                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 IN RE: ADAMSON APPAREL, INC.,                     No. 12-57059
                          Debtor.
                                                     D.C. No.
                                                  2:11-cv-01204-
 ALBERTA P. STAHL, CHAPTER 7                           VAP
 TRUSTEE OF ADAMSON APPAREL,
 INC.,                                               OPINION
                        Appellant,

                     v.

 ARNOLD H. SIMON,
                                  Appellee.


        Appeal from the United States District Court
            for the Central District of California
         Virginia Phillips, District Judge, Presiding

                  Argued and Submitted
          December 11, 2014—Pasadena, California

                          Filed May 6, 2015

       Before: Ronald Lee Gilman,* Susan P. Graber,
        and Consuelo M. Callahan, Circuit Judges.

 *
   The Honorable Ronald Lee Gilman, Senior United States Circuit Judge
for the Sixth Circuit, sitting by designation.
2                IN RE ADAMSON APPAREL, INC.

                    Opinion by Judge Gilman;
                     Dissent by Judge Graber


                           SUMMARY**


                            Bankruptcy

    Affirming the district court’s affirmance of the
bankruptcy court’s judgment after a bench trial in an
adversary proceeding, the panel held that a corporate insider
who personally guaranteed his corporation’s loan is absolved
of any preference liability to which he might otherwise have
been subjected, where he had previously waived his
indemnification rights against the corporation, he had a bona
fide basis for doing so, and he took no subsequent actions to
negate the economic impact of that waiver.

    The panel held that the insider did not have any
preference liability regarding a pre-petition payment of the
loan because, in light of his indemnification waiver, he was
not a creditor of the corporation, which was a chapter 7
debtor. The panel declined to follow a line of bankruptcy
court cases holding that an insider guarantor is subject to
preference liability where a transfer works to his benefit, even
if he has unconditionally waived all claims against the debtor.

    Dissenting, Judge Graber wrote that she would follow
every bankruptcy court to have decided the issue and hold
that insider-guarantors such as the insider here are creditors.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
               IN RE ADAMSON APPAREL, INC.                    3

She also wrote that, in deciding that the waiver was valid, the
majority erred by making a finding regarding the purpose of
a payment made by the insider and in relying on a statement
made by counsel at oral argument.


                         COUNSEL

James K.T. Hunter (argued) and Malhar S. Pagay, Pachulski
Stang Ziehl & Jones LLP, Los Angeles, California, for
Appellant.

Leslie A. Cohen (argued) and J’aime K. Williams, Leslie
Cohen Law PC, Santa Monica, California, for Appellee.


                          OPINION

GILMAN, Circuit Judge:

    This case presents an unresolved issue of bankruptcy law.
The question is whether a corporate insider who personally
guaranteed his corporation’s loan is absolved of any
preference liability to which he might otherwise have been
subjected, where he had previously waived his
indemnification rights against the corporation, he had a bona
fide basis for doing so, and he took no subsequent actions to
negate the economic impact of that waiver. Bankruptcy
courts have split on this issue, and neither party has been able
to cite to any district- or appellate-court decision addressing
the question.
4             IN RE ADAMSON APPAREL, INC.

    Both the bankruptcy court and the district court below
ruled in favor of the corporate insider. For the reasons set
forth below, we AFFIRM the judgment of the district court.

                   I. BACKGROUND

A. The loan, pledges, and guaranties

    Adamson Apparel, Inc. (Adamson) manufactures and
sells clothing and accessories. On April 18, 2002, Adamson
took out a multimillion-dollar loan from CIT Group
Commercial Services, Inc. (CIT). To secure the loan,
Adamson granted CIT a lien on its inventory and accounts
receivable. Arnold H. Simon, Adamson’s president and
CEO, subsequently entered into two separate agreements with
CIT to guarantee the loan: a Cash Collateral Pledge
Agreement (the Pledge) and a Limited Guaranty (the
Guaranty). In these agreements, Simon took responsibility
for Adamson’s debt in the event that Adamson was unable to
fully repay the loan. Simon would ordinarily have been
entitled to have Adamson reimburse him for any amount that
he was obligated to pay on the corporation’s behalf to settle
the loan with CIT, but the agreements waived that right to
indemnification. (As used throughout this opinion, Simon’s
right to “indemnification” encompasses his rights to
subrogation, reimbursement, or any other form of repayment.)

    Over the next 18 months, the Pledge and the Guaranty
were revised several times. Both agreements were initially
signed on November 12, 2002. The Guaranty was updated on
February 11, 2003, then “amended and restated” on April 9,
2003. Both documents were further “amended and restated”
on April 25, 2003, then updated again on August 5, 2003. A
               IN RE ADAMSON APPAREL, INC.                   5

letter dated December 2, 2003 increased the amount that had
been guaranteed in the August 5, 2003 update of the Pledge.

    Toward the end of 2003, an entity known as BP Clothing
L.L.C. purchased a large amount of merchandise from
Adamson. On December 18, 2003, Adamson instructed BP
Clothing to transfer the purchase price (specifically,
$4,989,934.65) to CIT in partial satisfaction of the debt owed
by Adamson to CIT, this being the very debt guaranteed by
Simon. Adamson filed for bankruptcy under Chapter 11 of
the Bankruptcy Code nine months later. On or about March
31, 2004, Simon paid the balance of the loan, totaling over
$3.5 million, from his personal funds.

B. Lower-court proceedings

    After Adamson filed for Chapter 11 bankruptcy in
September 2004, the Committee of Unsecured Creditors (the
Committee) was appointed to represent the interests of
Adamson’s unsecured creditors. The Committee filed this
adversary action against Simon under a preference-liability
theory. Preference liability is “a mechanism that allows [a]
debtor or trustee to recover from creditors who received
payments in the weeks or months prior to the bankruptcy so
that they can be distributed to all bankruptcy estate creditors
in accordance with their priority.” Leslie A. Cohen & J’aime
K. Williams, Guarantor Preference Liability, 31 Cal. Bankr.
J. 795, 795 (2011). The Committee sought to recover from
Simon the $4,989,934.65 paid by BP Clothing to CIT in
December 2003, arguing that Simon was a corporate insider
who received a preference because he had guaranteed the
loan from CIT. Any reduction in that debt was therefore to
his benefit.
6              IN RE ADAMSON APPAREL, INC.

    In June 2007, Simon filed a motion for summary
judgment, contending that because he had waived his right to
claim indemnification from Adamson, he was not a creditor
and therefore not subject to preference liability. The
bankruptcy court granted that motion the following month.
It held that Simon had fully waived his right to
indemnification, which eliminated his status as a creditor for
preference-liability purposes. The Committee appealed to the
district court.

    The district court reversed the grant of summary judgment
and remanded the case to the bankruptcy court for further
factual development. It pointed out that an ambiguity existed
between the Pledge and the Guaranty as to whether Simon
had fully and irrevocably waived his right to indemnification.
The case was remanded to the bankruptcy court for a
resolution of this issue.

    A bench trial in bankruptcy court took place in September
2010. At trial, Simon testified that he understood at all times
that he would never have any right to seek indemnification
from Adamson for any funds that he expended to settle its
debt to CIT. He told the court that CIT had required him to
include the indemnification waiver in the Pledge and the
Guaranty, although his own preference would have been to
retain the right to seek reimbursement. Simon also pointed
out that he had never filed a proof of claim in Adamson’s
bankruptcy case.

   In addition to Simon’s testimony, the bankruptcy court
took a plethora of documentary evidence under consideration.
The court entered its decision in favor of Simon in December
2010. It held that the Committee had failed to carry its
burden of establishing Simon’s “creditor” status under
               IN RE ADAMSON APPAREL, INC.                   7

11 U.S.C. §§ 101(10) & 547(b). Simon’s testimony as to his
understanding of his rights under the Pledge and the
Guaranty, together with his failure to file a proof of claim in
Adamson’s bankruptcy case, defeated the Committee’s
arguments based on the ambiguous wording of the
documents. The bankruptcy court subsequently entered
judgment in favor of Simon, holding that he was exempt from
preference liability because he was not a creditor of
Adamson.

    The Committee again appealed to the district court, which
affirmed the judgment of the bankruptcy court in August
2012. It held that the bankruptcy court did not commit clear
error in concluding that the Committee had failed to establish
that Simon was a creditor of Adamson. This timely appeal
followed, with the duly appointed Trustee being substituted
for the Committee after Adamson’s bankruptcy case was
converted from Chapter 11 to Chapter 7.

                      II. ANALYSIS

A. Standard of review

    “We review de novo the district court’s decision on
appeal from the bankruptcy court, applying the same
standards applied by the district court, without deference to
the district court.” In re Thorpe Insulation Co., 677 F.3d 869,
879 (9th Cir. 2012) (citation omitted). The bankruptcy
court’s findings of fact are reviewed under the clear-error
standard, and its conclusions of law are reviewed de novo.
Id. The parties agree that New York state law governs the
substance of this case in accordance with the choice-of-law
provisions in the contracts at issue.
8              IN RE ADAMSON APPAREL, INC.

B. Simon’s status as an alleged creditor of Adamson

    Title 11 U.S.C. § 547(b)(1) requires that the transfer of
assets in question must be “to or for the benefit of a creditor”
in order for preference liability to attach. In relevant part, a
creditor is defined in § 101(10) of the Bankruptcy Code as an
“entity that has a claim against the debtor that arose at the
time of or before the order for relief concerning the debtor.”
11 U.S.C. § 101(10). A claim is further defined as a “right to
payment” or a “right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment.”
11. U.S.C. § 101(5). The Trustee bears the burden of
establishing that Simon meets this definition, as well as
satisfying each of the other preference-liability requirements,
in order to prevail on its claim against him. 11 U.S.C.
§ 547(g); see also Universal Serv. Admin. Co. v. Post-
Confirmation Comm. of Unsecured Creditors of Incomnet
Commc’ns Corp., 463 F.3d 1064, 1070 (9th Cir. 2006).

    1. The contracts at issue are ambiguous as to whether
       Simon waived his indemnification right

    In support of its argument that Simon retains a claim
against Adamson, the Trustee points to the Pledge documents
dated November 12, 2002 and April 25, 2003. These
documents provide that Simon “defers all statutory,
contractual, common law, equitable, and all other claims
against [Adamson],” including those for “subrogation,
reimbursement, exoneration, contribution, indemnification,
setoff or other recourse,” “[u]nless and until [CIT has]
received final payment and satisfaction in full” for the loan.
The Trustee argues that simply deferring a claim does not
extinguish it, so that Simon retains a claim against Adamson
and is properly considered a creditor. It contends that these
               IN RE ADAMSON APPAREL, INC.                   9

Pledge documents were never superseded by any subsequent
document.

     To counter this argument, Simon points out that his
November 12, 2002 Guaranty states that he “irrevocably
waives and agrees he will not exercise any and all rights
which he has or may have at any time . . . to assert any claim
against Adamson or any other party on account of payments
made under this Guaranty or otherwise, including . . . any and
all existing and future rights of subrogation, reimbursement,
exoneration, contribution, and/or indemnity.” That Guaranty
was executed on the same date as the November 12, 2002
Pledge.

    As for the documents dated April 25, 2003, they do not
contain a clear waiver of the right of indemnification, but do
confirm that the amendment and reinstatement “shall not, in
any manner, be construed to constitute payment of, or impair,
limit, cancel or extinguish or constitute a novation in respect
of, the indebtedness and other obligations and liabilities of
Pledgor evidenced by or arising under the Existing
Guaranty.” The April 9, 2003 version of the Guaranty was in
place at the time that the Pledge was amended on April 25,
2003 and contains an indemnification waiver identical to the
one in the original November 12, 2002 Guaranty. An
identical waiver also appears in the August 5, 2003 update to
the Pledge.

    This discrepancy between the deferral of indemnification
rights in the Pledge and the unconditional waiver of the same
rights in the Guaranty creates an ambiguity on the face of the
documents. “Ambiguity is determined by looking within the
four corners of the document, not to outside sources.” Kass
v. Kass, 696 N.E.2d 174, 180 (N.Y. 1998) (citing W.W.W.
10             IN RE ADAMSON APPAREL, INC.

Assocs. v. Giancontieri, 566 N.E.2d 639, 641–42 (N.Y.
1990)). “The entire contract must be reviewed and particular
words should be considered, not as if isolated from the
context, but in the light of the obligation as a whole and the
intention of the parties as manifested thereby.” Riverside S.
Planning Corp. v. CRP/Extell Riverside, L.P., 920 N.E.2d
359, 363 (N.Y. 2009) (internal quotation marks omitted).
Where multiple documents exist in support of the same
transaction or purpose, the documents should generally be
interpreted as a single contract. BWA Corp. v. Alltrans Exp.
U.S.A., Inc., 493 N.Y.S.2d 1, 3 (N.Y. App. Div. 1985).
“Whether an agreement is ambiguous is a question of law for
the courts.” Kass, 696 N.E.2d at 180 (citing Van Wagner
Adver. Corp. v. S&M Enters., 492 N.E.2d 756, 758 (N.Y.
1986)).

    Here, the district court properly concluded that the
discrepancy discussed above creates an ambiguity as to
whether Simon’s right to indemnification was fully waived.
One set of documents says that the right is simply deferred
until CIT has been fully paid, while the other set of
documents says that the waiver is unconditional. Because
these two positions are inconsistent, we find no error in the
district court’s remand of the case to the bankruptcy court to
resolve the ambiguity.

     2. The bankruptcy court did not commit clear error in
        finding that the waiver of Simon’s indemnification
        rights was unconditional

    When a contract is deemed ambiguous, its interpretation
becomes a question of fact, Mellon Bank, N.A. v. United Bank
Corp. of N.Y., 31 F.3d 113, 116 (2d Cir. 1994), and we review
that interpretation under the clear-error standard, Dist. Lodge
               IN RE ADAMSON APPAREL, INC.                   11

26, Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO
v. United Techs. Corp., 610 F.3d 44, 54 (2d Cir. 2010). Clear
error exists when, although there is evidence to support the
lower court’s conclusion, the reviewing court is left with the
“definite and firm conviction that a mistake has been made.”
ASM Capital, LP v. Ames Dep’t. Stores, Inc. (In re Ames
Dep’t Stores, Inc.), 582 F.3d 422, 426 (2d Cir. 2009) (citing
United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)).

    The district court was not left with such a conviction, nor
are we. In addition to seeing the unconditional waiver set
forth in the Guaranty, the bankruptcy court heard Simon’s
testimony that CIT had insisted on the waiver and that Simon
had never questioned its effectiveness. This testimony was
reinforced by the fact that Simon never filed a proof of claim
in the Adamson bankruptcy case. The bankruptcy court thus
had more than sufficient evidence to conclude that Simon had
fully waived his right of indemnification from Adamson.

   3. Having fully waived his right of indemnification and
      taken no subsequent actions that would negate the
      economic impact of that waiver, Simon has no claim
      against Adamson and thus cannot be considered a
      creditor

    The Trustee offers no additional theory regarding any
claim that Simon might have against Adamson that would
cause Simon to meet the definition of a creditor as set forth in
the Bankruptcy Code. Instead, it urges this court to join
several bankruptcy courts in stepping away from the plain
text of the Code and subjecting an insider guarantor to
preference liability where a transfer works to his benefit, even
if he has unconditionally waived all claims against the debtor.
See Miller v. Greystone Bus. Credit II, L.L.C. (In re USA
12             IN RE ADAMSON APPAREL, INC.

Detergents, Inc.), 418 B.R. 533, 541–42 (Bankr. D. Del.
2009); Russell v. Jones (In re Pro Page Partners, LLC),
292 B.R. 622, 631–33 (Bankr. E.D. Tenn. 2003); Telesphere
Liquidating Trust v. Galesi (In re Telesphere Commc’ns,
Inc.), 229 B.R. 173, 176 n.3 (Bankr. N.D. Ill. 1999).

    The above line of cases relied upon by the Trustee stems
from the Seventh Circuit’s decision in Levit v. Ingersoll Rand
Fin. Corp. (In re Deprizio), 874 F.2d 1186, 1194 (7th Cir.
1989), and Congress’s subsequent response to Deprizio in
1994. In principle, the Bankruptcy Code seeks to effect an
equitable distribution of a debtor’s assets to the debtor’s
various creditors through the Code’s statutory provisions and
the use of a bankruptcy trustee. A simple way to achieve that
goal in many situations is to collect all of a debtor’s assets at
the time of bankruptcy and apportion those assets ratably to
the creditors according to their priority. But Congress has
recognized that such a simple scheme would not be equitable
if creditors who sensed financial difficulty could demand
payment and have their demands fully satisfied in the period
leading up to the filing of a bankruptcy petition, leaving the
remaining creditors with a shortfall. See id. (describing this
reasoning in more detail).

    To remedy that concern, Congress empowered the trustee
to set aside any transactions benefiting a creditor in the 90
days before the filing of a bankruptcy petition. See 11 U.S.C.
§ 547(b). Congress apparently decided that 90 days is an
adequate time for reasonably alert creditors to notice potential
preferential treatment and force a debtor to either pay up or
face an involuntary bankruptcy petition.

    But, as courts have noted and Congress has recognized,
“[i]nsiders pose special problems.” In re Deprizio, 874 F.2d
               IN RE ADAMSON APPAREL, INC.                    13

at 1195. The Bankruptcy Code defines insiders of a
corporation as any director, officer, general partner, or person
in control of the corporation, as well as any of their relatives.
See 11 U.S.C. § 101(31)(B). The court in Deprizio
highlighted the particular complications that they cause as
follows:

        Insiders will be the first to recognize that the
        firm is in a downward spiral. If insiders and
        outsiders had the same preference-recovery
        period, insiders who lent money to the firm
        could use their knowledge to advantage by
        paying their own loans preferentially, then
        putting off filing the petition in bankruptcy
        until the preference period had passed.

In re Deprizio, 874 F.2d at 1195.

    Congress responded to that concern by extending the
preference-recovery period to one year for transactions that
benefit insiders, where the insider is a creditor. The
Bankruptcy Code implements this policy through 11 U.S.C.
§ 547(b):

        Except [for certain exceptions not relevant
        here], the trustee may avoid any transfer of an
        interest of the debtor in property (1) to or for
        the benefit of a creditor; [and] . . . (4) made
        (A) on or within 90 days before the date of the
        filing of the petition; or (B) between ninety
        days and one year before the date of the filing
        of the petition, if such creditor at the time of
        such transfer was an insider[.]
14            IN RE ADAMSON APPAREL, INC.

    For ordinary transactions, that provision is
straightforward. But what happens when a lender makes a
loan to the debtor and, as part of the loan, an insider
personally guarantees the loan? May the trustee avoid
payments made to the lender during the extended preference-
recovery period? The Seventh Circuit in Deprizio held that,
by the plain text of the Bankruptcy Code, the answer is “yes”
—the longer preference-recovery period applies to those
payments. See In re Deprizio, 874 F.2d at 1200–01.

    In so holding, the Seventh Circuit reasoned that “[a]
guarantor has a contingent right to payment from the debtor:
if Lender collects from Guarantor, Guarantor succeeds to
Lender’s entitlements and can collect from Firm. So
Guarantor is a ‘creditor’ in Firm’s bankruptcy.” Id. at 1190.
Accordingly, the requirements of § 547(b) are met and the
longer preference-recovery period of one year applies to
payments on loans guaranteed by insiders. Other circuit
courts, including this one, soon adopted the Seventh Circuit’s
analysis in Deprizio. See, e.g., Official Unsecured Creditors
Comm. of Sufolla, Inc. v. U.S. Nat’l Bank of Or. (In re
Sufolla, Inc.), 2 F.3d 977, 986 (9th Cir. 1993).

    Congress remedied the perceived inequity to innocent
lenders ensnared by Deprizio and its progeny in a 1994
amendment to the Bankruptcy Code. Under that amendment,
which is still in effect, the extended recovery period applies
to payments made on loans guaranteed by insiders, but the
trustee may seek recovery only from the insider and not from
the lender. 11 U.S.C. § 550(c).

   Two separate lines of cases developed in Deprizio’s
wake; one is relied upon by the Trustee and the other by
Simon. The caselaw favorable to Simon developed first, after
               IN RE ADAMSON APPAREL, INC.                   15

Deprizio was handed down but before the 1994 amendment
to the Bankruptcy Code. Those cases conclude that bona fide
indemnification waivers are valid and excuse an insider
guarantor from preference liability. See O’Neil v. Orix Credit
Alliance, Inc. (In re Ne. Contracting Co.), 187 B.R. 420,
423–24 (Bankr. D. Conn. 1995); Hostmann v. First Interstate
Bank of Or., N.A. (In re XTI Xonix Techs. Inc.), 156 B.R. 821,
833–34 (Bankr. D. Or. 1993); Hendon v. Assocs. Commercial
Corp. (In re Fastrans), 142 B.R. 241, 245 (Bankr. E.D. Tenn.
1992). They “apply the letter of the statute to the facts before
[them]” rather than focusing on broader concerns of public
policy. In re Fastrans, 142 B.R. at 246; see also In re Ne.
Contracting Co., 187 B.R. at 423; In re XTI Xonix Techs.
Inc., 156 B.R. at 833–34. Because a guarantor has no legally
cognizable claim against the borrower’s estate once he has
waived his right to indemnification, these courts concluded
that insider guarantors who had done so in good faith were
not “creditors” under the Bankruptcy Code and therefore
were not subject to preference liability.

    The cases relied upon by the Trustee, on the other hand,
conclude that such waivers are simply not valid. See In re
USA Detergents, Inc., 418 B.R. 533, 542 (Bankr. D. Del.
2009); In re Pro Page Partners, LLC, 292 B.R. 622, 631
(Bankr. E.D. Tenn. 2003); In re Telesphere Commc’ns, Inc.,
229 B.R. 173, 176 n.3 (Bankr. N.D. Ill. 1999). As explained
by the court in Telesphere,

       such a waiver has no economic impact—if the
       principal debtor pays the note, the insider
       guarantor would escape preference liability,
       but if the principal debtor does not pay the
       note, the insider could still obtain a claim
       against the debtor, simply by purchasing the
16             IN RE ADAMSON APPAREL, INC.

       lender’s note rather than paying on the
       guarantee. Thus, the “Deprizio waiver” could
       only be seen as an effort to eliminate, by
       contract, a provision of the Bankruptcy Code.
       The attempted waiver of subordination rights
       was thus held to be a sham provision,
       unenforceable as a matter of public policy.

In re Telesphere, 229 B.R. at 176 n.3. The subsequent cases
of In re Pro Page Partners, 292 B.R. at 631, and In re USA
Detergents, 418 B.R. at 542, adopted Telesphere’s reasoning.
Despite this split of authority in the bankruptcy courts, no
district or circuit court has yet weighed in on the validity of
these so-called “Deprizio waivers.”

    We begin our assessment by noting that the latter cases’
concern about the possibility of “sham” waivers is a valid
one. A savvy insider guarantor might well agree to waive his
right to indemnification from the corporate debtor, but then
simply purchase the debt from the lender rather than pay it off
if the debtor is later unable to meet its obligations. Such
maneuvering would transform the original guarantor into the
lender directly rather than by way of subrogation and, in that
capacity, he would clearly have a claim against the debtor’s
bankruptcy estate without the burden of the one-year
preference period for insider guarantors.

    But the mere possibility of such avoidance does not mean
that it will routinely occur. The post-1994 bankruptcy courts
that have considered this question, as well as our dissenting
colleague, would establish a bright-line rule based on a fear
of what could happen. We believe the sounder approach is to
consider what actually has happened. Rather than negating
every Deprizio waiver based on a hypothetical scenario, the
               IN RE ADAMSON APPAREL, INC.                  17

courts should instead examine the totality of the facts before
them for evidence of “sham” conduct in the circumstances
presented. In the present case, all evidence in the record
indicates that the waiver at issue was not a sham.

    First, CIT held a lien on Adamson’s inventory and
accounts receivable to secure the loan. This lien gave CIT a
priority claim against these assets of Adamson in the event of
bankruptcy. CIT’s claim would therefore have been satisfied
to the extent of the remaining inventory and accounts
receivable even in the absence of Simon’s guarantee.

    Second, Simon never filed a proof of claim in the
bankruptcy case. Counsel for both sides acknowledged at
oral argument that the funds at issue here were not sufficient
to cover Adamson’s entire debt to CIT, and that Simon
personally paid CIT over $3.5 million to clear Adamson’s
debt without ever seeking reimbursement. If the concern
raised by the post-1994 bankruptcy cases were at play here,
Simon would have simply purchased the balance of the CIT
note and then filed a claim as the successor to CIT in the
bankruptcy case. Instead, he personally paid the debt without
ever filing a claim against the estate.

    Our dissenting colleague, however, is not persuaded that
the balance of Adamson’s debt to CIT was paid from Simon’s
funds because that question was a contested fact in the
original trial. But as discussed in more detail in the dissent,
the Trustee’s counsel acknowledged at oral argument that
Adamson’s debt to CIT—the debt against which the
December 18, 2003 payment from BP Clothing was
credited—was “fully paid off on March 31st [2004] . . . when
it got the amounts from the cash collateral accounts.” And
18             IN RE ADAMSON APPAREL, INC.

the record makes clear that the cash collateral accounts in
question indisputably belonged to Simon.

    We have every right to treat this concession at oral
argument as binding on the Trustee. See Hilao v. Estate of
Marcos, 393 F.3d 987, 993 (9th Cir. 2004) (“A party (or . . .
a nonparty) is bound by concessions made in its brief or at
oral argument.”). Out of an abundance of caution, however,
we gave the Trustee an opportunity in supplemental briefing
to explain her counsel’s statement and to clarify the Trustee’s
position on when Adamson’s debt was paid off. But the
Trustee failed to directly address the concession in her
response, instead contending that her counsel’s review “had
revealed that the record below does not definitively establish
either when or from what source the Adamson Apparel debt
to CIT was satisfied.” Despite this somewhat dubious claim
of ambiguity, we note that the Trustee does not dispute the
key fact that the Adamson debt to CIT has been fully paid
without Simon filing a claim against the bankruptcy estate.
This adds to our confidence that the concession made at oral
argument was not simply a “slip of the tongue.”

    And contrary to the characterization of the evidence
presented in the dissent, the Committee at trial did not argue
that the $3.5 million payment made on March 31, 2004 was
for a personal debt that Simon owed to CIT. It instead
contended that Simon made the $3.5 million payment in
connection with what the Committee called the “Grupo”
transaction rather than with the transaction at issue in this
case.

    As made clear from the record below, however, Grupo
Xtra of New York, Inc. was a company that had previously
licensed trademarks that were eventually relicensed to
               IN RE ADAMSON APPAREL, INC.                  19

Adamson Apparel. Before going bankrupt, Grupo had
incurred liabilities to CIT in connection with these
trademarks. In early November 2002, CIT asked Adamson to
assume the liabilities and try to collect Grupo’s receivables.
The Grupo transaction was thus simply a subset of
Adamson’s indebtedness to CIT. In short, the $3.5 million
that Simon paid to CIT on March 31, 2004 was for
Adamson’s benefit, yet Simon never sought reimbursement
for any portion of that payment in bankruptcy.

    A third factor indicating that the waiver here was not a
sham is the fact that Simon had no unilateral right to purchase
the note from CIT if Adamson defaulted. Although he could
have pursued that possibility, CIT was also free to refuse to
sell him the note and instead insist on payment. This factor
might explain why Simon did not, in fact, purchase the note
rather than pay it off when called upon to do so. If Simon
had had a contractual right to purchase the note from CIT,
then we would be more concerned about the waiver being a
sham.

    Finally, the Trustee presented no evidence that the debt in
question was the only debt that Simon guaranteed on
Adamson’s behalf. Adamson is a closely held corporation,
and Simon is its president and CEO. There is no reason to
assume that he did not personally guarantee additional
Adamson debts that he has been called upon to satisfy. Under
such circumstances, Simon would have received no benefit
by satisfying CIT’s debt first rather than any other debts of
equivalent magnitude that he might have personally
guaranteed. The Trustee’s failure (or inability) to establish
that the CIT loan was the only one personally guaranteed by
Simon further lessens our concern about the bona fide nature
of the waiver.
20            IN RE ADAMSON APPAREL, INC.

    All of these factors lead us to the conclusion that the
waiver at issue in this case was not a sham. The concern of
the Telesphere line of bankruptcy cases is simply not present
where Simon’s waiver prevented him from filing a claim to
recover the amount that he personally paid to satisfy the
balance of Adamson’s debt to CIT. We cannot say that a
waiver totally eliminating Simon’s right to recover over $3.5
million has no economic substance. Given that the waiver is
valid, Simon does not have a claim against the Adamson
estate and thus does not meet the definition of a creditor
under the Bankruptcy Code.

    Moreover, when faced with a clearly drafted statute, we
are not at liberty to deviate from the text in favor of a
generalized notion of public policy. The Supreme Court
decided in Norwest Bank Worthington v. Ahlers, 485 U.S.
197, 206 (1988), that “whatever equitable powers remain in
the bankruptcy courts must and can only be exercised within
the confines of the Bankruptcy Code.” In order to be subject
to preference liability, a person or an entity must be a
creditor. 11 U.S.C. § 547(b). A person is a creditor only if
he has a right to payment from the debtor. 11 U.S.C.
§ 101(10). Here, Simon waived any such right at the
insistence of CIT. Nothing in the Bankruptcy Code prevented
him from doing so, nor does any portion of the Code subject
Simon to preference liability simply because he received a
benefit—and a contingent one at that—from the payment by
BP Clothing to CIT. See In re Deprizio, 874 F.2d at 1190–92
(holding that corporate insiders were not “creditors” subject
to a preference claim when the corporation paid the Internal
Revenue Service for delinquent wage withholding taxes,
despite the benefit that they received by being relieved of
personal liability for the taxes).
              IN RE ADAMSON APPAREL, INC.                 21

    The public-policy concern raised by the Trustee in this
case is far from frivolous, but that concern is more properly
addressed to Congress, which has the ability to amend the
Bankruptcy Code. This court’s equitable powers are limited
by the text of the Code as presently worded. Norwest,
485 U.S. at 206. Accordingly, we hold that when an insider
guarantor has a bona fide basis to waive his indemnification
rights against the debtor in bankruptcy and takes no
subsequent actions that would negate the economic impact of
that waiver, he is absolved of any preference liability to
which he might otherwise have been subjected.

                   III. CONCLUSION

   For all the reasons set forth above, we AFFIRM the
judgment of the district court.



GRABER, Circuit Judge, dissenting:

    I respectfully dissent. The majority’s conclusion that
Arnold Simon is not a “creditor” for purposes of the
Bankruptcy Code is wrong for two independent reasons.
First, I would follow every bankruptcy court to have decided
the issue and hold that insider-guarantors such as Simon are
“creditors.” The majority errs by looking to extraneous facts
to decide whether the waiver is valid. Second, even if we
were to look to additional facts, the majority’s analysis
depends heavily on a “fact” that the bankruptcy court
expressly declined to find.
22                 IN RE ADAMSON APPAREL, INC.

         A. Insiders and the Right to Indemnity

   As its president and CEO, Simon is an insider of
Adamson Apparel, Inc. Adamson took out a loan from CIT
Group Commercial Services, Inc.       Simon personally
guaranteed the loan. Adamson made a partial payment of
about $5 million on the loan in December 2003. In
September 2004, Adamson filed for bankruptcy.

    Title 11 U.S.C. § 547(b) authorizes the bankruptcy trustee
to avoid certain pre-filing transfers: all transfers made in the
90-day period before filing and all transfers made for the
benefit of a “creditor” in the one-year period before filing.
Because the December 2003 partial payment occurred less
than a year before filing but more than 90 days before filing,
the trustee’s ability to avoid the transfer turns on whether
Simon was a “creditor” of Adamson in December 2003.

    Every bankruptcy court to have addressed this issue since
the important 1994 amendments to the Bankruptcy Code have
agreed: insider-guarantors such as Simon are “creditors” for
purposes of the Code even if they nominally have waived
their right to indemnity. Miller v. Greystone Bus. Credit II,
L.L.C. (In re USA Detergents, Inc.), 418 B.R. 533, 542
(Bankr. D. Del. 2009); Russell v. Jones (In re Pro Page
Partners, LLC), 292 B.R. 622, 630–31 (Bankr. E.D. Tenn.
2003); Telesphere Liquidating Trust v. Galesi (In re
Telesphere Commc’ns, Inc.), 229 B.R. 173, 176 n.3 (Bankr.
N.D. Ill. 1999).1 The courts’ reasoning is important:



     1
    The bankruptcy courts that decided the issue before the 1994
amendments all addressed the inequitable situation that Congress fixed in
1994—allowing a trustee to seek the funds from the lender. As the
                 IN RE ADAMSON APPAREL, INC.                           23

         [S]uch a waiver has no economic impact—if
         the principal debtor pays the note, the insider
         guarantor would escape preference liability,
         but if the principal debtor does not pay the
         note, the insider could still obtain a claim
         against the debtor, simply by purchasing the
         lender’s note rather than paying on the
         guarantee. Thus, the [waiver] could only be
         seen as an effort to eliminate, by contract, a
         provision of the Bankruptcy Code. The
         attempted waiver of subordination rights was
         thus held to be a sham provision,
         unenforceable as a matter of public policy.

Telesphere, 229 B.R. at 177 n.3; see USA Detergents, 418
B.R. at 542 (quoting and agreeing with that text from
Telesphere); Pro Page, 292 B.R. at 630–31 (same).

    The majority opinion generally agrees with the quoted
analysis. But the majority opinion then goes a step
further—looking at additional facts in an open-ended inquiry
into whether the waiver was a “sham.” Maj. op. at 11–21. I
disagree with that approach, which is not supported by
precedent or by the logic of what Congress tried to
accomplish. The waivers are invalid for purposes of the
Bankruptcy Code because they attempt to defeat the one-year
look-back period via contract, even though the waivers have
no real-world economic impact. The majority opinion
searches for clues as to whether Simon actually planned to
purchase the note, but that inquiry is irrelevant. Because
Simon easily could have purchased the note as of December


majority correctly recognizes, those cases plainly do not apply here, where
the trustee seeks the funds from the insider.
24            IN RE ADAMSON APPAREL, INC.

2003, the waiver had no real-world effect other than to defeat
the Bankruptcy Code’s longer look-back period for insiders.
Therefore, Simon was a creditor.

    I would follow the unanimous view of the bankruptcy
courts that have ruled on this issue and would hold that an
insider-guarantor is a “creditor” for purposes of the
Bankruptcy Code.

     B. Reliance on a New Fact

    The majority opinion’s primary reasoning is that, because
Simon later paid $3.5 million toward the Adamson-CIT loan
with his personal funds and did not file a bankruptcy claim
against Adamson, we should be less worried that Simon’s
waiver of indemnification rights was a sham. As explained
above, I disagree as a matter of law that those facts are
relevant. But even if we must consider additional facts, the
majority opinion errs by considering a “fact” that the
bankruptcy court expressly declined to find.

    No one disputes that, in March 2004, Simon paid CIT
about $3.5 million. But the reason for that payment was hotly
disputed before the bankruptcy court. Simon asserted that the
payment was in satisfaction of the Adamson-CIT loan.
Plaintiff strongly disagreed and presented evidence that the
payment was to satisfy a personal debt, owed by Simon to
CIT, that had nothing whatsoever to do with Adamson. For
our purposes, if the $3.5 million payment was made only to
satisfy a personal debt, then that payment does not
demonstrate anything with respect to whether the waiver on
the Adamson-CIT loan was a “sham.”
               IN RE ADAMSON APPAREL, INC.                  25

    Everyone agrees that the bankruptcy court declined to
reach this factual question. In effect, the majority decides a
disputed issue of fact. But “[t]rial courts find facts. We do
not.” Fisher v. Roe, 263 F.3d 906, 912 (9th Cir. 2001),
overruled in other part by Payton v. Woodford, 346 F.3d
1204, 1217 n.18 (9th Cir. 2003) (en banc).

    Making that factual finding is all the more egregious
because the record strongly (if not conclusively) suggests that
the $3.5 million payment was not on Adamson’s behalf but
was for a personal debt that Simon had acquired with respect
to a different transaction and company (Grupo). In Simon’s
favor is Simon’s own self-serving testimony. In Plaintiff’s
favor is proffered evidence that included:

       • Financial statements by CIT in early 2004
       showing (1) that no credit of $3.5 million
       appeared and (2) that, as of March 15,
       2004—before the $3.5 million payment—
       Adamson owed CIT less than $200,000.

       • A separate note, which nowhere references
       Adamson and is a personal note: “FOR
       VALUE RECEIVED, ARNOLD H. SIMON,
       an individual (the “Debtor”), hereby
       unconditionally promises to pay on demand to
       the order of THE CIT GROUP . . .
       $3,379,630.00 . . . .”

       • A letter dated January 7, 2003, that describes
       the loan to Simon as “your personal loan from
       CIT.”
26             IN RE ADAMSON APPAREL, INC.

       • A letter from CIT that describes the loan as
       “the personal note to us dated November 5,
       2002 with an approximate amount of $3[.]455
       M,” which included interest on the principal
       amount.

       • A draft settlement agreement in late 2004
       that states: “On or about November 5, 2002,
       CIT made a personal loan to Simon in the
       amount of $3,379,630 for which Simon
       executed a Demand Promissory Note . . . in
       favor of CIT in said amount.”

       • An email in late 2004 that describes the
       loan in similar terms.

    The majority opinion attempts to justify its appellate
factual finding in two ways. First, it asserts that, because the
personal debt arose as part of the “Grupo transaction,” and
because Adamson assumed some of Grupo’s liabilities, “[t]he
Grupo transaction was thus simply a subset of Adamson’s
indebtedness to CIT.” Maj. op. at 19. The bankruptcy court
never made factual findings on these points, so the majority
opinion attempts to justify one improper factual finding by
making others. Moreover, whether Adamson assumed certain
liabilities to CIT is wholly irrelevant to the question of the
nature of the debt between Simon and CIT. As noted above
and as evidenced by the note itself and by other documents
from 2002 and 2003, the debt in question was a personal one,
owed by Simon in his individual capacity. Accordingly,
when Simon paid that personal debt, it was for his own
benefit, not Adamson’s.
              IN RE ADAMSON APPAREL, INC.                  27

    Second, the majority opinion asserts that Plaintiff’s
lawyer “acknowledged at oral argument that . . . Simon
personally paid CIT over $3.5 million to clear Adamson’s
debt.” Maj. op. at 17. Such an acknowledgment would be a
startling concession given that the issue was disputed
vigorously before the bankruptcy court. Unfortunately for the
majority opinion, the transcript of oral argument reveals no
such concession.

    After oral argument, we ordered supplemental briefing on
the effect of the following exchange:

       JUDGE GILMAN: I’ve just got one question.
       I want to know, was the debt to CIT fully paid
       off on December 18, 2003, when the BP
       Clothing amount was roughly five million was
       in fact diverted to . . .

       ATTORNEY HUNTER: No, I think it was
       fully paid off on March 31st when it took the
       . . . uh . . . March 2004, when it got the
       amounts from the cash collateral accounts.

That statement cannot be considered a concession on the
question of the reason for the March 2004 payment. Judge
Gilman asked whether the debt was fully paid in December
2003, and the lawyer answered “no.” In context, the question
concerned timing, not the reason for the 2004 payment.
Moreover, the lawyer stated only that “I think” that the debt
was satisfied by the March 2004 payment. (Emphasis added.)
In the supplemental briefing, the lawyer explained that, after
reviewing the record, his statement at oral argument had been
incorrect.
28             IN RE ADAMSON APPAREL, INC.

    We of course have held that a “judicial admission is
binding” when a party “clearly and expressly conceded [an
issue] on appeal, both in briefing and at oral argument.”
United States v. Crawford, 372 F.3d 1048, 1055 (9th Cir.
2004) (en banc). And as the majority opinion properly notes,
an unambiguous concession at oral argument can be binding.
Maj. op. at 18. But the majority opinion improperly extends
that principle to a statement at oral argument that starts with
the equivocal phrase “I think,” on a topic different from the
topic of the question posed, on a matter that was litigated
extensively before the trial court, and as to which the
purported concession later was renounced in a supplemental
brief. See Jonibach Mgmt. Trust v. Wartburg Enters., Inc.,
750 F.3d 486, 491 n.2 (5th Cir. 2014) (“To qualify as a
judicial admission, the statement must be . . . deliberate,
clear, and unequivocal . . . .” (internal quotation marks
omitted)); Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859–60 (9th
Cir. 1995) (holding that a judicial admission may be
retracted). Not only is there no support for the majority
opinion’s incredibly strict application of the judicial
admissions doctrine, we do ourselves and the litigants a great
disservice if lawyers must be constantly wary that a mistaken
guess about the content of the factual record, intended to aid
the court, will be held against their clients conclusively.

   I would reverse the bankruptcy court’s holding that Simon
was not a “creditor” and would remand for further
proceedings. Accordingly, I dissent.
