          United States Court of Appeals
                        For the First Circuit


No. 17-1912

         IN RE MONTREAL, MAINE & ATLANTIC RAILWAY, LTD.,

                                Debtor.
                          ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶


    ROBERT J. KEACH, solely in his capacity as the Chapter 11
      trustee for MONTREAL, MAINE & ATLANTIC RAILWAY, LTD.,

                              Appellant,

                                  v.

                 WHEELING & LAKE ERIE RAILWAY COMPANY,

                               Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF MAINE

                [Hon. Jon D. Levy, U.S. District Judge]
              [Hon. Peter G. Cary, U.S. Bankruptcy Judge]


                                Before

                        Thompson, Circuit Judge,
                      Souter, Associate Justice,
                       and Selya, Circuit Judge.




     
      Hon. David H. Souter, Associate Justice (Ret.) of the Supreme
Court of the United States, sitting by designation.
     Robert J. Keach, with whom Lindsay K.Z. Milne, Roma N. Desai,
and Bernstein, Shur, Sawyer & Nelson, P.A. were on brief, for
appellant.
     George J. Marcus, with whom David C. Johnson, Andrew C.
Helman, and Marcus, Clegg & Mistretta, P.A. were on brief, for
appellee.
                        ̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶̶

                          April 18, 2018
                       ___________________
           SELYA, Circuit Judge. This appeal requires us to explore

the labyrinth of high-stakes bankruptcy law to determine whether

the proceeds of a multi-million-dollar sale of certain railroad

lines constituted property of the bankruptcy estate.                Although we

are skeptical of the rationale employed by the courts below and

thread our way through this maze along a different ratiocinative

path, we arrive at the same place: we conclude that the disputed

funds were not property of the bankruptcy estate.               Consequently,

we affirm the dismissal of the complaint.

I. BACKGROUND

           Because this appeal challenges an order of dismissal for

failure to state an actionable claim, we take the facts from the

well-pleaded averments contained in the complaint, supplemented

from other permissible sources.         See Banco Santander de P.R. v.

Lopez-Stubbe (In re Colonial Mortg. Bankers Corp.), 324 F.3d 12,

15-16 (1st Cir. 2003).    In carrying out this task, we assume the

reader's   familiarity   with   our    opinion      in    earlier     litigation

involving the same parties.     See Wheeling & Lake Erie Ry. v. Keach

(In re Montreal, Me. & Atl. Ry.) (MMA I), 799 F.3d 1, 3-4 (1st

Cir. 2015).

           In 2002, Montreal, Maine & Atlantic Railway, Ltd. (the

debtor) and a group of related entities purchased the assets of

several United States and Canadian railways.              On January 8, 2003,

a   consortium   of   investors       (the   2003        Investors)     provided


                                  - 3 -
$15,000,000     to   the   purchasers      in     return    for    a    series     of

subordinated notes and warrants.           Despite this infusion of cash,

the debtor soon found itself strapped and procured a $34,000,000

loan from the Federal Railroad Administration (the FRA).                     As part

of this transaction, the FRA obtained a senior lien on all of the

debtor's rail lines and related improvements in the United States.

Several years later, the appellee, Wheeling & Lake Erie Railway

Company (Wheeling), furnished a $6,000,000 line of credit to the

debtor — a transaction memorialized by a promissory note dated

June 15, 2009 and a security agreement.

             Notwithstanding these efforts, the debtor struggled to

meet its financial obligations.         By late 2010, it owed $906,579.38

in overdue principal and $1,466,355.58 in accrued interest to the

FRA.   To     obtain   needed     funds,   the     debtor   proposed         to   sell

approximately 233 miles of track located in northern Maine (the

Lines) to the State of Maine.         In order to make this transaction

feasible, the debtor enlisted FRA's cooperation and, on December

29, 2010, it agreed with the FRA to amend the existing loan

agreement.

             This    amendment,    which     we    shall    call       the    Second

Amendment, lies at the epicenter of this litigation. Under Section

3.b, the FRA agreed to provide "a limited waiver" of its senior

lien over the Lines, which would take effect "upon the closing" of

the proposed sale to the State of Maine.               In exchange, the FRA


                                     - 4 -
received a replacement lien on certain of the debtor's property in

Canada.

             As   relevant     here,    the    FRA   conditioned         its   "limited

waiver" of its senior lien on the debtor's compliance with a series

of    conditions    spelled     out    in     Section     3.b.ii    of    the    Second

Amendment.        The FRA concluded that these conditions and the

concomitant       amendments    to     the    parties'    prior     agreement      were

"equitable and in the overall best interest of the United States"

in accordance with 45 U.S.C. § 823.

             Pertinently, the Second Amendment required the debtor,

upon the closing of the sale, to convey the proceeds to an escrow

agent.    Once the FRA's replacement lien on the Canadian property

had   been   perfected,      the     debtor    was   to    pay     the   FRA    roughly

$2,400,000 of the sale proceeds (representing the sum of the FRA's

overdue principal and accrued interest), pay roughly $14,000,000

to the 2003 Investors, reserve roughly $1,000,000 to defray certain

accounts payable, and distribute the remainder of the proceeds to

Wheeling to reduce the debtor's outstanding balance under the 2009

credit agreement.

             The record contains few details as to how the parties

shaped the contours of this waterfall of disbursements.                         In this

regard, though, the complaint does allege that the 2003 Investors

"demanded full payment as a condition to allowing the transaction

to occur."        The complaint also alleges an overlap between the


                                        - 5 -
leadership of Wheeling and the leadership of the debtor. It offers

several examples of this perceived overlap, such as the fact that

Larry R. Parsons was the principal owner of Wheeling and served as

a board member of the debtor and the fact that ABC Railway (a

wholly owned subsidiary of Wheeling) was a shareholder of the

debtor's parent company.

             On January 4, 2011, the State of Maine agreed to pay

approximately $21,000,000 for the Lines (of which approximately

$1,000,000 was to be retained by Maine and applied to other debt

owed to Maine).    The debtor distributed the proceeds in accordance

with the waterfall provision of the Second Amendment, with the

result that Wheeling received $2,708,912.20 (which was applied to

pay down the debtor's outstanding line of credit).           Despite this

effort to stanch the flow of red ink, the debtor's financial woes

persisted and, in mid-2013, it filed a voluntary petition for

protection under Chapter 11 of the Bankruptcy Code.          See 11 U.S.C.

§ 301.   The bankruptcy court appointed the appellant, Robert J.

Keach, as the Chapter 11 trustee (the Trustee).1

             On May 26, 2015, the Trustee instituted an adversary

proceeding    against   Wheeling,    seeking   to   avoid   the   waterfall

disbursement made to it as constructively fraudulent under section


     1 During the pendency of this proceeding, the Trustee was
appointed estate representative of the post-effective-date estate
pursuant to the debtor's chapter 11 plan of liquidation. For ease
in reference, we refer to him throughout as the Trustee.


                                    - 6 -
5(b) of Maine's Uniform Fraudulent Transfer Act (UFTA), which

proscribes    certain    conveyances   by   an     insolvent   debtor   to   an

"insider."     See id. § 544(b); 14 M.R.S.A. § 3576(2).               Wheeling

moved to dismiss the Trustee's complaint pursuant to Rule 7012 of

the Federal Rules of Bankruptcy Procedure.              It argued that the

waterfall disbursements did not consist of "assets" belonging to

the debtor and, in the alternative, that the Trustee had failed

plausibly to allege that Wheeling was an "insider" vis-à-vis the

debtor.   Accepting Wheeling's first argument, the bankruptcy court

dismissed the complaint with prejudice for failure to state an

actionable    claim.      It   reasoned     that    because    the   waterfall

disbursements were part of a single transaction, all aspects of

which should be deemed to have occurred simultaneously, they

remained encumbered by the FRA's lien up to and until the time of

disbursement (and, therefore, did not comprise property belonging

to the debtor).        The bankruptcy court did not reach Wheeling's

alternative ground for dismissal.

             The Trustee appealed to the federal district court,

which affirmed on substantially similar reasoning.              See Keach v.

Wheeling & Lake Erie Ry. (In re Montreal, Me. & Atl. Ry.) (MMA

II), No. 1:17-CV-00012, 2017 WL 3485560, at *4-5 (D. Me. Aug. 14,

2017).    This timely second-tier appeal followed.




                                   - 7 -
II.    ANALYSIS

            Congress has established a two-tiered framework for

appellate review in bankruptcy cases.    See MMA I, 799 F.3d at 4-

5; City Sanitation, LLC v. Allied Waste Servs. of Mass., LLC (In

re Am. Cartage, Inc.), 656 F.3d 82, 87 (1st Cir. 2011).   A litigant

ordinarily may take a first-tier appeal either to the bankruptcy

appellate panel or to the district court.   See 28 U.S.C. § 158(a)-

(b).     No matter which route is pursued for a first-tier appeal,

further review is available in the court of appeals.      See MMA I,

799 F.3d at 5.     In such second-tier proceedings, no particular

deference is afforded to the determinations of the first-tier

appellate adjudicator but, rather, we "train the lens of our

inquiry directly on the bankruptcy court's decision."     Id.

            As said, the bankruptcy court dismissed the complaint

under Bankruptcy Rule 7012(b), which in effect replicates Federal

Rule of Civil Procedure 12(b)(6).       In such circumstances, the

jurisprudence of Rule 12(b)(6) applies with full force.          See

Privitera v. Curran (In re Curran), 855 F.3d 19, 24 (1st Cir.

2017).

            We review an order granting a motion to dismiss for

failure to state a claim de novo.   See González v. Vélez, 864 F.3d

45, 50 (1st Cir. 2017).     In conducting this tamisage, we accept

the complaint's well-pleaded facts as true and "draw all reasonable

inferences therefrom in the pleader's favor."   Id.   "[A] complaint


                               - 8 -
need not set forth 'detailed factual allegations,'" In re Curran,

855 F.3d at 25 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007)), "but it must 'contain sufficient factual matter . .

. to state a claim to relief that is plausible on its face,'" id.

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

          The     plausibility    standard     requires      a    court    to

choreograph   a   two-step   pavane.     See   A.G.   ex   rel.   Maddox   v.

Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013).           First, the court

must "strip away and discard the complaint's conclusory legal

allegations."     Shay v. Walters, 702 F.3d 76, 82 (1st Cir. 2012).

Second, "the court must determine whether the remaining facts allow

it 'to draw the reasonable inference that the defendant is liable

for the misconduct alleged.'"          Jane Doe No. 1 v. Backpage.com,

LLC, 817 F.3d 12, 24 (1st Cir. 2016) (quoting Morales-Cruz v. Univ.

of P.R., 676 F.3d 220, 224 (1st Cir. 2012)).                  Dismissal is

warranted when a complaint's factual averments are "too meager,

vague, or conclusory to remove the possibility of relief from the

realm of mere conjecture."     SEC v. Tambone, 597 F.3d 436, 442 (1st

Cir. 2010) (en banc).

          Against this backdrop, we turn to the plausibility vel

non of the Trustee's claim.2       The bankruptcy code authorizes a


     2 The Trustee, who did not attach a copy of the Second
Amendment to his complaint, argues that we may not rely on language
in the Second Amendment in gauging plausibility. This argument
rings hollow.     While we primarily "draw the facts from the


                                 - 9 -
trustee to "avoid any transfer of an interest of the debtor in

property or any obligation incurred by the debtor that is voidable

under applicable law by a creditor holding an [allowable] unsecured

claim . . . ." 11 U.S.C. § 544(b)(1).   A prevailing trustee "may

recover, for the benefit of the bankruptcy estate," either the

property transferred fraudulently or its equivalent value.     Id.

§   550(a); see Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 138

S. Ct. 883, 889 (2018).     "[A]ny property the trustee recovers

becomes estate property and is divided pro rata among all general

creditors."   Cadle Co. v. Mims (In re Moore), 608 F.3d 253, 260

(5th Cir. 2010) (emphasis omitted).

          The interpretation of the language employed by Congress

in drafting the bankruptcy code — including, as pertinent here,

the term "interest of the debtor in property" under section 544(b)

— is a matter of federal law.    See Abboud v. Ground Round, Inc.




operative version of the complaint" in assessing the bona fides of
a motion to dismiss, González, 864 F.3d at 48, we may supplement
those facts in certain ways, see, e.g., Haley v. City of Bos., 657
F.3d 39, 46 (1st Cir. 2011) (identifying, inter alia, "documents
incorporated by reference into the complaint, matters of public
record, and facts susceptible to judicial notice" as permissible
sources of facts); In re Colonial Mortg., 324 F.3d at 15-16
(similar). Here, the complaint repeatedly references the Second
Amendment, and the Trustee's entire case hinges on a construction
of that contract. Because the complaint's averments are explicitly
tied to and dependent upon the Second Amendment (the authenticity
of which is not challenged), the Second Amendment is fair game in
gauging the plausibility of the complaint. See Beddall v. State
St. Bank & Tr. Co., 137 F.3d 12, 17 (1st Cir. 1998). We proceed
accordingly.


                              - 10 -
(In re Ground Round, Inc.), 482 F.3d 15, 17 (1st Cir. 2007).            Even

so,   "the   existence    and   extent   of    the   debtor's   interest    is

ordinarily a creature of state law."           Id. (emphasis in original)

(citing Butner v. United States, 440 U.S. 48, 54-55 (1979)).            This

framework requires us to make a bifurcated determination: we first

must determine the scope of the debtor's property rights under

state law and then look to federal law, which "dictates to what

extent that interest is property of the estate."           Rent-A-Ctr. E.,

Inc. v. Leonard (In re WEB2B Payment Sols., Inc.), 815 F.3d 400,

405 (8th Cir. 2016) (quoting N.S. Garrott & Sons v. Union Planters

Nat'l Bank of Memphis (In re N.S. Garrott & Sons), 772 F.2d 462,

466 (8th Cir. 1985)).

             In the case at hand, the parties agree that Maine is the

source of the relevant state law, and we follow their lead.                See

Rok Builders, LLC v. 2010-1 SFG Venture LLC (In re Moultonborough

Hotel Grp., LLC), 726 F.3d 1, 5 n.3 (1st Cir. 2013).            When applying

Maine law, we rely principally on the jurisprudence of its highest

court (the Maine Supreme Judicial Court, commonly called the Law

Court).   See Butler v. Balolia, 736 F.3d 609, 612 (1st Cir. 2013).

Absent an on-point decision of the Law Court, we "endeavor to

predict how [the Law Court] would likely decide the question" by

relying on the "types of sources that the state's highest court

would   be    apt   to   consult,"    such    as   persuasive   out-of-state




                                     - 11 -
precedents, learned treatises, and public policy considerations.

Id. at 613; see MMA I, 799 F.3d at 10.

          The Trustee alleges that Maine's version of the UFTA

renders the waterfall disbursement to Wheeling voidable.       Under

that statute, a "transfer" of an asset by a debtor "is fraudulent

as to a creditor whose claim arose before the transfer" if the

debtor, while insolvent, made the conveyance "to an insider for an

antecedent debt" and "the insider had reasonable cause to believe

that the debtor was insolvent."    14 M.R.S.A. § 3576(2).   Wheeling

denies not only that it was chargeable with "insider" status but

also that the waterfall disbursement to it involved any "assets"

of the bankruptcy estate.

          For purposes of the UFTA, "transfer" and "asset" are

terms of art.3    A "transfer" consists of "[e]very mode . . . of

disposing of or parting with an asset or an interest in an asset."

Id. § 3572(12).     An "asset" includes "property of a debtor," but

does not include "[p]roperty to the extent that it is encumbered

by a valid lien."    Id. § 3572(2).

          The parties argue at length about when the FRA's release

of its lien on the Lines took effect.    The Trustee says that this




     3 "Insider" is likewise a term of art, but one that need not
concern us. Because we conclude that the waterfall disbursements
did not implicate assets belonging to the bankruptcy estate, see
infra, we have no occasion to address Wheeling's alternative
defense.


                               - 12 -
occurred prior to the making of the waterfall disbursement to

Wheeling.         In Wheeling's view, though, the lien remained in effect

until       the    debtor   fully    complied    with   the   Second   Amendment's

waterfall provision. Like the bankruptcy court, the district court

agreed       with    Wheeling,      concluding   that   all   of   the   waterfall

disbursements dealt with property that was encumbered at the time

of the transfer and, for that reason, did not involve "assets" of

the debtor.           See MMA II, 2017 WL 3485560, at *5; see also 14

M.R.S.A. § 3572(2), (12).

                  We need not resolve the knotty questions concerning the

temporal relationship between the FRA's release of its lien and

the waterfall disbursements.              Even if we assume for argument's

sake that the Lines were no longer encumbered by the FRA's lien at

the time the waterfall disbursement to Wheeling was made, the

debtor did not hold an interest in that property that is voidable

under section 544(b).            We explain briefly.4


        4
       Although our reasoning differs from that of the courts
below, such a variance is wholly permissible. When reviewing the
grant of a motion to dismiss for failure to state a claim, we are
not wed to the lower court's reasoning but may affirm on any ground
supported by the record. See Kando v. R.I. State Bd. of Elections,
880 F.3d 53, 58 (1st Cir. 2018); González, 864 F.3d at 50.
     In a related vein, the Trustee complains that the ground we
find dispositive was not argued by Wheeling in the bankruptcy
court. This plaint is unavailing. When engaged in de novo review,
"[w]e are at liberty to affirm a district court's judgment on any
ground made manifest by the record, whether or not that particular
ground was raised below." United States v. George, ____ F.3d ___,
___ (1st Cir. 2018) [No. 17-1371, slip op. at 15]; accord Hoover
v. Harrington (In re Hoover), 828 F.3d 5, 8 (1st Cir. 2016); Doe


                                        - 13 -
             The    solution     to   this   puzzle   hinges   on   the   Second

Amendment.         In   Maine,   as   elsewhere,   "[i]nterpretation      of   an

unambiguous [contract] provision is a matter of law, and the

provision is given its plain, ordinary, and generally accepted

meaning."    Daniel G. Lilley Law Off., P.A. v. Flynn, 129 A.3d 936,

940 (Me. 2015) (quoting Reliance Nat'l Indem. v. Knowles Indus.

Servs., Corp., 868 A.2d 220, 228 (Me. 2005)).                   As the plain

language of the Second Amendment makes pellucid, the relationship

between the contracting parties (the debtor and the FRA) was akin

to a bailment, which is an arrangement involving "the delivery of

personal property by one person to another in trust for a specific

purpose, with a contract . . . that the trust shall be faithfully

executed and the property returned or duly accounted for when the

special purpose is accomplished . . . ."              Frost v. Chaplin Motor

Co., 25 A.2d 225, 226 (Me. 1942) (citation omitted); see Westleigh

v. Conger, 755 A.2d 518, 519-20 (Me. 2000); Levesque v. Nanny, 53

A.2d 703, 704 (Me. 1947).

             Here, the FRA initially held title to the Lines as

mortgagee.     See Mortg. Elec. Regist. Sys., Inc. v. Saunders, 2

A.3d 289, 294 (Me. 2010).             As such, it controlled the proposed

sale of the Lines (which were to be sold for an amount that was




v. Anrig, 728 F.2d 30, 32 (1st Cir. 1984) (Breyer, J.). In any
event, there is no unfairness here: the dispositive ground was
briefed and argued both in the district court and in this court.


                                      - 14 -
less than the amount of debt secured by its lien).            Through the

Second Amendment, the FRA approved the sale of the Lines and waived

its lien.   With respect to consideration, the FRA required, among

other things, that the proceeds from the sale be paid to an "escrow

agent"5 for the special purpose of distributing those funds to the

parties enumerated in Section 3.b.ii. of the Second Amendment upon

perfection of the FRA's replacement lien. Cf. Dean Witter Reynolds

Inc. v. Variable Annuity Life Ins. Co., 373 F.3d 1100, 1108 (10th

Cir. 2004) (explaining that placement of "monies . . . in accounts

for   certain   specific   purposes,   such   as   escrow   accounts"   may

establish bailment at common law); Lawrence v. Lincoln Cty. Tr.

Co., 131 A. 863, 867 (Me. 1926) (similar).

            Whatever the proper label for this type of transaction,

the bottom line is that the debtor could not have put the proceeds

to any use that was not authorized by the FRA under the terms of

the Second Amendment. Pertinently for present purposes, the Second

Amendment had the effect of forbidding the debtor from using the




      5
      The term "escrow" is often used to describe "[a]n account
held in trust or as security." Black's Law Dictionary, 662 (10th
ed. 2014). Although the Second Amendment can be read to allow the
selection of a third party to serve as escrow agent for the purpose
of making the specific distributions, it appears from the record
that the debtor itself served this function.        In all events,
nothing turns on the identity of the party serving this function,
and the Trustee has not alleged that the failure to appoint an
independent escrow agent was in any way adverse to the rights of
the bankruptcy estate.


                                 - 15 -
proceeds to pay general creditors save for the approximately

$1,000,000 that was earmarked for accounts payable.

            Having determined that, under Maine law, the waterfall

provision   created   a   relationship   resembling    a   bailment,   our

analysis must proceed under applicable federal law, that is, under

section 544(b).   As the Supreme Court has explained in construing

similar language under section 547(b), the term "'property of the

debtor' . . . is best understood as that property that would have

been part of the estate had it not been transferred before the

commencement of the bankruptcy proceedings."          Begier v. IRS, 496

U.S. 53, 58 (1990); see Stettner v. Smith, (In re IFS Fin. Corp.),

669 F.3d 255, 261 (5th Cir. 2012) (applying Begier in the section

544(b)(1) context).   In other words, "[a] bankruptcy estate cannot

succeed to a greater interest in property than the debtor held

prior to bankruptcy."      NTA, LLC v. Concourse Holding Co. (In re

NTA, LLC), 380 F.3d 523, 528 (1st Cir. 2004) (citing 11 U.S.C. §

541(d)).

            "[T]he principal determinant of whether the debtor has

'an interest' in the property" is "the degree of control a debtor

exercises over the property transferred."      MBNA Am. Bank, N.A. v.

Meoli (In re Wells), 561 F.3d 633, 635 (6th Cir. 2009) (quoting

McLemore v. Third Nat'l Bank (In re Montgomery), 983 F.2d 1389,

1395 (6th Cir. 1993)); accord Southmark Corp. v. Grosz (In re

Southmark Corp.), 49 F.3d 1111, 1116-17 & n.16-17 (5th Cir. 1995).


                                - 16 -
So, for example, a bank account used by a debtor to pay general

creditors of its own choosing may be avoidable, even if the bank

account is in another person's name.    See Riley v. Nat'l Lumber

Co. (In re Reale), 584 F.3d 27, 31 (1st Cir. 2009).   By contrast,

property is not part of the bankruptcy estate when "the debtor

merely receives [it] in order to deliver it to its intended

recipient without any control or ownership over it."       City of

Springfield v. Ostrander (In re LAN Tamers, Inc.), 329 F.3d 204,

210 (1st Cir. 2003).   So, for example, if a debtor incurs health-

care expenses covered by insurance, and the insurance company sends

payment to the debtor before the debtor pays the health-care

provider, the insurer's payments would not be property recoverable

by the debtor's creditors.   See id. (citing S. Rep. No. 95-989, at

82 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787, 5868; H.R. Rep.

No. 95-595 (1978), at 368, as reprinted in 1978 U.S.C.C.A.N. 5963,

6324).   It follows that where, as here, the debtor holds funds as

a mere disbursing agent pursuant to a contract that prevents it

from putting the funds to any use other than that designated in

the contract, the trustee cannot avoid the debtor's transfer of

the funds in compliance with the contract.     See Lyon v. Contech

Constr. Prods., Inc. (In re Computrex, Inc.), 403 F.3d 807, 811,

813 (6th Cir. 2005); see also Old Republic Nat'l Title Ins. Co. v.

Tyler (In re Dameron), 155 F.3d 718, 722-23 (4th Cir. 1998).




                              - 17 -
             These limitations on the scope of the bankruptcy estate

make good commercial sense.     They prevent unsecured creditors from

sharing in funds that the debtor could not have retained for its

own use.     See In re LAN Tamers, 329 F.3d at 215.             By the same

token, such limitations are consistent with the Supreme Court's

admonition that the law "does not authorize a trustee to distribute

other people's property among a bankrupt's creditors."                Pearlman

v. Reliance Ins. Co., 371 U.S. 132, 135-36 (1962).

             The upshot is that the debtor was a mere "transfer

station along the road to payment" of the parties specified under

the   waterfall   provision.     In    re   Computrex,   403   F.3d    at   811

(citation omitted). Thus, it lacked a cognizable property interest

in    the   waterfall   disbursement    paid   to   Wheeling.         See   id.

Consequently, that disbursement is not avoidable under section

544(b).

             In an effort to blunt the force of this reasoning, the

Trustee relies heavily on the use of the disbursements to pay down

the debtor's indebtedness.        He attempts to draw an analogy to

preferential transfer cases under section 547(b) in which third

parties pay off general creditors as part of the purchase price of

a debtor's assets.      See, e.g., Warsco v. Preferred Tech. Grp., 258

F.3d 557, 565-66 (7th Cir. 2001); Buckley v. Jeld-Wen, Inc.                 (In

re Interior Wood Prods. Co.), 986 F.2d 228, 231 (8th Cir. 1993);

Feltman v. Bd. of Cty. Comm'rs. of Metro. Dade Cty. (In re S.E.L.


                                  - 18 -
Maduro (Fla.), Inc.), 205 B.R. 987, 991-92 (Bankr.S.D.Fla. 1997).

The Trustee says that this case is of the same genre because the

Lines were sold to a third party and some (but not all) of the

debtor's creditors received portions of the sale proceeds to

satisfy existing debts.

          We    find    this    proffered     analogy   unpersuasive.       The

preferential transfer cases hawked by the Trustee rest on the

notion that "[if] the funds the third party used to pay the

creditor were consideration for the debtor's sale of its assets,"

then those funds are considered "property" of the estate because

they "would have been available for distribution" to the general

pool of creditors "had they not been transferred."               Warsco, 258

F.3d at 565; cf. Begier, 496 U.S. at 58 (explaining bankruptcy

code's "central policy" of ensuring "[e]quality of distribution

among creditors").

          The case at hand is a horse of a quite different hue:

unlike in these preferential transfer cases, the Lines were not

"assets" that belonged outright to the debtor prior to consummation

of the relevant transactions but, rather, were subject to the FRA's

mortgage and lien.       See 14 M.R.S.A. § 3572(2).          As the Trustee

readily acknowledges, "the FRA would have been entitled to the

proceeds" from a sale of the Lines "but for" the Second Amendment.

And although the FRA granted a limited waiver of its lien, it

conditioned    that    waiver   on   the    debtor's    distribution   of   the


                                     - 19 -
proceeds   in     compliance      with    the     Second   Amendment's     waterfall

provision. The FRA made a choice to allocate the proceeds to which

it was entitled among certain of the debtor's creditors, an

allocation that it apparently concluded was "equitable and in the

overall best interest of the United States."

            Seen in this light, it is readily apparent that this is

not a case in which a debtor decides to sell his assets and divert

the proceeds to pay certain creditors to the detriment of others.

Instead,   it     is   a   case   in     which    a    senior   lienholder   imposes

conditions that preclude the debtor from exercising effective

control    over    the     sale   proceeds.           Accordingly,   the   waterfall

disbursement to Wheeling did not consist of property of the

debtor's estate.         See In re Computrex, 403 F.3d at 813.

            The Trustee nonetheless insists that other averments in

the complaint render his allegations about the debtor's control

over the waterfall disbursements plausible.                     As he sees it, the

debtor "could not have 'paid' [Wheeling] if it did not have control

or dominion over the proceeds."             The fly in this ointment is that

the Trustee mistakenly equates the debtor's possession of the sale

proceeds with its control over those proceeds.                   The mere fact that

the debtor briefly possessed the sale proceeds (apparently as an

escrow agent) does not mean that it had any discretion to use those

proceeds as it saw fit.




                                         - 20 -
            Were   the    Trustee's        reasoning   valid,    any   property

possessed by a bailee, however fleetingly, would become property

of   that   bailee's     estate   in   a    bankruptcy      proceeding.    This

proposition is untenable.         The law is luminously clear that, in

the absence of a state statute to the contrary — and no such

statute has been cited here — "if property is in a debtor's hands

as bailee or agent," that property is not recoverable by the

bankruptcy trustee. 5 Collier on Bankruptcy ¶ 541.05 (A.N. Resnick

& H.J. Sommer, eds., 16th ed. 2017); see Kitchen v. Boyd (In re

Newpower), 233 F.3d 922, 933 (6th Cir. 2000); Torkelson v. Maggio

(In re The Guild & Gallery Plus, Inc.), 72 F.3d 1171, 1180 (3d

Cir. 1996).    Consequently, we reject the Trustee's flawed attempt

to equate "possession" with "control."

            Undaunted,     the    Trustee     tries    to    attach    decretory

significance to the fact that the FRA received only $2,400,000 or

so from the sale of the Lines (more than $30,000,000 less than the

total of the loan balance, plus incurred interest and penalties),

while the 2003 Investors received payment in full.                 The Trustee

suggests that this fact shows that the debtor, not the FRA, had

control over the sale proceeds.             But this suggestion represents

magical thinking:      the debtor could never have sold the Lines, let

alone decided how to distribute the sale proceeds, without the

FRA's approval.        That the FRA chose to structure the waterfall

disbursements in a way that favored the 2003 Investors may well be


                                    - 21 -
an indication that the 2003 Investors had some leverage; it is

not, however, an indication that the debtor had control over the

sale proceeds.

             We recognize that the FRA's decision to divert the

proceeds of the sale to less senior creditors may seem unusual,

but the FRA is not a typical transacting party.               Rather, the FRA

is an executive agency of the United States, which employs its

lending program to maintain and improve the nation's railroads.

See 45 U.S.C. § 822.     Here, it agreed to a loan modification that

it deemed to be in the national interest; and in structuring that

modification, it presumably determined that the national interest

would   be   best   served    by   distributing     the    sale    proceeds    in

accordance with the waterfall provision.             We have no reason to

believe that it would have surrendered its security interest in

the Lines otherwise. To permit the Trustee retroactively to unwind

this transaction would simply second-guess the FRA and disturb the

balance that it sought to strike without any principled basis for

doing so.

             In a last ditch attempt to salvage his complaint, the

Trustee points to other allegations in the complaint that, in his

view, make his claim plausible.           He emphasizes, for instance, the

complaint's     allegations        that    the    waterfall       disbursements

"consisted    entirely   of   unencumbered       assets"   belonging    to    the

debtor at the time of payment.            The problem, though, is that the


                                    - 22 -
Trustee    gives    too   much   weight   to   conclusory     statements   and

rhetorical flourishes.       Plausibility demands that a pleader offer

more substantial stuff.          See Iqbal, 556 U.S. at 678.          As the

Supreme Court has explained, "'labels and conclusions' or 'a

formulaic recitation of the elements of a cause of action will not

do.'"     Id. (quoting Twombly, 550 U.S. at 555).             Nor will "bald

assertion[s]" satisfy the plausibility standard.                A.G. ex vel.

Maddox, 732 F.3d at 80.

            In     this   instance,   the      conclusory     statements   and

rhetorical flourishes contained in the complaint are belied by the

cold, hard facts. Under the plausibility standard, fairly applied,

the complaint does not state a claim upon which relief can be

granted.

            Teetering on the brink of defeat, the Trustee scrambles

to attain firmer footing by switching the subject.                He contends

that he should at least have been given leave to amend his

complaint pursuant to Bankruptcy Rule 7015.          This contention gains

him no ground.

            Bankruptcy Rule 7015 employs Rule 15 of the Federal Rules

of Civil Procedure as the "mechanism for adjudicating motions to

amend a pleading in the bankruptcy context."                In re Curran, 855

F.3d at 27.      Subject to the exceptions not pertinent here, Rule 15

authorizes amendment only by leave of court.           See Fed. R. Civ. P.

15(a)(2).     Though a "court should freely give leave when justice


                                    - 23 -
so requires," id., it has discretion to deny such a request for

reasons including "undue delay," "bad faith or dilatory motive,"

"undue prejudice," or "futility of amendment," Foman v. Davis, 371

U.S. 178, 182 (1962).    We review denial of leave to amend for abuse

of that discretion.     See In re Curran, 855 F.3d at 28.

          To begin, the Trustee requested leave to amend for the

first time in the district court.        He never asked for any such

largesse in the bankruptcy court.     Ordinarily, a party must "seek

any relief that might fairly have been thought available" in the

nisi prius court, on pain of waiver.       Beaulieu v. IRS, 865 F.2d

1351, 1352 (1st Cir. 1989) (Aldrich, J.); accord Vega-Rodriguez v.

P.R. Tel. Co., 110 F.3d 174, 184 (1st Cir. 1997).        The Trustee

fails to articulate any reason sufficient to warrant a departure

from this prudential principle.

          Even if we were disposed to overlook this waiver — and

we are not — the Trustee has not identified any other or further

factual allegations that could be set out in an amended complaint

that would suffice to revivify his failed avoidance claim.        The

terms of the Second Amendment are clear and, on this record, leave

to amend would appear to be "an empty exercise."     Vega-Rodriguez,

110 F.3d at 184.   Consequently, the district court neither lapsed

into error nor abused its discretion in rejecting the Trustee's

belated request for leave to amend his complaint.           See In re

Curran, 855 F.3d at 28-29 (denying leave to amend as futile because


                                - 24 -
of plaintiff's failure to allege additional facts that would render

claim plausible); Coyne v. City of Somerville, 972 F.2d 440, 446

(1st Cir. 1992) (similar).

III. CONCLUSION

            We need go no further. For the reasons elucidated above,

the dismissal of the Trustee's complaint is



Affirmed.




                               - 25 -
