                    UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT



                             No. 92-4209



IN THE MATTER OF:    PERNIE BAILEY DRILLING CO., INC.,
                                                    Debtor.


W. SIMMONS SANDOZ, Successor Trustee
to William F. Baity, Successor Interim
Trustee to Hugh William Thistlethwaite,
Jr., Etc.,

                                                Plaintiff-Appellant,


                                versus


FEDERAL DEPOSIT INSURANCE CORPORATION,
ETC., and NCNB TEXAS NATIONAL BANK,

                                                Defendants-Appellees.




          Appeal from the United States District Court
              for the Western District of Louisiana

                             May 28, 1993
Before POLITZ, Chief Judge, WISDOM and WIENER, Circuit Judges.

POLITZ, Chief Judge:

     The Chapter 7 bankruptcy trustee appeals the ruling of the

bankruptcy court, affirmed by the district court, concerning the

validity of a secured interest in certain accounts receivable. For

the reasons assigned, we affirm.
                                 Background

     In March 1982, Pernie Bailey Drilling Company and Interfirst

Bank Fannin1 executed an agreement entitled "Security Agreement --

Assignment of Contract Rights" to secure a series of loans.                 The

instrument gave the Bank a security interest in all of Bailey's

present and future accounts receivable.          The instrument was duly

recorded in the mortgage records of various Louisiana parishes in

May of 1984 but was never reinscribed.2

     In February 1986, J.P. Owen & Co. owed Bailey $1,368,490.

This debt is at the core of the present controversy.           To facilitate

collection the Bank required Bailey to specifically assign all

amounts   owed   by   Owen.      The   Bank   sent    Owen   notice   of   this

assignment, directing that all payments be made directly to it.

     In March 1986, Bailey filed for bankruptcy protection under

Chapter 11.   The Bank promptly requested relief from the automatic

stay imposed by 11 U.S.C. § 362 to enable it to exercise its rights

against various collateral, including the Owen receivable.                  The

bankruptcy court, in lifting the automatic stay by order dated

April 10, 1986, specifically provided that the lifting of the stay

would remain effective in the event of a conversion to a Chapter 7

proceeding.      In   November    1986,    Bailey's    Chapter   11   was   so

     1
          For reasons not relevant to the issues raised in this
case, the Bank's interest ultimately fell into the hands of the
FDIC.   For the sake of clarity, "the Bank" will refer to all
successors to Interfirst Bank Fannin's interest.

     2
          To remain effective, a notice of assignment of accounts
receivable must be reinscribed within five years. La. R.S. 9:3106.


                                       2
converted.

     The newly appointed Chapter 7 trustee invoked 11 U.S.C. § 548

and filed the instant suit challenging the validity of the 1986

assignment as a fraudulent conveyance.       He sought a return of the

Owen receivable to the bankruptcy estate.        The sauce thickens --

Owen also was in bankruptcy.      The Owen bankruptcy court ultimately

recognized the Bank's claim and set aside the funds in its favor

pending resolution of the fraudulent conveyance claim in the Bailey

case.     During this period the notice of assignment, filed in May

1984, prescribed.

     The Bailey court rejected the trustee's fraudulent conveyance

theory,    holding   that   the   Bank's   security   interest   remained

effective throughout the Bailey bankruptcy.            According to the

bankruptcy court, the effectiveness of the notice did not cease

because the rights of the parties were fixed well before the

supposed lapse in recordation.      The court suggested that the 1986

conversion to Chapter 7 reinstated the stay as a matter of law.

Regrettably, the lack of a single explanation for the court's

conclusion, understandable as it is in view of the posture of the

case, has encouraged both parties to obfuscate. The district court

affirmed; the trustee timely appealed.       The validity of the Bank's

security interest in the Owen account is the sole issue presented

on appeal.    Ultimately, the question is whether the Bank owned the

Owen receivable before its notice prescribed or, if not, whether

the Bank was still obliged to reinscribe following Bailey's filing

under Chapter 11 and converting to Chapter 7.


                                     3
                                   Analysis

        The trustee maintains that the Bank's failure to reinscribe

terminates     its     perfected    status    under    Louisiana    law3    and,

accordingly, that the Owen receivable belonged to the bankruptcy

estate. The trustee concedes that the recordation was effective at

the time Bailey filed the Chapter 11 petition.4            He also concedes

that when the Chapter 11 proceeding was initiated, the automatic

stay fixed the status quo and reinscription was thereby prevented.5

It is the trustee's position that when the bankruptcy court lifted

the stay, allowing the Bank to exercise its rights in the Owen

receivable, it concomitantly revived the Bank's duty to reinscribe

its notice of assignment.           Thus, the trustee attacks what he

perceives    to   be    the   bankruptcy     court's   conclusion    that   the

conversion to Chapter 7 reinstated the stay as a matter of law, and

argues that the Bank's secured status failed because the filing

ostensibly lapsed shortly thereafter.

        We are not persuaded.      In this case the court lifted the stay

in the Chapter 11 proceeding to allow the Bank to take the assets


        3
          Neither party disputes the role of Louisiana law in
determining whether the bank's claim remains secured.       For a
discussion of the relationship between the Bankruptcy Code and
state law see In re Groetken, 843 F.2d 1007 (7th Cir. 1988), and
R.I.D.C. Indus. Dev. Fund v. Snyder, 539 F.2d 487 (5th Cir. 1976).
Our disposition of the case pretermits such etherial concerns.

        4
          La. R.S. 9:3106 provides that the recording of such an
interest remains effective as to third parties for five years.

    5
             In re Bond Enterp., Inc., 54 B.R. 366 (Bankr. N.M. 1985).


                                       4
to which it was entitled under the security agreement, including

the Owen receivable.    The Bank cites Louisiana law in support of

its argument that an assignment "although done for the purpose of

serving as a security interest, is nevertheless a transfer of

ownership" if the parties so intended; thus it owned the Owen

receivable from its inception.6    Likewise, the Bank also points out

that Louisiana   law   provides   that   the   assignee   of   an   account

receivable has the right to receive proceeds of the receivable

when, as the Bank did here, it serves appropriate notice of the

assignment on the account debtor, in which case the Bank owned the

Owen receivable before the Bailey bankruptcy.7

     The character of the Owen receivable at its inception depended

on the intention of the parties, an intention not clearly defined

a` quo.   The bankruptcy court did find, however, that whatever

rights the Bank had to the receivable resulted from the 1982

security agreement/assignment and 1984 recording thereof, and not

from the 1986 assignment.8   Perhaps the court declined to consider

whether the 1986 assignment transferred ownership because it found

the 1982 pledge to be sufficient to dispose of the issue regardless

of whether it transferred ownership.      Perhaps the court viewed the

     6
          Shell Western E & P, Inc. v. Fluid Driers, Inc., 572
So.2d 323, 325-26 (La.App. 1990), cert. denied, 575 So.2d 823
(1991).

     7
          La. R.S. 9:3108.

     8
          The conclusion stems from the court's reading of La.
R.S. 9:3103-9:3110.


                                   5
1982 assignment to be a transfer of ownership under the Louisiana

Assignment of Accounts Receivable Act,9 making the 1986 assignment

superfluous. In either case, the distinction is not dispositive in

light of    the     treatment     accorded     the   asset   in   the   bankruptcy

proceedings before the purported lapse in recordation.

      The Bank's rights in the Owen receivable came to fruition

before the statutory lapse in the recordation on May 30, 1989

because    of   a   number   of    acts   sufficient    in   themselves      or   in

combination with others:           (1) Bailey's filing under Chapter 11;10

(2) the Bank's notice to Owen of the assignment which, under

Louisiana law, provides the assignee with the superior right to

payment;11 (3) the Bank's filing of a notice of claim; (4) the

lifting of the automatic stay and recognition by the Bailey court

of   the   Bank's    vested       right   to   the   Owen    receivable;12    and,

      9
            La. R.S. 9:3101 et seq.

     10
          The automatic stay is imposed immediately upon the filing
and the secured status vel non of creditors is generally regarded
as fixed at that point for the protection of the creditors "in a
manner consistent with the bankruptcy goal of equal treatment."
Hunt v. Banker's Trust Co., 799 F.2d 1060 (5th Cir. 1986);
11 U.S.C. § 362. Courts have noted that requiring reinscription
after commencement of bankruptcy proceedings would serve no
purpose, particularly when the case is converted to liquidation.
See Bond (collecting cases).

      11
          La. R.S. 9:3108; Coastal Credit Co. v. American Waste &
Pollution Control Co., 583 So.2d 553 (La.App. 1991); Shell Western,
572 So.2d at 328 (assignee's rights are superior to the assignor
upon notice to the debtor).

      12
          As noted, we agree with the holding in Bond. We also
agree with the observations made therein that (1) "the critical
time for determining the respective rights of a debtor and its

                                          6
ultimately, (5) the formal recognition of the Bank's rights to the

proceeds in the Owen bankruptcy proceeding. We focus our attention

on the last event.

       When Owen sought the protection of the bankruptcy code, the

rights of his creditors became subject thereto.                 When the court

confirmed the Owen plan Bailey's trustee's rights and those taking

from    and   through   it   were   dramatically      impacted.      Under     the

bankruptcy code the claims of creditors arising prior to the

confirmation are discharged and are payable only as provided by the

plan.13     The only enforceable debts of Owen, therefore, were those

recognized in the plan.         Only the Bank asserted a relevant debt

recognized in the Owen plan.

       The judicial recognition of the assignment and the allowance

of the debt formally, finally, and conclusively terminated the

Bank's security      interest    and   created   an    actual     right   to   the

proceeds.     Stripped to essentials, the Owen receivable represents

a right to receive payment from a third party and is a "property

interest," in the sense that it is a thing that may be sold, given


creditors is the date of the filing of a petition in bankruptcy"
and (2) "filing of a [notice of reinscription] would . . .
violat[e]" the automatic stay. Bond, 54 B.R. at 369. The trustee
relies heavily on dicta in Bond suggesting that an order lifting
the automatic stay invariably revives the duty to reinscribe. We
do not agree with this broad reading of Bond, and conclude to the
contrary. Where, as here, the creditor seeks not only payments
already made but also rights to future proceeds, the order lifting
the stay must expressly address the creditor's ability to
reinscribe before it may be given that effect.

       13
          11 U.S.C. § 1141; In re Serv. Decorating Co., 105 B.R.
859, 862 (N.D. Ill. 1989).


                                       7
away, or encumbered.            After the Owen plan was confirmed, only the

Bank possessed that right.              To reclaim the asset it was incumbent

upon the trustee to defeat the transfer of ownership between the

Bank    and       Bailey   whenever      it   occurred,     as    he   unsuccessfully

attempted to do.14

       When       the   Owen    court   allowed   the   Bank's     claim     under    the

assignment, it stated that "all rights of the trustee to avoid or

otherwise contest the validity or effect of said claim are fully

reserved." The trustee seizes on this language and argues that the

order       did   not   establish       any   irrevocable    rights     to   the     Owen

receivable.         The obvious aim of this language, however, was merely

to recognize the trustee's fraudulent conveyance claim in the

Bailey bankruptcy proceeding and to preserve his effort to avoid

such a transfer.           This qualification was appropriate in light of

the trustee's ongoing attempt to reclaim the Owen receivable under

section 548, but we cannot be oblivious to the trustee's failure in

that regard.

       We conclude and hold that reinscription of the notice of

assignment was not necessary to preserve the Bank's right to the

proceeds of the Owen receivable.

       We find no merit in the trustee's conclusionary complaint that

the    Bank       has   taken     fatally     inconsistent       positions    in     this

litigation as respects the challenged asset. The mere assertion of

alternate legal positions is not unusual and, most certainly, is

       14
          The trustee failed in his effort to set aside the
transfer under 11 U.S.C. § 548. That ruling has not been appealed.


                                              8
not necessarily anathema; and, in any event, we note the inequity

of that position in view of the fact that the trustee himself

stands in pari delicto.

     The judgment appealed is AFFIRMED.




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