                                                                    F I L E D
                                                             United States Court of Appeals
                                                                     Tenth Circuit
                                   PUBLISH
                                                                 February 13, 2007
                     UNITED STATES CO URT O F APPEALS           Elisabeth A. Shumaker
                                                                    Clerk of Court
                               TENTH CIRCUIT



 In re: M S55, IN C.,

               Debtor.

 -------------------------

 JEFFR EY HILL, Trustee,                              No. 05-1389

               Appellant,

 v.

 AKAM AI TECHNOLOGIES, IN C., a
 Delaware corporation,

               Appellee.



         A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
                   FOR T HE DISTRICT OF COLORADO
                       (D .C . NO. 04-cv-02698-EW N)


D. Bruce Coles, Fish & Coles, Denver, Colorado, for Plaintiff-Appellant.

Bart B. Burnett, Pearson, Horowitz, & Burnett, P.C. (Robert M . Horowitz,
Pearson, Horowitz, & Burnett, P.C., Denver, Colorado, and George B. Hofmann,
Parsons Kinghorn H arris, P.C., Salt Lake City, Utah, with him on the brief),
Denver, Colorado, for Defendant-Appellee.
Before T YM KOV IC H, M cW ILLIAM S, Circuit Judges, and EAGAN, *
District Judge.


T YM K O VIC H, Circuit Judge.



      The question in this bankruptcy appeal is whether a Chapter 7 trustee may

bring claims that a Chapter 11 debtor-in-possession could not. W e conclude that

the trustee is barred in the circumstances of this case from bringing a derivative

claim on behalf of a creditors’ committee after conversion to Chapter 7.

      Accordingly, we AFFIRM the decision of the district court.

                                   I. Background

      Debtor ms55, Inc. (known under its trade name M SH OW .com) provided

internet-based meeting and conference technology to corporate clients. In July

2001, after a series of financial setbacks, M SH OW filed for bankruptcy under

Chapter 11. 11 U.S.C. § 1101. Shortly after the bankruptcy case was filed, some

of M SH OW ’s unsecured creditors formed a creditors’ comm ittee to represent

their interests in the proceedings. About the same time, M SH OW sought

emergency authority from the bankruptcy court to use its cash on hand as

collateral, incur additional post-petition debt, and protect post-petition lenders

from existing creditors.



      *
       The Honorable Claire V. Eagan, District Judge, United States District
Court for the Northern District of Oklahoma, sitting by designation.

                                         -2-
      The bankruptcy court issued a financing order granting M SHOW ’s request.

This post-petition financing order gave M SH OW , as the debtor-in-possession, 1

authority to use certain of its assets subject to pre-petition security interests,

including assets held by secured creditors. A kamai Technologies had previously

helped finance M SH OW and was one of its secured creditors holding a pre-

petition security interest.

      The financing order contained a provision protecting the secured creditors,

including Akamai, from “any and all claims” except those that could be brought

by the unsecured creditors’ committee. Paragraph 7 of the financing order, which

is at the heart of this dispute, set out the protective bar:

      Debtor’s estate, creditors, holders of claims against or equity interest
      in, debtor, any official or unofficial com m ittee of holders of claims or
      equity interests and all such and other persons and entities shall be
      forever barred from asserting any and all claims on any basis or theory
      against the secured creditors.

R. at 36, ¶ 7 (emphasis added).

      The financing order, however, carved out a narrow exception to this bar for

an unsecured creditors’ committee:

      The Committee shall have until the first date set by the Court for objections
      to confirmation of a reorganization plan in the Bankruptcy Case to deliver
      to Secured Creditors . . . [its] written notice of intent . . . to comm ence an

      1
         “A debtor-in-possession is a debtor who, during the pendency of the case
prior to confirmation of the reorganization plan, retains the bankruptcy estate’s
property in the fiduciary capacity of a trustee.” Peters v. Pikes Peak Musicians
Ass’n., 462 F.3d 1265, 1271 n.3 (10th Cir. 2006) (internal quotation and citations
omitted).

                                           -3-
      action against any Secured Creditor asserting any claim, liability, or cause
      of action, based on any grounds or theory whatsoever . . . but including,
      without limitation, any claim, liability or cause of action seeking to avoid,
      [etc.].

R. at 37.

      In addition to the explicit language of ¶ 7, the financing order contained

other provisions confirming that it bound parties other than M SHOW and was

intended to survive conversion to Chapter 7. Paragraph 15, for example,

stipulated its provisions were to survive conversion to Chapter 7 bankruptcy.

And ¶ 16 stipulated that the protections of ¶ 7 would bind parties to a debtor-in-

possession credit agreement that included releases and other protections for

secured creditors. 2

      The financing order also required M SH OW to prepare and serve a notice on

its creditors that described the agreements contained in ¶ 7. Accordingly, in

August 2001, M SHOW served notice including the following language:

      If the Committee takes no action against the Secured Creditors by these
      deadlines [which it estimated to be 90 days from the date of the notice],
      any claims that may exist against the Secured Creditors will be forever
      barred. This bar is binding not only on M SH OW and its creditors, but
      also on any subsequently appointed bankruptcy trustee.

R. at 43, ¶ 8. The notice further acknowledged:

      2
        The debtor-in-possession credit agreement that was entered pursuant to
the financing order also (1) “contained Debtor’s acknowledgment that the claims
of the Secured Creditor [i.e., Akamai] against it were valid,” and (2) “contained
an express ‘release’ of claims by the Debtor against the [debtor-in-possession]
Lenders as Secured Creditors, without reference to claims against other Secured
Creditors.” A plt. Br. at 12–13 (citing R. at 97).

                                         -4-
      All of the provisions of the loan agreements and the Order shall be binding
      on . . . any trustee subsequently appointed in the bankruptcy case for
      M SH OW and including upon dismissal, conversion to Chapter 7, or closing
      the M SHOW case. As a result, these provisions may limit the recovery of
      both pre-petition and post-petition unsecured creditors in the event the case
      is converted to one under Chapter 7.

R. at 44, ¶ 9 (emphasis added). 3

      Following this notice, the bankruptcy court approved the financing order on

August 20, 2001. Over the next year-and-a-half, however, the creditors’

committee took no action to assert claims against the secured creditors.

Consequently, the parties decided to convert the case to Chapter 7. In its motion

to convert the case to Chapter 7, the trustee stated that one of the purposes of

conversion was “to initiate avoidance and other types of litigation . . . . by an

independent Chapter 7 trustee.” 4 R. at 205–8.

      Three days before the conversion order was entered, on June 17, 2003,

M SHOW and the unsecured creditors’ committee filed a stipulated settlement,

releasing certain lenders. The settlement said nothing about claims against

secured creditors, such as Akamai, except that “all parties to this agreement

hereby expressly reserve their rights, claims, and causes of action against any


      3
         Since the notice was prepared by M SHOW , the trustee argues that its
language has questionable relevance. W e have only relied upon the notice to
establish effective notice was conferred. W e do not rely upon it for interpretation
of the financing order.
      4
        The trustee writes, “Implicit in that M otion was an understanding that
avoidance rights for the benefit of the estate w ould not expire on conversion; if
claims expired, a post-conviction trustee could not pursue them.” Aplt. Br. at 14.

                                         -5-
third-parties who are not Released parties.” R. at 218–19, §§ 9, 14. Akamai was

not a released party.

      The bankruptcy court entered the conversion order on June 20, 2003. The

Chapter 7 trustee subsequently commenced an avoidance action against A kamai to

recover transfers for the benefit of the estate. Akamai moved for summary

judgment on the ground that the claim was barred by the terms of the financing

order. The bankruptcy court denied this motion, and Akamai appealed to the

district court. The district court reversed on the ground that the financing order

barred the trustee’s claims.

      The trustee now appeals.

                                    II. Analysis

      A bankruptcy trustee has general authority to avoid certain transfers “for

the benefit of the estate.” 11 U.S.C. §§ 544, 547, 548, 550. Under the

bankruptcy code, a debtor-in-possession has the powers of a trustee, id. § 1107(a),

and, as such, the authority to bring avoidance actions. Zilkha Energy Co. v.

Leighton, 920 F.2d 1520, 1523 (10th Cir. 1990) (debtor-in-possession’s authority

under § 1107(a) includes the right to bring § 544 avoidance action). Importantly,

however, where a debtor-in-possession serves as the trustee in a Chapter 11

bankruptcy, a Chapter 7 trustee may not assert any rights that were previously

waived by the debtor-in-possession prior to conversion. Paul v. M onts, 906 F.2d

1468, 1473 (10th Cir. 1990).

                                         -6-
      Accordingly, we must first determine if M SH OW , as the debtor-in-

possession, waived its right along with the right of the Chapter 7 trustee to bring

an avoidance action against Akamai. If it did, we must then consider whether the

trustee can still exercise the authority reserved to the creditors’ committee to

bring such a claim.

A. Waiver by Debtor-in-possession

      The first issue is readily resolved by the financing order. It clearly states:

“Debtor’s estate . . . [and] debtor . . . shall be forever barred from asserting any

and all claims on any basis or theory against the secured creditors.” R. at 36, ¶ 7.

It is difficult to construe the language of this legal bar any way other than a

waiver of M SHOW ’s right to bring an avoidance action against secured creditors

such as Akamai.

      Nevertheless, the trustee suggests several theories in support of his position

that he is not barred from bringing suit. 5 The trustee argues (1) a full release did



      5
        The trustee also argues that avoidance actions forward the fundamental
bankruptcy principle of equality of distribution and that this principle does not
evaporate under the Bankruptcy Code simply because a case is converted from
Chapter 11 to Chapter 7. No one disagrees. Equality of distribution is protected
by the debtor-in-possession, trustee, and judicial oversight of the agreements
made by debtors and trustees. As w e discuss below, the financing order agreed to
by M SHOW and approved by a bankruptcy court in this case had the effect of
barring litigation against certain creditors once conversion to Chapter 7 dissolved
the one entity available to bring suit, the creditors’ committee. The equality
principle did not evaporate, but its applicability was attenuated by the financing
order before conversion to Chapter 7. It was further attenuated after conversion
due to the financing order’s revocation of the estate’s ability to bring suit.

                                          -7-
not occur because the creditors’ committee retained a right of action; (2) inclusion

of the word “trustee” in ¶ 5, but not ¶ 7 of the order, excluded the trustee from the

¶ 7 legal bar; (3) it is unreasonable to conclude the agreement intended

conversion to act as an unstated limitation on the creditors’ comm ittee right of

action; and (4) parol evidence should be admitted to establish the intent of the

parties. All of these arguments are without merit.

      (1) The Release. The trustee first argues that because the order “expressly

preserves avoidance claims to be pursued by the [creditors’ c]ommittee against

the Secured Creditors,” it cannot be a full release. Aplt. Br. at 23. The basis for

this argument is the proposition that a release is an “outright discharge of the

entire obligation.” Symons v. M ueller Co., 526 F.2d 13, 17 (10th Cir. 1975).

Thus, the trustee argues, the retention of any right to sue implies the financing

order did not constitute a full release and, therefore, the trustee may still sue.

      But the real question is not whether a full release exists, but rather who

retained any existing right to bring an avoidance action. It is well established that

a Chapter 7 trustee succeeds to the rights of the debtor-in-possession and is bound

by prior actions of the debtor-in-possession to the extent approved by the court.

Paul v. M onts, 906 F.2d 1468, 1473 (10th Cir. 1990). Even the trustee concedes

he is “bound by court approved stipulations of a [debtor-in-possession] prior to

conversion.” Aplt. Br. at 22. The creditors’ comm ittee may have retained a right

of action, but that does not remove the existing bar against the debtor-in-

                                          -8-
possession or, post-conversion, the trustee enforcing those rights. M SH OW and,

post-conversion, the trustee are barred from bringing an avoidance action

regardless of whether the right to an avoidance action exists. Both the bankruptcy

court and district court agreed the financing order barred M SH OW from bringing

an avoidance action and that the trustee was similarly barred. The only reason the

bankruptcy court denied summary judgment was its conclusion that the trustee

succeeded to the creditors’ committee right of action.

      (2) The Financing Order. Turning to the language of the financing order,

the trustee contends differing language used in different paragraphs supports a

textual argument that the trustee is not barred from asserting avoidance claims.

He argues ¶ 7 does not specifically state that the trustee is bound by the

agreement, while ¶ 5 of the order mentions that a successor trustee is subject to

the order’s superiority to other underlying rights of the parties. 6 From this

linguistic variation, the trustee argues that we should understand ¶ 7, unlike ¶ 5,

allows trustee actions.

      W e disagree. The language in ¶ 7 explicitly applies to both the debtor and

the debtor’s estate. The trustee stands in the place of the debtor and represents

the interest of the estate. It follows that this bar on the debtor also applies to the



      6
         Paragraph 5 provides that obligations incurred by the debtor under the
financing agreement “[S]hall at all times be senior, in this and any subsequent
case under the Bankruptcy Code, to the rights of debtor, any successor trustee
. . . .”

                                          -9-
trustee. It does not matter that ¶ 7 of the order did not expressly include a trustee;

the trustee was inevitably included as successor to the debtor-in-possession under

the financing order’s provision that its terms would survive conversion.

      (3) Limitation on the Creditors’ Committee Right to Bring an Avoidance

Action. Next, the trustee argues that it would be unreasonable to treat the

financing order language as an effective bar because conversion would operate as

an unstated limitation on the creditors’ committee right to bring an avoidance

action. For example, the trustee argues conversion could theoretically occur at

M SH OW ’s sole discretion just one day after the debtor-in-possession financing

order became final, i.e., one day after its approval, M SH OW could have converted

the Chapter 11 action to a Chapter 7 action, thereby closing off the creditors’

committee right of action before the committee had time to investigate the need to

bring an action. But the fact that Chapter 7 conversion could dissolve the

comm ittee immediately after the order became effective demonstrates only that

M SH OW failed to retain a meaningful right to enforce avoidance actions for the

creditors’ committee. It does not mean that M SHOW ’s w aiver of its own rights

(and those of the Chapter 7 trustee) to enforce the agreement were so

unreasonable as to be unenforceable. It is not unreasonable for the debtor-in-

possession to give away certain rights of the estate in order to receive the benefit

of additional financing. If the creditors’ committee felt M SHOW ’s actions were

either unreasonable or an effort to unjustifiably protect certain secured creditors

                                         -10-
from an avoidance action, it could have challenged the financing order or

objected at the conversion hearing and sought forestallment of conversion until

the avoidance actions had been undertaken. The notice issued to comply with the

financing order explicitly warned those whose legal rights might be affected by

the order of the deadline to file a motion for reconsideration.

      (4) Parol Evidence. Finally, the trustee claims the financing order is

ambiguous, requiring parol evidence to interpret it. He contends the parties

sought conversion for the primary purpose of allowing the trustee to bring

avoidance actions, so it makes little sense to conclude that they intended to waive

such claims in their financing agreement.

      His argument has tw o flaw s. First, the order is not ambiguous. It clearly

bars the debtor-in-possession (and the estate) from bringing any action. Thus, the

parole evidence rule precludes us from examining extrinsic evidence in

interpreting the agreement. Boyer v. Karakehian, 915 P.2d 1295, 1299 (Colo.

1996) (“A court should only admit parol evidence when the contract between the

parties is so ambiguous that their intent is unclear.”). 7 Furthermore, the

conversion order was entered long after the financing order, so the intent of the

parties at the time of conversion is not evidence of what they intended when they

made the agreement. The fact that some parties later hoped the trustee would be

      7
        As the financing order implemented an agreement between the parties that
stipulated Colorado law would govern disputes, we apply the Colorado laws of
contract interpretation.

                                         -11-
able to step into the unsecured creditors’ right to sue upon conversion says

nothing about the parties’ intentions regarding the financing order when it was

drafted and entered. The 20-20 nature of hindsight should be most palpable in

bankruptcy proceedings.

      In sum, none of the trustee’s arguments undermine the financing order’s

language that M SHOW is barred from bringing an avoidance action against

Akamai. Both the bankruptcy court and district court reached this same

conclusion, and we agree. As a Chapter 7 trustee has no rights greater than the

debtor-in-possession, and here, M SH OW had no right to bring an avoidance

action to pass on to the trustee, then the trustee was not entitled to bring an

avoidance action in its own right.

B. Independent Right to an Avoidance Action

      The trustee next argues that he inherited the unexhausted right retained by

the creditors’ committee to bring an avoidance action. Akamai responds that the

trustee could not inherit any rights from the creditors’ comm ittee that he did not

inherit from the debtor-in-possession.

      This is a matter of first impression for this circuit: whether a Chapter 7

trustee can succeed to the rights of a Chapter 11 creditors’ comm ittee upon

conversion. The district court concluded the trustee did not succeed to the

creditors’ committee right because the committee was dissolved upon conversion.


                                          -12-
It found the trustee bound by the acts of the debtor-in-possession and, as

M SHOW was barred from bringing suit against A kamai, the trustee is similarly

bound. W e agree on the latter ground.

      Chapter 11 expressly provides for the creation of an unsecured creditors’

comm ittee, 11 U.S.C. § 1102, but is less clear about the dissolution of a

comm ittee. M ost courts have concluded that conversion of a Chapter 11 case to a

Chapter 7 case results in dissolution of a Chapter 11 committee. See, e.g., 4

Norton Bankr. L. & Prac. 2d § 78:10.5. And with dissolution of the committee,

its rights also expire. Official Comm. of Unsecured Creditors v. Belgravia Paper

Co. (In re Great Northern Paper, Inc.), 299 B.R. 1, 5 (D.M e. 2003) (“Once the

Chapter 11 case was converted to a Chapter 7 case, the Creditors Committee

ceased to exist; the Creditors C ommittee’s attorney therefore had no authority to

make an assignment, nor did the Creditors C ommittee have any rights to

assign.”). The trustee argues here that the right to bring an avoidance action is

not a right of the creditors’ committee, but rather derivative of the rights of the

debtor and the estate. Thus, he contends the rights have not expired. Akamai

concedes as much: “Akamai does not contend . . . that avoidance actions . . .

‘evaporate’ w hen a case is converted to Chapter 7.” Aple. Brief at 19–20.

      As a preliminary matter, we do not quarrel that the right of the creditors’

comm ittee to bring an avoidance action is derivative. But that conclusion does



                                          -13-
not affect the result here. Even though the avoidance action rights have not

expired, the committee no longer exists to enforce those rights.

      The trustee is also prevented from bringing a claim on the existing

derivative rights. As w e already explained, a Chapter 7 trustee succeeds only to

the rights of the debtor-in-possession, so the trustee is bound by prior actions of

the debtor-in-possession to the extent approved by the bankruptcy court. In Paul

v. M onts, 906 F.2d 1468 (10th Cir. 1990), we concluded:

      The trustee, as successor to the debtor in possession, is bound by his
      predecessor’s authorized actions. W hen asserting rights of action
      against another, the bankruptcy trustee has no greater rights than the
      debtor has. The trustee is . . . subject to the same defenses as could
      have been asserted by the defendant had the action been instituted by
      the debtor . . . . He may not maintain a position regarding a transaction
      wholly inconsistent with his previous acts in connection with that same
      transaction.


Id. at 1473 (emphasis added) (internal quotations & citations omitted). Thus, the

trustee— like the debtor-in-possession M SH OW — is also barred from bringing an

avoidance action, even if such an action has not been extinguished. The trustee’s

authority is curtailed by the terms agreed to by M SH OW and approved by the

court in the financing order. 8




      8
        W e hasten to add creditors, the trustee, and the debtor-in-possession have
numerous opportunities to challenge or modify unfavorable provisions in a
financing order. Parties could also seek preservation of the claims during
conversion to Chapter 7.

                                         -14-
      The only authority cited by the trustee that suggests he might succeed to the

rights of the creditors’ committee is In re Rachles, Inc., 131 B.R. 782 (Bankr.

D.N.J. 1991), a case deserving some discussion. In Rachles, the debtor made

fraudulent transfers while under Chapter 11 protection. The creditors’ committee

filed an adversary proceeding against the transferee to avoid the transfers. The

petition was subsequently converted to Chapter 7, and the trustee also filed an

adversary proceeding setting forth identical claims. After a question arose as to

the timeliness of the trustee’s complaint, the trustee sought to consolidate its case

with the committee’s earlier filed action. Allowing the consolidation, the court

concluded:

      Upon conversion and appointment, a trustee steps into the shoes of the
      debtor-in-possession with respect to all rights, responsibilities and
      liabilities. Logically then, it is entirely appropriate for the Chapter 7
      Trustee to be substituted as plaintiff in the instant adversary proceeding
      in the place of the Creditors’ Committee which initially filed the
      adversary complaint on behalf of the Debtor and this estate.


Id. at 785 (emphasis added). Thus, the creditors’ committee claims w ere really

claims of the debtor and his estate— claims that still belonged to the estate after

conversion— so it was logical to permit the trustee to carry forward the cause of

action initiated by the committee. The trustee was permitted to take hold of the

reins and litigate the derivative rights previously asserted by the committee.

      Rachles should not be read to stand for a proposition that the creditors’

comm ittee has independent avoidance claims of its own to which the trustee

                                         -15-
inevitably succeeds. The trustee in Rachles was not succeeding to the

independent rights of the creditors’ committee, but rather joining the committee’s

already initiated derivative claim of the debtor’s rights in a case where the trustee

was not otherwise barred by previous arrangements made by the debtor-in-

possession.

      As a matter of law , a creditors’ committee does not have its own right to

bring avoidance actions. See, e.g. Official Comm. of Unsecured Creditors of

Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery, 330 F.3d 548, 563 (3d

Cir. 2003) (stating that “§ 1103(c)(5) does not confer the sort of blanket authority

necessary for the Committee independently to initiate an adversarial proceeding,

including one under § 544(b)”). But courts have “permitted creditors’ committees

to bring actions in the name of the debtor,” usually only “in connection with

actions against insiders or other persons that the debtor in possession has refused

or is reluctant to sue.” Collier on Bankruptcy ¶ 1103.05[6][a] (emphasis added).

Thus, as the trustee noted, any rights the creditors’ committee has to an avoidance

action are derivative of the debtor and the estate’s claims. 9 In Rachles, the trustee


      9
        W e note the committee’s right to bring an avoidance action is not without
question. Although we are among those courts to allow a committee to bring such
an action, see Starzynski v. Sequoia Forest Indus., 72 F.3d 816, 821 (10th Cir.
1995), recent Supreme Court precedent may undermine this practice. In Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 7–8 (2000), the
Supreme Court held that statutory language granting certain powers on behalf of
trustees did not grant the same powers to unnamed entities, such as a creditors’
                                                                      (continued...)

                                         -16-
succeeded to just such derivative estate claims. To the extent the creditors’

comm ittee had been bringing those claims on behalf of the debtor, the trustee

remained free to direct the claims forward.

      In re Great Northern Paper, Inc., 299 B.R. 1, also turned on the derivative

nature of the rights asserted by the creditors’ committee. According to Great

Northern, where the interests of the creditors’ committee were allied with the

debtor so that the committee w as simply bringing claims on behalf of the debtor,

the trustee was free to continue directing the claims forward— essentially taking

over the reins of the estate’s claim as was done in Rachles. Id. at 7–8. But in

Great Northern, the interests of the estate, as represented by the debtor, and the

creditors’ committee were not aligned. As the creditors’ committee wished to

steer its claim contrary to the debtor’s intentions, the committee could not be said

to act on behalf of the debtor and the estate, so the committee was not bringing

rights derivative of the debtor. And, as we discussed, a trustee acts only on


      9
        (...continued)
comm ittee. On this authority, Akamai argues, the creditors’ committee here had
no right to bring an avoidance action. Since Hartford, however, other circuits
have continued to allow committees to bring avoidance actions. See, e.g,
Chinery, 330 F.3d 548; Jefferson County Bd. of County Comm’rs v. Voinovich (In
re V Cos.), 292 B.R. 290 (B.A.P. 6th Cir. 2003); Glinka v. Federal Plastics M fg.
(In re Housecraft Indus. USA, Inc.), 310 F.3d 64 (2d Cir. 2002).
       Because we conclude the trustee does not succeed to the committee’s rights
in any case, we need not discuss the availability of these rights since Hartford. It
is enough to note that to the extent the creditors’ committee has a right to initiate
an avoidance action, its right is derivative of the debtor-in-possession’s right and
is exercised on behalf of the bankruptcy estate.

                                         -17-
claims derivative of the debtor’s rights so the trustee in Great Northern could not

guide the creditors’ committee claims forw ard.

      Great Northern is inapplicable in this case. The creditors’ committee

claims here are derivative of the debtor because M SH OW specifically granted

them to the committee in the financing agreement, so the trustee could norm ally

bring those claims forward after conversion as in Rachles. But M SHOW also

used the financing agreement to bar itself and, post-conversion, the trustee from

taking over the reins and acting on those derivative rights.

      In sum, the only rights a trustee inherits from a creditors’ committee to

bring an avoidance action are derivative of the debtor’s rights. In this case, the

trustee is barred from acting on those derivative rights because the debtor-in-

possession was barred in the financing order. The derivative rights exist like a

sword in a stone, but there is no Arthur to claim them.

                                  III. Conclusion

      For the reasons set forth above, we AFFIRM .




                                         -18-
