                           PUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT


In re: MERRY-GO-ROUND                  
ENTERPRISES, INC.,
                             Debtor.


DEBORAH H. DEVAN,
                Plaintiff-Appellee,              No. 04-1646

                v.
PHOENIX AMERICAN LIFE INSURANCE
COMPANY,
              Defendant-Appellant.
                                       
          Appeal from the United States District Court
           for the District of Maryland, at Baltimore.
                J. Frederick Motz, District Judge.
         (CA-03-3667-JFM; BK-94-50161; AP-97-5480)

                     Argued: December 2, 2004

                     Decided: February 23, 2005

            Before KING and SHEDD, Circuit Judges,
        and Henry F. FLOYD, United States District Judge
                for the District of South Carolina,
                      sitting by designation.



Affirmed by published opinion. Judge King wrote the opinion, in
which Judge Shedd and Judge Floyd joined.
2                IN RE MERRY-GO-ROUND ENTERPRISES
                             COUNSEL

ARGUED: Morton Alfred Faller, SHULMAN, ROGERS, GAN-
DAL, PORDY & ECKER, P.A., Rockville, Maryland, for Appellant.
Cynthia Louise Leppert, NEUBERGER, QUINN, GIELEN, RUBIN
& GIBBER, P.A., Baltimore, Maryland, for Appellee. ON BRIEF:
Stephen A. Metz, SHULMAN, ROGERS, GANDAL, PORDY &
ECKER, P.A., Rockville, Maryland, for Appellant. Deborah H.
Devan, Jason M. St. John, NEUBERGER, QUINN, GIELEN, RUBIN
& GIBBER, P.A., Baltimore, Maryland, for Appellee.


                              OPINION

KING, Circuit Judge:

   In this appeal by Phoenix American Life Insurance Company
("Phoenix American"), we are called upon to decide whether interest
payments made by a debtor on post-petition life insurance policy
loans constitute avoidable transfers under § 549(a) of the Bankruptcy
Code. Phoenix American maintains that the claim of the Trustee for
the estate of debtor Merry-Go-Round Enterprises, Inc. ("MGRE")
should have been denied because such interest payments are not,
under the statute, avoidable "transfer[s] of property of the estate." 11
U.S.C. § 549(a). In the alternative, Phoenix American asserts that the
interest payments made by MGRE were authorized by statute and the
bankruptcy court. Both the bankruptcy and district courts disagreed
with Phoenix American, ruling that interest payments made to Phoe-
nix American by MGRE on post-petition life insurance policy loans
were avoidable transfers. As explained below, we affirm.

                                   I.

                                  A.

   In January 1985, MGRE, a retail clothing business operating
approximately 1,442 stores nationwide, entered into separate but iden-
tical retirement agreements with ten of its executives, providing each
of them an annual retirement income of approximately $100,000,
                  IN RE MERRY-GO-ROUND ENTERPRISES                     3
                                                          1
commencing at age 65 (the "Retirement Agreements"). On Septem-
ber 1, 1985, MGRE purchased ten identical group life insurance poli-
cies from Phoenix American to fund the Retirement Agreements (the
"Insurance Policies" or "Policies").2 The Insurance Policies desig-
nated the executives as the insureds and MGRE as sole owner and
beneficiary of the policies. Pursuant to the terms of the Insurance Pol-
icies, total annual premiums of approximately $191,500 were payable
to Phoenix American by MGRE on September 1 of each policy year.

   The Insurance Policies also provided that interest on outstanding
loans was due and payable on September 1 of each year. If such inter-
est was not timely paid, it was charged as an additional loan against
a policy’s cash value and added to the policy’s loan balance. Finally,
the Insurance Policies provided that they would be cancelled if a poli-
cy’s loan balance exceeded its cash value. In order to pay the annual
premiums due in 1986, 1987, and 1988, MGRE obtained loans from
Phoenix American on the Insurance Policies — on September 1 of
each year — against the accumulated cash values of the Policies, for
an outstanding loan principal of approximately $575,000. For each of
the years 1989 through 1993, MGRE paid the annual premiums on the
Insurance Policies when they were due, plus interest on the outstand-
ing loans. These payments were made by MGRE from its cash flow,
without resort to any policy loans.

   On January 11, 1994 (the "Commencement Date"), MGRE filed a
Chapter 11 bankruptcy petition in the District of Maryland, seeking
court protection in the reorganization of its business operations. On
the Commencement Date, MGRE filed an "Emergency Motion for
Authority to Make Payment in Full of (1) Payroll, (2) Reimbursable
Employee Expenses, and (3) Employee Benefits." By this motion,
MGRE disclosed the existence of the Insurance Policies, including the
annual premiums of approximately $191,500, plus accrued annual
  1
    We spell out the relevant facts pursuant to the "Joint Stipulation As
To Facts" filed by the parties in the bankruptcy court. Joint Stipulation
As To Facts, Devan v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round
Enter.), No. 94-5-0161-SD (Bankr. D. Md. Oct. 20, 2003) (the "Joint
Stipulation").
  2
    The Retirement Agreements had no funding or insurance require-
ments; MGRE thus had no obligation to purchase the Insurance Policies.
4                IN RE MERRY-GO-ROUND ENTERPRISES
interest of approximately $50,000 on the outstanding loans, due on
September 1, 1994. Although the bankruptcy court granted the motion
in part, MGRE did not seek, and the court did not award, any relief
relating to the Retirement Agreements or the Insurance Policies.

   On March 17, 1994, MGRE filed an "Amended Motion to Approve
Payment of Certain Prepetition Employee Benefits" (the "Amended
Motion"). The Amended Motion stated, in pertinent part, that:
"[MGRE] has supplemental retirement agreements with certain exec-
utive officers . . . . [A]pproval is sought to maintain and honor these
agreements. A list of affected employees, titles, policy numbers and
cash values is included . . . ." Amended Motion at ¶ 9. On April 11,
1994, the bankruptcy court ruled on the Amended Motion, entering
an order providing that "the debtors shall be permitted to honor and
maintain the supplemental retirement agreements described in the
[Amended Motion]" (the "April 11, 1994 Order"). No mention was
made in the Amended Motion or the April 11, 1994 Order of the out-
standing loans against the Insurance Policies.

   On November 9, 1994, MGRE directed a request to Phoenix Amer-
ican seeking to "borrow the maximum cash value available" on the
Insurance Policies and for Phoenix American to deduct the annual
premiums due on September 1, 1994.3 On December 9, 1994, pursu-
ant to MGRE’s request, Phoenix American issued a check to MGRE
in the sum of $1,210,752.70 ("Loan I"), representing the maximum
loans available to MGRE at that time less the 1994 annual premiums
of approximately $191,500 (for the policy year September 1, 1994,
through August 31, 1995).

   By September 1, 1995, additional cash values had accumulated in
the Insurance Policies, but loans totalling $1,976,695.86 remained out-
standing.4 On September 26, 1995, MGRE paid Phoenix American
    3
    On November 10, 1994, MGRE delivered to Phoenix American a
check in the sum of $44,005.74, in full payment of accrued interest due
for the 1993 policy year (September 1, 1993, until August 31, 1994) on
pre-petition loans.
  4
    The $1,976,695.86 in outstanding loans on the Insurance Policies as
of September 1, 1995, included:
                  IN RE MERRY-GO-ROUND ENTERPRISES                   5
accrued interest on the outstanding loans in the sum of $134,689.10
("Interest Payment I") for the preceding policy year (September 1,
1994, through August 31, 1995). That same day, MGRE again
directed a request to Phoenix American to "borrow the maximum
cash value available" on the Insurance Policies and directed Phoenix
American to deduct the annual premiums from the sum to be loaned.
Pursuant to MGRE’s request, Phoenix American, on October 27,
1995, paid MGRE the sum of $99,875.69 ("Loan II"), representing
the maximum loans available at that time less the loans used to pay
the 1995 annual premiums of approximately $191,500 (for the policy
year September 1, 1995, through August 31, 1996). The approval of
the bankruptcy court was neither sought nor obtained for any of the
loans made by Phoenix American on the Insurance Policies after the
Commencement Date.

   On March 1, 1996, the bankruptcy court converted the MGRE
bankruptcy case to a Chapter 7 liquidation proceeding and the Trustee
was appointed. On October 1, 1996, upon demand of the Trustee that
the estate be paid the cash surrender values of the Insurance Policies,
Phoenix American issued the Trustee a check for $810.63. This sum
represented (1) the total cash values of the Insurance Policies
($2,438,695.29), (2) minus the outstanding loans ($2,268,057.34),5

      • pre-petition loans, totalling $574,457.37;

      • loans used to pay the September 1, 1994 policy premi-
        ums, totalling $191,485.79; and

      • Loan I ($1,210,752.70).
  5
   The $2,268,057.34 in outstanding loans on the Insurance Policies as
of September 1, 1996, included:

      • $1,976,695.86 in outstanding loans as of September 1,
        1995;

      • loans used to pay the September 1, 1995 policy premi-
        ums, totalling $191,485.79; and

      • Loan II ($99,875.69).
6                 IN RE MERRY-GO-ROUND ENTERPRISES
and (3) minus accrued interest on the outstanding loans for the pre-
ceding policy year (September 1, 1995, through August 31, 1996) of
$169,827.32 ("Interest Payment II").

                                   B.

   On September 2, 1997, the Trustee initiated an adversary proceed-
ing against Phoenix American in the bankruptcy court seeking to
recover the sum of $1,616,144.81 for the loans Phoenix American had
made on the Insurance Policies after the Commencement Date, i.e.,
Loans I and II (collectively, the "Loans"), and the two interest pay-
ments made by MGRE on those loans, i.e., Interest Payments I and
II. The Trustee contended that the Loans and Interest Payments I and
II were unauthorized post-petition transfers under 11 U.S.C. § 549,
which provides, in relevant part, that "the trustee may avoid a transfer
of property of the estate . . . that occurs after commencement of the
case . . . [and] that is not authorized under this title or by the court."
11 U.S.C. § 549(a)(2)(B) (the "Statute"). On March 31, 1999, after the
parties filed cross-motions for summary judgment, the bankruptcy
court granted summary judgment to Phoenix American with respect
to the Trustee’s claims on the Loans. However, the court denied any
relief to Phoenix American with respect to Interest Payments I and II,
concluding that they may have constituted unauthorized post-petition
transfers under the Statute, and preserving that issue for trial. Devan
v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round Enter., Inc.), No.
94-5-0161-SD, slip op. at 6-9 (Bankr. D. Md. Mar. 31, 1999) (grant-
ing in part and denying in part motion for summary judgment)
("Bankr. Op. I").

   On September 12, 2003, the parties filed renewed motions for sum-
mary judgment on the Trustee’s claims relating to Interest Payments
I and II, and the parties agreed that these motions should be heard
together at the bench trial scheduled for November 3, 2003. In con-
nection with the summary judgment motions and the upcoming trial,
the parties, on October 20, 2003, filed the Joint Stipulation with mul-
tiple exhibits. The court thereafter conducted the bench trial and ren-
dered an oral opinion in favor of the Trustee on Interest Payments I
and II. Devan v. Phoenix Am. Life Ins. Co. (In re Merry-Go-Round
Enter., Inc.), Tr. of Judge’s Decision Only, No. 94-5-0161-SD
(Bankr. D. Md. Nov. 3, 2003) ("Bankr. Op. II"). Pursuant thereto, on
                 IN RE MERRY-GO-ROUND ENTERPRISES                    7
November 24, 2003, the court entered judgment against Phoenix
American in the sum of $214,211.72, plus pre-judgment interest from
August 29, 1997. The court determined the amount of the judgment
by aggregating Interest Payment I ($135,689.10) with Interest Pay-
ment II ($169,826.32), and then deducting $90,294.70 for interest
paid on pre-petition loans. (We hereinafter refer to the judgment sum
of $214,211.72 as the "Interest Payments."). In so doing, the court
concluded that MGRE was authorized by its April 11, 1994 Order to
make the interest payments on pre-petition loans.

   Phoenix American appealed the judgment to the district court and,
on April 12, 2004, the district court affirmed the bankruptcy court’s
ruling. Phoenix Am. Life Ins. Co. v. Devan, 308 B.R. 237, 243 (D.
Md. 2004) ("Dist. Op."). The district court held that the Interest Pay-
ments constituted "transfers" within the meaning of the Statute, and
that they were not authorized by the Bankruptcy Code or the bank-
ruptcy court. Phoenix American has now appealed the district court’s
ruling to this Court, and we possess jurisdiction pursuant to 28 U.S.C.
§ 158(d).

                                  II.

   We review the judgment of a district court sitting in review of a
bankruptcy court de novo, applying the same standards of review that
were applied in the district court. Three Sisters Partners, L.L.C. v.
Harden (In re Shangra-La, Inc.), 167 F.3d 843, 847 (4th Cir. 1999).
Specifically, "we review the bankruptcy court’s factual findings for
clear error, while we review questions of law de novo." Loudon Leas-
ing Dev. Co. v. Ford Motor Credit Co. (In re K & L Lakeland, Inc.),
128 F.3d 203, 206 (4th Cir. 1997).

                                 III.

   As recognized by the bankruptcy and district courts, the recovery
by a Trustee of post-petition transfers from the bankruptcy estate
requires, under the Statute, the satisfaction of four elements: (1) a
transfer, (2) of property of the estate, (3) made after commencement
of the case, and (4) that is not authorized under the Bankruptcy Code
or by the bankruptcy court. See Hoagland v. Edward Hines Lumber
Co. (In re LWMcK Corp.), 196 B.R. 421, 423 (Bankr. S.D. Ill. 1996);
8                 IN RE MERRY-GO-ROUND ENTERPRISES
Geekie v. Watson (In re Watson), 65 B.R. 9, 11 (Bankr. C.D. Ill.
1986). On appeal, Phoenix American maintains that the Interest Pay-
ments do not constitute "transfer[s]" within the meaning of the Statute
and, alternatively, that they were transfers authorized by the Bank-
ruptcy Code and the bankruptcy court. We address these contentions
in turn.

                                   A.

    Phoenix American first asserts that both of the lower courts erred
in determining that the Interest Payments were "transfer[s]" under the
Statute. Under the Bankruptcy Code, a "transfer" is defined broadly
as "every mode, direct or indirect, absolute or conditional, voluntary
or involuntary, of disposing of or parting with property or with an
interest in property." 11 U.S.C. § 101(54). Phoenix American main-
tains that the Interest Payments do not constitute such transfers, in
that they did not dispose of or part with MGRE’s property. First, it
contends, the bankruptcy court properly found that the Loans were
not "transfer[s]" under the Statute because they simply delivered
MGRE’s own funds to itself. Bankr. Op. I at 6-9 ("The so-called pol-
icy loan is in actuality only an advance to the policyholder of reserve
values in the policy to which the policyholder is absolutely entitled
. . . ."); see also Bd. of Assessors of the Parish of Orleans v. N.Y. Life
Ins. Co., 216 U.S. 517, 522-23 (1910) (Holmes, J.) (holding that pol-
icy loans are distinct from ordinary loans because there is no obliga-
tion to repay). Phoenix American maintains, however, that the
bankruptcy court erred when it distinguished the Loans from the
Interest Payments. According to Phoenix American, because the
Interest Payments prevented the cash surrender values of the Insur-
ance Policies from being reduced, they did not dispose of or part with
MGRE’s property; to the contrary, those Payments increased the cash
surrender values of the Policies. Under Phoenix American’s reason-
ing, the Interest Payments are not "transfer[s]" within the meaning of
the Statute.

   We see this contention as without merit, and we agree with the
bankruptcy and district courts that the Interest Payments constituted
"transfer[s]" under the Statute. The bankruptcy court persuasively rea-
soned that the Interest Payments were "payment[s] to [Phoenix Amer-
ican] to maintain [Phoenix American’s] investment return on the life
                 IN RE MERRY-GO-ROUND ENTERPRISES                    9
insurance policies’ cash values to enable [Phoenix American] to pay
policy dividends and to earn a return for itself." Bankr. Op. I at 10
(emphasis added). MGRE thus depleted its assets, i.e., the cash sur-
render values of the Insurance Policies, in order to make interest pay-
ments to Phoenix American. This is different, the bankruptcy court
recognized, from the Loans, where MGRE merely withdrew the cash
values it owned in the Policies. In these circumstances, the Interest
Payments constituted "transfer[s]" under the Statute, because they
decreased the value of MGRE’s estate by disposing of the estate’s
property in favor of Phoenix American.

                                  B.

   Alternatively, Phoenix American contends that MGRE was autho-
rized to make the Interest Payments by both the Bankruptcy Code,
specifically § 365 (executory contracts) and § 363(c)(1) (ordinary
course of business transactions), and by the bankruptcy court in its
April 11, 1994 Order. On this point, we first observe that Phoenix
American bore the burden of proving that the transfers were "autho-
rized." See Fed. R. Bankr. P. 6001 ("Any entity asserting the validity
of a transfer under [the Statute] shall have the burden of proof."). We
consider in turn Phoenix American’s alternate assertions that the
transfers, i.e., the Interest Payments, were authorized by the Bank-
ruptcy Code and the bankruptcy court.

                                  1.

                                  a.

   Phoenix American contends that the Insurance Policies were "exec-
utory contracts" within the meaning of § 365, which gives a Chapter
11 debtor the authority, subject to court approval, to "assume or
reject" any executory contract of the debtor. 11 U.S.C. § 365. Impor-
tantly, Phoenix American concedes that MGRE did not seek bank-
ruptcy court approval prior to MGRE’s purported assumption of the
Insurance Policies. Appellee’s Br. at 27. Therefore, Phoenix Ameri-
can’s contention on this point must fail, as it did in the district and
bankruptcy courts, for the simple reason that MGRE did not obtain
court approval of MGRE’s alleged contract assumptions, as mandated
by § 365. See Dist. Op. at 242; Bankr. Op. II at 8; see also In re A.H.
10                IN RE MERRY-GO-ROUND ENTERPRISES
Robins Co., 68 B.R. 705, 711 (Bankr. E.D. Va. 1986) ("[C]ourt
approval is not a perfunctory step and assumption by conduct cannot
be sanctioned by this Court.").

                                   b.

   Next, Phoenix American maintains that the Interest Payments were
authorized by § 363(c)(1), as payments made "in the ordinary course
of business," and thus should not have been avoided under the Statute.
11 U.S.C. § 363(c)(1).6 Phoenix American asserts that MGRE made
the Interest Payments to maintain the Insurance Policies for the pur-
pose of funding, in the ordinary course of its business, the benefits
due to its executives under the Retirement Agreements. Both lower
courts disagreed with this contention, however, finding that the Inter-
est Payments failed to qualify as being made "in the ordinary course"
of MGRE’s business under § 363(c)(1). Because the bankruptcy court
resolved the "ordinary course" issue by a factual determination, we
may set it aside only if it is clearly erroneous. Harman v. First Am.
Bank of Md. (In re Jeffrey Bigelow Design Group, Inc.), 956 F.2d
479, 481-82 (4th Cir. 1992); see also United States v. Singh, 363 F.3d
347, 354 (4th Cir. 2004) ("A factual finding is clearly erroneous
when, through our review of the evidence, we are left with the defi-
nite and firm conviction that a mistake has been committed."). And
because, on careful consideration, we are left with no firm conviction
that a mistake has been committed here, we are unable to identify
clear error in this finding.

   In resolving this contention, we are content to adopt the reasoning
of the district court, that is, that Phoenix American failed to carry its
burden of proving that the Interest Payments qualified as "ordinary
course of business" transactions. See Dist. Op. at 241; see also Fed.
R. Bankr. P. 6001. Phoenix American presented no evidence either
that (1) obtaining life insurance policy loans in the maximum allow-
able sum were common practice in its industry, i.e., the operation of
  6
   Although § 363 speaks only of the authority of a trustee, 11 U.S.C.
§ 1107 grants a debtor-in-possession — MGRE during its initial Chapter
11 proceeding — the rights of a trustee (with some exceptions which are
not relevant here). See In re Roth Am., Inc., 975 F.2d 949, 952 n.2 (3d
Cir. 1992).
                  IN RE MERRY-GO-ROUND ENTERPRISES                     11
retail clothing stores; or (2) a creditor would reasonably have
expected MGRE to enter into such loans. See Joint Stipulation; see
also Bowers v. Atlanta Motor Speedway, Inc. (In re S.E. Hotel Props.
Ltd. P’ship), 99 F.3d 151, 158 (4th Cir. 1996) (rejecting debtor’s con-
tention that transactions were in "ordinary course of business"
because debtor failed to show they were common practice in industry
or that creditors could reasonably expect them). We therefore reject
Phoenix American’s contention that the Interest Payments were
authorized under the provisions of § 363(c)(1).

                                    2.

   Finally, Phoenix American maintains that the Interest Payments
were authorized by the April 11, 1994 Order, permitting MGRE to
"honor and maintain the supplemental retirement agreements" as
described in the Amended Motion. MGRE’s Amended Motion had
represented to the bankruptcy court that the Retirement Agreements
(referred to in the April 11, 1994 Order as "the supplemental retire-
ment agreements") were funded by the Insurance Policies.7 Phoenix
American contends on appeal that the bankruptcy court’s April 11,
1994 Order authorized MGRE to borrow against the cash values of
the Insurance Policies and that the Interest Payments were merely a
cost of honoring and maintaining those Policies (and the Retirement
Agreements).

   Phoenix American’s contention on the April 11, 1994 Order is
without merit for two reasons. First, the Amended Motion merely
sought authority to honor and maintain the Retirement Agreements,
and the April 11, 1994 Order does not mention the Insurance Policies
in any way, much less authorize MGRE to deplete their cash values.
Second, the bankruptcy court interpreted its April 11, 1994 Order as
not authorizing the Interest Payments. Bankr. Op. II at 6 ("I think [the
April 11, 1994 Order] simply does not go that far to say a paragraph
offering a debtor to maintain supplemental retirement agreements
extends to allowing the debtor to use those insurance contracts for
  7
   The Amended Motion provided, in pertinent part, that "[MGRE] has
obtained life insurance on each officer to fund benefits payable under the
agreements. . . . [A]pproval is sought to maintain and honor these agree-
ments." Amended Motion at ¶ 9.
12                IN RE MERRY-GO-ROUND ENTERPRISES
other purposes."). And when this issue was raised on appeal to the
district court, that court aptly observed, "[a] bankruptcy court is
deemed to be in the best position to interpret its own orders, and thus
a court’s interpretation of its own order must be given substantial def-
erence." Dist. Op. at 242 (relying on Colonial Auto Ctr. v. Tomlin (In
re Tomlin), 105 F.3d 933, 941 (4th Cir. 1996)).

   Phoenix American also asserts that, because the bankruptcy court
deemed interest payments on pre-petition loans as authorized by its
April 11, 1994 Order, the Interest Payments themselves must also
have been authorized. See supra Part I.B; see also Bankr. Op. II at 9-
10 ("I do draw a distinction here as a matter of fact between the post
petition loan and the policy loan interest being made on that . . . and
the pre-petition policy loan obligations that were paid post-petition.").
In its emergency motion filed on the Commencement Date, MGRE
disclosed to the bankruptcy court that it would be required to make
interest payments on pre-petition loans of approximately $50,000, but
the post-petition interest payments were in fact nearly three times that
sum. In that circumstance, we see no error in the bankruptcy court’s
finding that the Interest Payments (for loans obtained post-petition)
were not authorized by the April 11, 1994 Order, which merely per-
mitted "honoring and maintaining" the Retirement Agreements (not
the withdrawal of an unprecedented $1.3 million from the Insurance
Policies). Furthermore, as we have observed, a bankruptcy court is in
the "best position to interpret its own orders." Colonial Auto Ctr., 105
F.3d at 941. According the appropriate deference to that court’s inter-
pretation of its April 11, 1994 Order, the Interest Payments were not
authorized by the bankruptcy court. Therefore, the Interest Payments
were neither authorized by the Bankruptcy Code nor the bankruptcy
court.

                                  IV.

  Pursuant to the foregoing, we affirm the judgment of the district
court.

                                                            AFFIRMED
