                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN THE MATTER OF: TOWER PARK              No. 13-56045
PROPERTIES, LLC,
                         Debtor,             D.C. No.
                                          2:13-cv-01006-
                                               GHK
ALEXANDER HUGHES, Sole Non-
Contingent Beneficiary of the Mark
Hughes Family Trust,                        OPINION
                           Appellant,

                 v.

TOWER PARK PROPERTIES, LLC,
                        Appellee.


     Appeal from the United States District Court
         for the Central District of California
    George H. King, Chief District Judge, Presiding

                Argued and Submitted
          June 3, 2015—Pasadena, California

               Filed September 28, 2015
2            IN THE MATTER OF: TOWER PARK PROPS.

        Before: Raymond C. Fisher and Jay S. Bybee, Circuit
           Judges and Elizabeth E. Foote,* District Judge.

                     Opinion by Judge Bybee


                           SUMMARY**


                            Bankruptcy

    The panel affirmed the district court’s judgment
dismissing for lack of standing Alexander Hughes’ appeal
from the bankruptcy court’s order approving a settlement
agreement in the Chapter 11 bankruptcy of Tower Park
Properties, LLC.

    The panel held that a beneficiary of a trust who disagrees
with the way the trust was administered by former trustees is
not a “party in interest” under 11 U.S.C. § 1109(b) with
standing to object to the bankruptcy court’s approval of a
settlement agreement between a debtor, creditor entities held
by the trust, and the former trustees, at least where the
beneficiary’s interests are adequately represented by a party-
in-interest trustee.




    *
  The Honorable Elizabeth E. Foote, District Judge for the U.S. District
Court for the Western District of Louisiana, sitting by designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
            IN THE MATTER OF: TOWER PARK PROPS.                             3

                               COUNSEL

Scott D. Bertzyk (argued), Eric V. Rowen, Howard J.
Steinberg, Kevin P. Garland, Karin Bohmholdt, and Matthew
R. Gershman, Greenberg Traurig, LLP, Los Angeles,
California, for Appellant.

Jeremy V. Richards (argued) and Dean A. Ziehl, Pachulski,
Stang, Ziehl & Jones LLP, Los Angeles, California; David B.
Golubchik and Daniel H. Reiss, Levene, Neale, Bender, Yoo
& Brill L.L.P., Los Angeles, California, for Appellee.


                               OPINION

BYBEE, Circuit Judge:

    The Bankruptcy Code confers a “right to be heard” with
respect to “any issue in a case under [Chapter 11]” on any
“party in interest.” 11 U.S.C. § 1109(b). We have previously
held that party-in-interest status is a necessary prerequisite to
bankruptcy standing. In re Thorpe Insulation Co., 677 F.3d
869, 884 (9th Cir. 2012). In this case, we consider whether
a beneficiary of a trust who disagrees with the way the trust
was administered by former trustees is a “party in interest”
with standing to object to the bankruptcy court’s approval of
a settlement agreement between a debtor, creditor entities
held by the trust, and the former trustees.1 We hold that the
trust beneficiary does not have party-in-interest standing
under § 1109(a) to object to the settlement, at least where his


  1
    Given the evolving status of Hughes’ efforts to remove the original
trustees, discussed infra, the statement of the issue is based on the fact the
trustees were formally removed by order of the probate court.
4        IN THE MATTER OF: TOWER PARK PROPS.

interests are adequately represented by a party-in-interest
trustee. We thus affirm the judgment of the district court
dismissing this case for lack of standing.

                               I

A. The Facts

    Appellant Alexander Hughes (“Hughes”) is the only son
of Mark Hughes, the founder of Herbalife who passed away
in 2000, and is the sole, non-contingent beneficiary of the
Mark Hughes Family Trust (“Trust”). Mark Hughes’ estate
had an estimated worth of over $300 million at the time of his
death, and the bulk of his estate was placed in the Trust. See
Hughes v. Klein, 2015 WL 1455981, at *1 (Cal. Ct. App.
Mar. 30, 2015) (unpublished). The Trust principal must
remain in the Trust, per Mark Hughes’ instructions, until
Alexander turns 35 in 2026. Id. Before his death, Mark
Hughes named three successor trustees to the Trust: Conrad
Lee Klein, Christopher Pair, and Jack Reynolds. Id. Once
they assumed responsibility for the Trust, the trustees agreed
that Klein would act as the lead, full-time trustee and
manager of the Trust’s various corporate holdings. Id. The
Trust owns two LLC’s relevant here: Hughes Investment
Partnership, LLC (“HIP”) and MH Holdings II H, LLC (“MH
II”) (together, the “Hughes Entities”). Virtually all of the
Trust’s assets are held either by one of the Hughes Entities or
another LLC owned by the Trust.

    At the time of Mark Hughes’ death, MH II owned a real
property asset called “Tower Grove”—a 157-acre
undeveloped residential property located on a hill
overlooking Beverly Hills, California. In 2004, the trustees
authorized the sale of the Tower Grove property to Tower
            IN THE MATTER OF: TOWER PARK PROPS.                            5

Park Properties, LLC (“Tower Park”), the debtor and
appellee. Notably, the sale was entirely seller-financed; MH
II loaned Tower Park the $23.75 million required to purchase
the property. HIP advanced additional funding to Tower Park
for the purpose of developing Tower Grove. Through that
transaction, MH II and HIP became the two largest secured
creditors of Tower Park.2

B. Bankruptcy Court Proceedings

    Tower Park soon defaulted on its obligations and, in July
2008, filed for Chapter 11 bankruptcy. As of 2009, HIP and
MH II’s aggregate claims, which included the purchase,
construction, and development financing plus interest,
amounted to approximately $57 million. Tower Park’s
proposed plan of reorganization restructured the Hughes
Entities’ loans, modifying the interest rates and conditionally
reducing the principal balance on certain loans. The proposed
plan further provided that HIP would provide Tower Park
with $7 million in exit financing. The bankruptcy court
entered an order confirming Tower Park’s Chapter 11 plan in
April 2010. After the confirmation of the plan, however,

 2
   This case concerns only a part of the substantial litigation that the sale
of Tower Grove spawned. We grant Hughes’ motion to take judicial
notice of various documents filed in the U.S. District Court for the Central
District of California in a related proceeding (No. 2:13-cv-01518-GHK)
and in the California probate court trustee removal proceeding (Los
Angeles Superior Ct. No. BP063500). We also take judicial notice of the
California Court of Appeal’s decision on appeal from the probate court,
Hughes v. Klein, 2015 WL 1455981 (Cal. Ct. App. Mar. 30, 2015), and
Tower Park’s Chapter 11 case and adversary proceedings in the U.S.
Bankruptcy Court for the Central District of California (Nos. 2:08-bk-
20298; 2:12-ap-01803; 2:12-ap-01845). See Harris v. Cnty. of Orange,
682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of
undisputed matters of public record.”).
6          IN THE MATTER OF: TOWER PARK PROPS.

disputes arose between the trustees, the Hughes Entities, and
Tower Park over the implementation of the plan provisions.
For two years, the parties litigated various disputes in
bankruptcy court and, in at least one adversary proceeding,
Tower Park named Klein individually as a defendant, alleging
various claims of personal misconduct.

    Consequently, Tower Park entered into negotiations with
the trustees and Hughes Entities to settle the disputes. After
six weeks of negotiations and two full-day mediation
sessions, Tower Park and its various associated entities
entered into a Settlement Agreement with HIP, MH II,
Conrad Klein (individually and as trustee), and Jack Reynolds
(individually and as trustee).3 The Agreement was signed in
early January 2013. The day after the Agreement was signed,
Tower Park filed a motion seeking bankruptcy court approval
of the Agreement. See Fed. R. Bankr. Proc. 9019(a) (“On
motion by the trustee and after notice and a hearing, the court
may approve a compromise or settlement.”). Tower Park
requested and received an expedited hearing date, which the
court set for later that month.

    Meanwhile, Hughes had just completed a several months
long trial in California probate court concerning a petition he
had filed back in 2010 to remove the three trustees. The
petition alleged that each of the trustees had committed
various breaches of fiduciary duty with respect to the sale of
Tower Grove and other trust management decisions. The


    3
   It is unclear from the record why Christopher Pair, one of the three co-
trustees, was not a party to the Settlement Agreement. Although Pair did
not sign the Agreement, the Agreement states that Tower Park will
dismiss with prejudice all matters against Pair in either his individual or
trustee capacity.
          IN THE MATTER OF: TOWER PARK PROPS.                  7

parties were still awaiting a final decision by the probate
court when Tower Park filed its motion for approval of the
Settlement Agreement. Six days after the Agreement was
filed, Hughes filed an ex parte application with the probate
court seeking the immediate suspension of the trustees and
the appointment of a successor trustee. The probate court
granted the motion the same day. In place of the trustees, the
probate court appointed Fiduciary Trust International of
California (“FTIC”) as trustee ad litem. The court ordered
FTIC to “analyze . . . and independently determine whether
the [Settlement] . . . is proper and in the best interests of the
Trust,” and “take whatever action is necessary and
appropriate to promote or forestall approval of [the
Settlement].”

    The day after the probate court suspended the trustees,
Hughes filed an Objection to the Settlement Agreement with
the bankruptcy court. He asked the bankruptcy court to take
judicial notice of the pending probate court proceedings,
including his petition for removal in probate court, ex parte
application, and the probate court’s grant of immediate
suspension of the co-trustee’s powers. Based on his concerns
about the trustees’ potential breach of trust, Hughes
contended that the Agreement was not negotiated in good
faith and constituted an impermissible modification of a
“substantially consummated” plan, prohibited under
§ 1127(b) of the Bankruptcy Code. Specifically, Hughes
observed that under the proposed Agreement, HIP and MH II
agreed to accept a “discounted payoff amount” of $57.5
million in “full satisfaction” of the Tower Park obligations
under its loans, if approved by the bankruptcy court and paid
by a certain date. The Agreement acknowledged that as of
December 2012, the total outstanding balance on the Hughes
Entities’ loans had risen to approximately $81.6 million. The
8          IN THE MATTER OF: TOWER PARK PROPS.

discounted payoff amount of $57.5 million thus equaled a
$24.1 million (or thirty-percent) reduction of Tower Park’s
debt. Pointing to his removal petition, Hughes contended that
the trustees agreed to the Agreement’s “massive,” thirty-
percent reduction of the debt in exchange for personal gain:
$5 million in cash and “broad personal releases,” not subject
to court approval, to “avoid the prospect of having to defend
and settle the claims using their personal funds after they are
removed as trustee[s] of the Hughes Trust.”4 Based on these
objections, Hughes asked the bankruptcy court to deny
approval of the Agreement, or, in the alternative, hold the
matter in abeyance to allow the trustee ad litem—appointed
just the day before—adequate time to review the Agreement.

    FTIC filed a “Limited Joinder” to Hughes’ Objection,
joining only the portion requesting abeyance of the approval
motion “to enable [FTIC] to review and independently
determine whether the Agreement is proper and in the best
interests of the Trust.”

    On January 16, Tower Park filed a reply opposing
Hughes’ Objection and FTIC’s Limited Joinder on the
grounds that both Hughes and FTIC lacked standing to object
to the Settlement Agreement. Tower Park argued that
Hughes’ status as beneficiary of the Trust does not confer
standing to object. Additionally, it contended, FTIC lacked
standing because it represents the Trust, and the Trust was not


    4
    The Settlement Agreement contained reciprocal releases. Tower Park
and its entities agreed to dismiss with prejudice “all actions, adversary
proceedings, contested matters or motions” filed against HIP, MH II,
Conrad Klein, Jack Reynolds, and Christopher Pair. HIP, MH II, Conrad
Klein, and Jack Reynolds conditionally agreed to dismiss with prejudice
all pending actions filed against Tower Park and its entities.
          IN THE MATTER OF: TOWER PARK PROPS.                 9

a party to the Settlement Agreement. Tower Park further
argued that the Settlement meets the Rule 9019 criteria, offers
benefits to the estate, does not constitute an impermissible
plan modification, and was negotiated in good faith under the
mediator’s guidance. Hughes did not file a response to
Tower Park’s reply.

    In late January 2013, the bankruptcy court held its
scheduled hearing on the approval of the Settlement
Agreement. The debtor argued that the Settlement is “great”
for the estate, discounting the debt by over $20 million. “But
the main thing,” the debtor explained, “is that the litigation
goes away. There’s finality, there’s certainty[,] and we can
move forward with developing the property and getting the
lender paid knowing what the amount is.” Counsel for
Hughes explained his reasons for objecting to the Settlement
and argued that Hughes had standing to object because,
among other reasons, he would be financially impacted by the
Settlement as the sole, non-contingent beneficiary of the
Trust. FTIC also defended its standing to object and
explained that it needed more time to fulfill its mandate from
the probate court to independently assess the benefits of the
Agreement for the Trust. While unable to take a position on
the propriety of the former trustees’ actions at the time of the
hearing, FTIC made clear that it intended to investigate and
determine whether the co-trustees acted outside the bounds of
their fiduciary obligations, and take appropriate action.

    At the close of the hearing, the bankruptcy court stated
that it would approve the Settlement. Although the
Settlement “troubled” the court, it was not an improper
modification and it clearly benefited the estate. The court
also concluded that Hughes and FTIC had standing:
“[A]lthough I have questions about it, I think from my
10        IN THE MATTER OF: TOWER PARK PROPS.

standpoint that you have standing. It’s a close question, but
I think that they have standing.” Later on, the court
acknowledged that standing is “a tricky little question,” but
explained that “I always like to give the benefit of the doubt
to people that have standing.” With that explanation, the
court issued its order granting Tower Park’s motion to
approve the Settlement Agreement and overruling Hughes’
objection.

    In March 2013, after the Settlement Agreement was
finalized, the probate court issued its final decision regarding
the removal of the co-trustees. The court found that the
trustees breached their duty to act with prudence, skill and
diligence when, among other things, they sold Tower Grove
to Tower Park. The court explained that the Tower Park
principal to whom the co-trustees entrusted the development
of Tower Grove “had no formal education in real estate,
property management, real estate financing, and no
professional licenses or certifications.” Consistent with its
prior ruling, the court ordered the co-trustees removed from
their duties and retained FTIC in place as the interim trustee
ad litem. The probate court’s decision was recently affirmed
by the California Court of Appeal. See Hughes v. Klein, 2015
WL 1455981, at *8 (Cal. Ct. App. Mar. 30, 2015)
(unpublished).

C. District Court Proceedings

     In February 2013, Hughes and FTIC took separate appeals
to the U.S. District Court for the Central District of California
to challenge the bankruptcy court’s approval of the
Settlement. The district court dismissed Hughes’ appeal for
lack of bankruptcy standing, principally because it concluded
that Hughes was not a “party in interest” as required under
          IN THE MATTER OF: TOWER PARK PROPS.                 11

the Bankruptcy Code. Quoting the Second Circuit’s decision
in In re Refco Inc., 505 F.3d 109, 118 (2d Cir. 2007), the
court explained that “‘[b]ankruptcy court is a forum where
creditors and debtors can settle their disputes with each
other,’” and it would be “unfair to allow what is essentially
a dispute between Alex Hughes and the Hughes Trust trustees
about whether the Settlement is ‘too good’ for [Tower Park]
to obstruct [Tower Park’s] ‘speedy and efficient’
reorganization.” The court noted that Hughes also had
alternative forums available to resolve his dispute with the
trustees, and indeed, had been using them: “since 2010, he
has been litigating in probate court a petition to remove the
Hughes Trust trustees for alleged ‘self[-]dealing and breaches
of fiduciary duties.’” In sum, the court concluded,
“[Hughes’] stake is too remote, and allowing such remote
parties to participate would unduly obstruct the bankruptcy
with collateral issues.” After holding that Hughes lacked
party-in-interest status, the court analyzed Hughes’ Article III
standing and found that he had none. The district court thus
declined to address whether Hughes had prudential standing.
Accordingly, the court dismissed Hughes’ appeal for lack of
standing. Hughes timely appealed.

    Although the district court dismissed Hughes’ appeal for
lack of standing, it did not dismiss the appeal taken by FTIC.
At present, FTIC continues to litigate before the district court.
In fact, FTIC has taken the position that the Conditional
Provisions became null and void when Hughes’ appeal to the
district court prevented the Agreement from becoming final
by the agreed-upon deadline, February 15.
12         IN THE MATTER OF: TOWER PARK PROPS.

                                  II

    The question before us is whether Hughes has standing
such that he possesses a right to be heard on his objection to
the Settlement Agreement. The bankruptcy court thought the
issue “close” and “tricky,” but granted Hughes “party-in-
interest” standing and ruled against him on the merits. The
district court, however, dismissed his appeal on the grounds
that he lacked standing in the bankruptcy court. Hughes has
standing to appeal the district court’s decision, so the
question presented is one of bankruptcy standing. In re
Thorpe Insulation Co., 677 F.3d 869, 883–84 (9th Cir. 2012).

     In order to have standing in bankruptcy court, Hughes
must satisfy three requirements. First, he must satisfy the
statutory requirements of the Bankruptcy Code and qualify as
a “party in interest” under 11 U.S.C. § 1109(b). Second,
because he seeks standing in federal court, he must satisfy the
constitutional minimum required by Article III. Third, he
must meet federal court prudential standing requirements.
Thorpe, 677 F.3d at 884. The district court concluded that
Hughes satisfied neither the “party in interest” nor the Article
III requirements of the bankruptcy standing test, and declined
to reach the prudential standing requirement.5



  5
    We review “de novo the district court’s decision on appeal from the
bankruptcy court, applying the same standards applied by the district
court, without deference to the district court. The bankruptcy court’s
conclusions of law are reviewed de novo, and its findings of fact are
reviewed for clear error.” Thorpe, 677 F.3d at 879 (citation omitted).
“Standing is an issue of law which we review de novo. Factual
determinations underlying the standing decision are reviewed for clear
error.” In re Palmdale Hills Prop., LLC, 654 F.3d 868, 873 (9th Cir.
2011) (citations omitted).
          IN THE MATTER OF: TOWER PARK PROPS.                 13

    We first address whether Hughes is a party in interest.
Hughes advances two arguments. He claims that he is a party
in interest because of his future financial stake in the Trust,
which holds corporations that are parties to the Settlement.
Hughes also argues that he is a party in interest because,
under California law, he has a cause of action against Tower
Park for its complicity in the trustees’ breach of their
fiduciary duty. Because we conclude that neither rationale
supports the conclusion that Hughes is a party in interest for
purposes of § 1109, we decline to address Article III and
prudential standing requirements.

A. Hughes’ Financial Stake is Insufficient to Confer Party-
   in-Interest Status

    We turn to the question whether Hughes is a “party in
interest,” as required for bankruptcy standing. Section
1109(b) of the Bankruptcy Code governs the right to be heard
in Chapter 11 proceedings:

        A party in interest, including the debtor, the
        trustee, a creditors’ committee, an equity
        security holder’s committee, a creditor, an
        equity security holder, or any indenture
        trustee, may raise and may appear and be
        heard on any issue in a case under this
        chapter.

11 U.S.C. § 1109(b) (emphasis added). The Bankruptcy
Code does not define the term “party in interest” except
operationally: Section 1109(b) supplies us with a list of
parties who must be considered parties in interest. Because
the list of parties is preceded by the word “including,” the list
is illustrative, and not exhaustive. We have observed that the
14         IN THE MATTER OF: TOWER PARK PROPS.

party-in-interest standard has “generally been construed
broadly,” and that “[c]ourts must determine on a case by case
basis whether the prospective party has a sufficient stake in
the proceedings so as to require representation.” Thorpe,
677 F.3d at 884 (quoting In re Amatex Corp., 755 F.2d 1034,
1042 (3d Cir. 1985)). At the same time, we have also
recognized that our sister circuits have not interpreted “party
in interest” to mean “anyone who might be affected by the
bankruptcy proceedings”; rather, a party in interest is one
who has a “legally protected interest that could be affected by
a bankruptcy proceeding.” Id. (quoting In re James Wilson
Assocs., 965 F.2d 160, 169 (7th Cir. 1992)) (emphasis added);
see also In re Global Indus. Techs., 645 F.3d 201, 210 (3d
Cir. 2011).6 Thus, an entity “that may suffer collateral
damage” but does not have a legally protected interest does
not have standing under § 1109(b). In re C.P. Hall Co.,
750 F.3d 659, 661 (7th Cir. 2014). Such interests are “too
remote to entitle the entity to intervene in a bankruptcy case.”
Id.; see 7 Collier on Bankruptcy ¶ 1109.01[1] (“The general
theory behind the section is that anyone holding a direct
financial stake in the outcome of the case should have an
opportunity . . . to participate in the adjudication of any issue
that may ultimately shape the disposition of his or her
interest.”).

    Both parties agree that Hughes does not fall under any of
the categories of parties in interest listed in § 1109(b). They

  6
     If we adopted a broader reading, we would effectively collapse the
§ 1109(b) requirements into Article III standing requirements. Although
at least one circuit has suggested that these two measures are “effectively
coextensive,” Global Indus. Techs., 645 F.3d at 211, we must give some
effect to Congress’s words. We think that effect was captured in our
holding in Thorpe: the party asserting standing to object in a bankruptcy
proceeding must have a “legally protected interest.” 677 F.3d at 884.
          IN THE MATTER OF: TOWER PARK PROPS.                 15

disagree over whether Hughes has a legally protected interest
in the Settlement approval proceedings such that he
constitutes a party in interest under the Bankruptcy Code.
Hughes argues that he has a legally protected interest because
any loss borne by the Hughes Entities as a result of the
Settlement will create a loss for the Trust, which will, in turn,
create a loss for Hughes. By contrast, Tower Park contends
that Hughes’ interest in the Trust assets is too remote, and
that allowing trust beneficiaries to participate would clutter
the bankruptcy proceeding with collateral issues. While we
have not previously addressed whether a trust beneficiary has
bankruptcy standing to object to a settlement that may
detrimentally affect trust assets, a comparison of our decision
in Thorpe, 677 F.3d 869, with the Second Circuit’s decision
in In re Refco Inc., 505 F.3d 109 (2d Cir. 2007), is instructive.

    In Thorpe, we considered whether certain insurers of a
debtor had standing to object to the debtor’s Chapter 11
reorganization plan. 677 F.3d at 876. The debtor, Thorpe
Insulation Company, faced substantial asbestos-related
liability and thus filed a plan of reorganization under 11
U.S.C. § 524(g), a provision of the Bankruptcy Code
specially enacted to deal with asbestos claims. Id. at 877. As
required under § 524(g), Thorpe established a trust for the
primary purpose of distributing funds to present and future
holders of asbestos claims. Id. at 877–78. Thorpe also
reached settlements with thirteen of its insurers, which
together agreed to provide more than $600 million in assets
to fund the trust. Id. at 878. In exchange, the settling insurers
sought protection under § 524(g)’s sheltering mechanism: an
injunction, issued upon plan confirmation, designed to
channel asbestos-related claims to the trust. Id. The resulting
plan permitted asbestos claimants to either bring their claims
against the trust or get permission from the trust to sue the
16         IN THE MATTER OF: TOWER PARK PROPS.

insurers who had not settled with the debtor. Id. at 878–79.
The non-settling insurers objected to the plan, and the
bankruptcy court dismissed their objection for lack of
standing. Id. at 879.

    We concluded that the non-settling insurers were parties
in interest because the plan directly affected their legal
interests. We identified two interests relevant here. First, we
determined that the non-settling insurers might be bound by
the trust’s determination of liability. Thus, the trust’s actions
would have preclusive effect on the non-settling insurers. Id.
at 885–86; cf. In re Teligent, Inc., 640 F.3d 53, 60–61 (2d Cir.
2011) (because entity lacked standing to challenge the
settlement in bankruptcy court, it was not estopped from
asserting a defense challenging the validity of the agreement
in another forum). Second, the settlement affected the non-
settling insurers’ rights to recover costs against settling
insurers, and cost recovery had previously been negotiated in
a contract between the two groups of insurers. Thorpe,
677 F.3d at 886–87. The non-settling insurers “reasonably
complain[ed]” that if they lacked standing to challenge the
bankruptcy plan, which increased their liabilities, they might
be bound by the plan’s valuation of particular insurance
claims even though “they were not permitted to participate in
establishing the valuation matrix” and could not challenge it.
Id. at 886.7

  7
    Contrast Thorpe with the Seventh Circuit’s recent decision in In re
C.P. Hall Co. In that case, also concerned with asbestos and insurance
funds, Hall was in bankruptcy and sought to settle its insurance coverage
with Integrity. 750 F.3d at 660. Hall had $10 million in insurance
coverage remaining with Integrity, but Integrity was also bankrupt, and
Hall and Integrity agreed to settle for $4.125 million. Id. Columbia
Casualty was Hall’s excess insurer, and it objected to the settlement on the
ground that anything Integrity did not have to pay might be charged to
           IN THE MATTER OF: TOWER PARK PROPS.                     17

    In Refco, the Second Circuit considered whether investors
were parties in interest with standing to object to an allegedly
fraudulent settlement between their company and the debtor
company. 505 F.3d at 111. In that case, approximately $300
million worth of investment funds belonging to Sphinx, an
investment management company, were transferred from
Refco Capital Markets, Ltd. (“RCM”)—where the funds had
previously been invested—to accounts held on Sphinx’s
behalf at Lehman Brothers. Id. at 112. Five days after the
transfer, Refco, Inc. and its RCM affiliate filed for Chapter 11
bankruptcy. Id. at 112 & n.3. RCM’s creditors sued Sphinx,
complaining that Sphinx had effected a preferential transfer
and demanding a return of the funds to the RCM estate. Id.
at 112. Sphinx and RCM’s creditors eventually reached a
settlement in which Sphinx agreed to return $263 million to
the RCM estate and waive any claim against RCM related to
the transfer, including its right to file a claim against RCM’s
estate. RCM filed a 9019 motion, seeking bankruptcy court
approval of the settlement. Id. at 111–13. Sphinx’s investors
objected, arguing that the settlement was the product of
collusion and fraud, and pointed to evidence suggesting that
Sphinx’s directors had acted ultra vires in agreeing to the
settlement. Id. at 113. The bankruptcy court found that the
investors lacked standing to object and approved the
settlement. Id. at 114.

    On appeal, the investors argued that the settlement would
cost them tens of millions of dollars, imposing a direct,
pecuniary harm. Id. at 115. In the alternative, the investors


Columbia. Id. The Seventh Circuit held that Columbia lacked standing
under § 1109(b) because it was “not a creditor of Hall’s estate in
bankruptcy, [and was] not the debtor.” Id. at 661. Any damage it might
suffer was “collateral.” Id.
18        IN THE MATTER OF: TOWER PARK PROPS.

contended that when the Sphinx directors breached their
fiduciary duty by entering into a fraudulent settlement, the
funds became the res of a constructive trust, of which the
investors were the beneficiaries. Because they held a
constructive trust over the funds used in the Settlement, they
argued, they had standing under the direct-pecuniary-interests
test. Id.

    The Second Circuit disagreed with the investors’
arguments. It concluded that party-in-interest standing does
not extend to those seeking to assert rights that are purely
derivative of another party’s rights, and here, the investors
could not claim to enforce any rights distinct from those of
Sphinx. Id. at 117. The court reasoned that, “[b]y investing
in Sphinx, Investors placed control of their funds entirely
within the hands of the Sphinx directors . . . . Only Sphinx,
not individual Investors, or even Investors as a group, could
assert a claim against the Refco estate, and only Sphinx was
permitted to negotiate a settlement . . . .” Id. Therefore,
“Investors maintain a financial ‘interest’ in Sphinx, but they
are not a party in interest within the meaning of the
Bankruptcy Code.” Id.

    With respect to the investors’ allegations of breach, the
court acknowledged that “[i]t may be that the Sphinx
directors violated their fiduciary duties by entering into a
settlement that was not in the best interests of Investors.” Id.
at 118. But the court concluded that the bankruptcy court was
not the appropriate forum in which to resolve such a dispute:
“Bankruptcy court is a forum where creditors and debtors can
settle their disputes with each other. Any internal dispute
between a creditor and that creditor’s investors belongs
elsewhere.” Id. at 118 (emphasis in original). Permitting too
many “peripheral parties” status as parties in interest “thwarts
         IN THE MATTER OF: TOWER PARK PROPS.                19

the traditional purpose of bankruptcy laws which is to provide
reasonably expeditious rehabilitation of financially distressed
debtors with a consequent distribution to creditors who have
acted diligently.” Id. (quoting In re Ionosphere Clubs, Inc.,
101 B.R. 844, 850–51 (Bankr. S.D.N.Y. 1989)). Thus, the
court concluded, permitting the investors to enter the
bankruptcy plan confirmation process and attempt to prove
the “litany of wrongs allegedly wrought by the officers and
directors of Sphinx upon Investors”—claims, the court noted,
the investors could file elsewhere—would cause a substantial
delay in the Refco bankruptcy proceeding and would not be
countenanced. Id. at 119.

    Applying Refco and Thorpe to the facts of this case, we
conclude that Hughes’ financial stake in the Trust assets does
not make him a party in interest within the meaning of
§ 1109(b). The California Court of Appeal has explained that
“[a] trust beneficiary has no legal title or ownership interest
in the trust assets,” and as such, in civil lawsuits, a trust
beneficiary’s “right to sue is ordinarily limited to the
enforcement of the trust, according to its terms.” Saks v.
Damon Raike & Co., 7 Cal. App. 4th 419, 427 (1992). In
general, therefore, a trust beneficiary is not the entity
positioned to take legal recourse to protect the trust assets,
unless the beneficiary is seeking only to enforce the terms of
the trust. Here, Hughes’ objection to the Settlement
Agreement is not an action to enforce the terms of the Trust.
Nor has Hughes suggested that his interest in the Trust assets
is somehow different from that of an ordinary trust
beneficiary. Indeed, the record shows that the Hughes
Entities and other LLC’s own the vast majority of assets in
the Trust, including all the debt owed the Trust by Tower
Park. Hughes has not claimed any direct ownership interest
in the Trust assets, nor any legal entitlement to control or
20          IN THE MATTER OF: TOWER PARK PROPS.

manage those assets at this time. He does not, as we held in
Thorpe, have a “legally protected interest” in the Settlement
itself.

    Hughes’ interest in the Settlement is therefore distinct
from that of the insurers in Thorpe. Whereas the insurers
demonstrated that the proposed plan directly interfered with
their legal rights and financial liabilities, Hughes makes no
such showing.8 Rather, the financial “interest” that Hughes
purports to possess in the trust assets is analogous to the
interest possessed by the investors in Refco. While the
investors in Refco held a financial “interest” in Sphinx’s
assets insofar as a threat to the assets impacted their return on
investment, they did not maintain control or management
over the funds. Once they invested in Sphinx, the investors
“placed control of their funds entirely within the hands of the
Sphinx directors.” Refco, 505 F.3d at 117. As such, the
investors were not parties properly positioned to assert claims
or negotiate a settlement relating to those assets. Id. The
same is true for Hughes. Once Mark Hughes placed assets in
the Trust for his son’s benefit, he placed control of those
assets entirely within the hands of the trustees. The legally


 8
   At oral argument, counsel for Hughes argued—for the first time—that
the Settlement Agreement directly interferes with Hughes’ legal rights
because it purports to release claims of any Hughes Entities’ beneficiaries
against Tower Park. This argument was not raised before the bankruptcy
court, the district court, or our Court prior to oral argument. It is therefore
forfeited. In re Mercury Interactive Corp. Secs. Litig., 618 F.3d 988, 992
(9th Cir. 2010). We thus decline to consider whether this provision affects
Hughes’ legal rights such that he should be accorded party-in-interest
status, although a common-sense reading of the Settlement Agreement
provision belies Hughes’ interpretation. Hughes is not the owner of the
Hughes Entities; he is a beneficiary of the Trust, and the Trust was not a
party to the Settlement.
            IN THE MATTER OF: TOWER PARK PROPS.                          21

protected interest in the properties at issue here rests with the
trustees, not the beneficiary. As such, Hughes is not the party
properly positioned to object to the Settlement as it relates to
the assets in the Trust—the proper party is FTIC, the trustee
ad litem.9

    Refco also demonstrates that an allegation of fraud lodged
against parties to the settlement does not change the party-in-
interest analysis. While acknowledging that there may very
well have been a breach of fiduciary duty by the Sphinx
directors, the Second Circuit concluded that such disputes do
not belong in bankruptcy court. Id. at 119. Likewise, even
though Hughes has alleged serious claims of breach against
the former trustees of the Trust, such allegations do not
convert Hughes into a party in interest. His disputes with the
trustees, like the investors’ disputes with the Sphinx directors,
belong elsewhere. Permitting Hughes to object to the
Settlement because of breach by the trustees is collateral to
the resolution of claims between the debtor (Tower Park) and
its creditors (the Hughes Entities). Indeed, had the
bankruptcy court waded in to the relationship between
Hughes and the trustees, it might have interfered with actions
in the appropriate fora for such challenges: the California
courts. The chronology of events in this case confirms this.
Hughes has successfully adjudicated his disputes with the
trustees in the California probate court and the California

 9
   We reject Hughes’ claim that the district court erred in failing to give
proper “deference” to the bankruptcy court’s “implied findings of fact”
that Hughes had a significant financial stake in the Trust assets. The
district court did not dispute this factual contention; rather, the court
concluded as a matter of law that this financial stake—however significant
in monetary terms—was nevertheless “too remote” to confer “party in
interest” status. The district court’s application of the standards of review
was proper. See Thorpe, 677 F.3d at 879.
22        IN THE MATTER OF: TOWER PARK PROPS.

Court of Appeal. See Hughes, 2015 WL 1455981, at *1–2.
Bringing disputes between trust beneficiaries and trustees into
the settlement approval process interferes with the central
purpose of Chapter 11 to promote the efficient reorganization
of debtors. See Toibb v. Radloff, 501 U.S. 157, 163 (1991)
(the purpose of Chapter 11 is to “permit[] business debtors to
reorganize and restructure their debts in order to revive the
debtors’ businesses and thereby preserve jobs and protect
investors”). We wish to be clear: by refusing party-in-interest
status to Hughes, we are making no judgment as to the
validity of Hughes’ claims of breach against the trustees.
However meritorious they may be, those claims do not confer
party-in-interest standing upon Hughes.

    As Refco recognized, the true party in interest is the party
properly charged with representing the financial interests of
the affected entity. See 505 F.3d at 117 (“Only Sphinx, not
individual Investors, or even Investors as a group, could
assert a claim against the Refco estate, and only Sphinx was
permitted to negotiate a settlement . . . . The party in interest
in the bankruptcy sense, representing the Investors’ financial
interest, is Sphinx.”). At present, the Trust is represented by
FTIC, which has shown itself willing and able to defend the
interests of the Trust. It not only joined Hughes’ objection
and motion to dismiss before the district court, but has also
continued to litigate the Settlement Agreement after Hughes’
suit was dismissed. FTIC’s appointment as trustee ad litem
allays any remaining doubt over whether Hughes’ objections
should be heard in light of concerns about the former trustees’
loyalty to the trust. Indeed, the trustee ad litem was charged
with representing the Trust in bankruptcy proceedings and
with “analyz[ing] . . . and independently determin[ing]
whether the [Settlement] . . . is proper and in the best interests
of the Trust,” and “tak[ing] whatever action is necessary and
          IN THE MATTER OF: TOWER PARK PROPS.                23

appropriate to promote or forestall approval of [the
Settlement].”

    FTIC continues, to this day, to challenge the
enforceability of the Conditional Provisions. It holds the duty
to manage and invest trust funds, and, if necessary, maintain
legal proceedings against third parties on behalf of the Trust
and its beneficiaries. See Restatement (Third) of Trusts
§ 107(3) (2012) (“In appropriate circumstances, a trustee ad
litem may be appointed to consider and, if appropriate, to
maintain a proceeding against a third party on behalf of the
trust and its beneficiaries.”). Thus, even if there were reasons
to doubt the adequacy of the former trustees’ representation
of the Trust, those trustees have since been replaced by FTIC
for purposes of litigating the Settlement’s scope and validity.
FTIC is the present trustee for the Trust, a willing and able
advocate for the Trust’s assets, and the proper party in
interest in this case.

B. Hughes’ Potential Claim Against Tower Park Does Not
   Confer Party-in-Interest Status

    Hughes seeks to distinguish his case from Refco, arguing
that he falls into a narrow exception to the general rule that
the trustee is the proper representative for the trust in legal
actions. Hughes relies on City of Atascadero v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., in which the California
Court of Appeal authorized a trust beneficiary to proceed
directly against a third party who had allegedly “actively
participated with a trustee in a breach of trust for their own
financial advantage.” 68 Cal. App. 4th 445, 467 (1998). The
court characterized this type of claim as “a direct right and
not one that is derivative through the trustee.” Id. (quoting
4 Scott on Trusts § 294.1 (4th ed. 1989)) (emphasis omitted).
24        IN THE MATTER OF: TOWER PARK PROPS.

Hughes contends that under Atascadero, he possesses a claim
against Tower Park for participating in the trustees’ alleged
breach of trust for its own financial gain. Such a claim would
not be derivative of the trustees’ power to sue Tower Park,
but rather a standalone, direct claim of interference with the
trustee-beneficiary relationship. Hughes explains that if he
can sue Tower Park directly to unwind a collusive settlement,
then “common sense dictates that he also satisfies the law’s
elastic concept of a ‘party in interest.’”

     We disagree. At best, Hughes’ purported Atascadero
claim fails under that case’s own rationale. Atascadero held
that where a successor trustee is willing and available to
protect the trust through appropriate legal proceedings, a trust
beneficiary may not maintain separate proceedings to
accomplish the same end. Although Atascadero held that
beneficiaries may sue third parties directly for participating
in a breach of trust, the California Court of Appeal was
careful to specify that trust beneficiaries may maintain such
a suit only if a successor trustee appointed to replace the
breaching trustee “has refused to sue or is unavailable.”
68 Cal. App. 4th at 467–68 (quoting 4 Scott on Trusts, supra,
§ 294.4). So long as “the trustee is ready and willing to
undertake the necessary proceedings,” then “the beneficiaries
cannot maintain a suit against adverse third parties.” Id. at
464–65; see also Restatement (Third) of Trusts § 107(2)(b)
(“A beneficiary may maintain a proceeding related to the trust
or its property against a third party only if . . . the trustee is
unable, unavailable, unsuitable, or improperly failing to
protect the beneficiary’s interest.” (emphasis added)). There
is no evidence here that the trustee ad litem failed to take the
“necessary and appropriate [actions] to promote or forestall
approval of [the Settlement],” as the probate court instructed
it to do.
         IN THE MATTER OF: TOWER PARK PROPS.               25

    Even if Hughes could bring a direct Atascadero claim
against Tower Park, it would not change our conclusion that
the bankruptcy court is not the appropriate forum for Hughes’
dispute with Tower Park. There are more appropriate fora
available to adjudicate the numerous and time-consuming
issues involved in Hughes’ Atascadero claim. See Refco, 505
F.3d at 118–19 (“We note that although they are not parties
in interest . . . Investors may still have remedies for fraud
perpetrated by their fiduciaries.”). Adjudicating Hughes’
Atascadero claim would involve a significant amount of time
and a litany of issues: whether Tower Park induced, “actively
participated with,” or aided and abetted the trustees in a
breach of trust; whether Tower Park did so for its own
financial gain; whether Tower Park received and retained the
benefits under the Settlement in knowing breach of trust, etc.
See Atascadero, 68 Cal. App. 4th at 462. Surely, these
questions would have caused a substantial delay in Tower
Park’s bankruptcy proceeding, contravening the purpose of
Chapter 11 to promote “speedy and efficient reorganization.”
Refco, 505 F.3d at 119. Accordingly, even if Hughes has a
direct claim against Tower Park, it does not persuade us that
bankruptcy court is the appropriate forum in which to hear it
and that Hughes should be considered a party in interest.

                             III

    In sum, we adopt the reasoning of the Second Circuit’s
opinion in Refco and hold that Hughes, as a trust beneficiary,
does not possess party-in-interest status under § 1109(b), at
least where his interests are adequately represented by a
party-in-interest trustee. We also reject Hughes’ argument
that Atascadero distinguishes his case from Refco. Because
we hold that Hughes lacks statutory party-in-interest status,
we decline to address whether Hughes satisfies the Article III
26      IN THE MATTER OF: TOWER PARK PROPS.

and prudential standing requirements. The judgment of the
district court is

     AFFIRMED.
