                                                                              FILED
                           NOT FOR PUBLICATION                                 FEB 11 2014

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                           FOR THE NINTH CIRCUIT


In the Matter of: DAEWOO MOTOR                   No. 12-56004
AMERICA, INC.,
                                                 D.C. No. 2:10-cv-05445-SVW
              Debtor,

                                                 MEMORANDUM*
DAEWOO MOTOR AMERICA, INC.,
Reorganized Debtor,

              Appellant,

  v.

DAEWOO MOTOR, CO., LTD.,

              Appellee.


                   Appeal from the United States District Court
                       for the Central District of California
                   Stephen V. Wilson, District Judge, Presiding

                           Submitted February 7, 2014**
                              Pasadena, California

Before: KLEINFELD, SILVERMAN, and HURWITZ, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
                                          -2-


      Daewoo Motor America (“DMA”), a chapter 11 debtor, seeks review of the

district court’s order affirming a bankruptcy court judgment entered in favor of the

debtor’s parent and creditor, Daewoo Motor Co., Ltd. (“DWMC”), on DMA’s

objection to DWMC’s proof of claim. The bankruptcy court: (1) declined to

recharacterize debt claimed by DWMC as equity in the debtor; and (2) allowed

DWMC to recoup amounts it owed to DMA against DMA’s obligations. We

review the bankruptcy court’s decision independently, and we affirm. See In re

Dominguez, 51 F.3d 1502, 1506 (9th Cir. 1995).

      DWMC argues that the bankruptcy court did not have authority to

recharacterize DWMC’s claim as one of equity in the appellant, relying on In re

Pacific Express, 69 B.R. 112 (B.A.P. 9th Cir. 1986), a decision of the Bankruptcy

Appellate Panel for the Ninth Circuit. This court’s recent opinion in In re Fitness

Holdings. Int’l, Inc., however, held that bankruptcy courts may recharacterize a

debtor’s obligations to reflect the nature of the obligation under state law, rejecting

Pacific Express’s strict limitation to equitable subordination under 11 U.S.C. §

510(c). 714 F.3d 1141, 1147 (9th Cir. 2013).

      The Fitness Express decision directs that, in distinguishing between debt and

equity, the applicable authority is state law. 714 F.3d at 1148. The parties agree
                                           -3-
that, in this case, the governing state law is identical to the multi-factor test used by

the lower courts. Based on this agreement, we proceed to a review of the merits.

      The bankruptcy court did not clearly err in denying DMA’s request to

recharacterize DWMC’s obligations. See In re AutoStyle Pastics, Inc., 269 F.3d

726 (6th Cir. 2001); Hardman v. United States, 827 F.2d 1409, 1411-12 (9th Cir.

1987). The bankruptcy court’s determination that the obligations were debts was

supported by the parties’ agreements, the contemporaneous documentation

evidencing the transactions, and DMA’s statements to third parties, including its

own auditors.

      The bankruptcy court also did not abuse its discretion in allowing DWMC to

recoup its debt against that owed to DWMC by DMA, since the obligations arose

from the same agreements. See Newbery Corp. v. Fireman’s Fund Ins. Co., 95

F.3d 1392, 1399 (9th Cir. 1996).

      Finally, we deny as moot DWMC’s request to dismiss or to summarily

affirm this appeal.

      AFFIRMED.
