrative expenses under § 503(b)(1)(A), as that provision

only allows the payment of "actual, necessary costs and expenses

of preserving the estate," 11 U.S.C. § 503(b)(1)(A), and the

operating expenses were not "necessary" costs.

                                       - 34 -
            Whatever the force of these arguments, USIC never made

any   of   them   to   the   Bankruptcy    Court.     In    arguing     that   the

bankruptcy estate had a turnover action against HSGC, USIC did

challenge CPA Barroso's treatment of these expenses. But, in doing

so, USIC never identified the various provisions of the Bankruptcy

Code that it now invokes as a legal bar to the consideration of

the operating expenses in determining whether there existed a

surplus, and therefore whether there existed a turnover cause of

action against HSGC. Thus, we reject USIC's newly raised arguments

regarding these provisions of the Bankruptcy Code as waived.9                  See

Hoover, 828 F.3d at 5.

            Finally,    USIC    contends    that    the    Bankruptcy    Court's

statement that HSGC's lease revenue from Puma was "free and clear

of any operating expenses" constitutes a finding that HSGC had no

      9USIC does now also contend that the Bankruptcy Court erred
in deducting the operating expenses because those expenses were
"completely unrelated to the sales deed" -- presumably, the sales
deed transferring ownership of the Mayagüez station -- and
therefore did not have to be returned pursuant to the rescission.
But, as with its other contentions, USIC did not actually argue
below that the operating expenses were unrelated to the deed, and
therefore that the Bankruptcy Court could not take them into
account in analyzing what HSGC was obligated to return under the
deed of rescission, so we reject it as waived as well.
Additionally, USIC points to no support -- either in the record or
in Puerto Rico law -- that the operating expenses taken into
account by the Bankruptcy Court were sufficiently "unrelated" to
the deed such that the Bankruptcy Court was not permitted to
incorporate those operating expenses into the determination of
what HSGC was required to turn over to the estate pursuant to the
deed of rescission.

                                   - 35 -
operating expenses other than the mortgage payments that were owed

for the mortgage on the Mayagüez station.      This contention also

fails.    The Bankruptcy Court concluded that the lease was free and

clear of operating expenses in that the lease did not oblige HSGC

to pay any of Puma's expenses in operating the gas station.    In re

López-Muñoz, 544 B.R. at 272.     The Bankruptcy Court did not find

that HSGC had no operating expenses associated with administering

the lease.      Thus, there is no internal contradiction in the

relevant findings by the Bankruptcy Court.10

                                 III.

            For the foregoing reasons, the order of the Bankruptcy

Court is affirmed.

     10 USIC also contends that the estate may have an action to
recover the profits from the Hormigueros station, which belonged
to HSGC during the entire relevant period, due to the fact that
the HSGC shares were in the trust for several months. But, as
USIC appears to acknowledge, the fact that the HSGC shares were in
the trust for a period of time would only injure the estate if
profits from HSGC were disbursed to the trust during that period.
And, USIC points to no support in the record for its claim that
HSGC profits were disbursed to the trust.

                                - 36 -