Introduction
Background

Third Circuit's majority opinion
Dissent
Analysis
Successor claims as property of the estate
Direct verses indirect injury: Seventh Circuit's ruling in Steinberg
Comment


Introduction

After a corporation files for bankruptcy, does a creditor have standing to pursue claims against an alleged third-party successor corporation? In In re Emoral(1) the Third Circuit barred a group of tort claimants from pursuing their claims on an alleged successor liability theory against a third-party defendant that had purchased all of the debtor's assets before the bankruptcy filing, stating that the successor liability action was properly that of the bankruptcy trustee.(2) Moreover, because a settlement agreement between the bankruptcy estate and the acquiring corporation provided for a general release of all claims which the bankruptcy estate may have held against the purchaser, the tort claimants were left with no legal remedy against the alleged successor corporation for their injuries.(3)

Background

In August 2010 Aaroma purchased certain assets and assumed certain liabilities of Emoral, a manufacturer of diacetyl. The asset purchase agreement specifically provided that Aaroma was not assuming Emoral's liability related to diacetyl, a chemical that had been manufactured by Emoral and used in the food flavouring industry and that it was not purchasing Emoral's insurance coverage. Nearly a year later Emoral filed for protection under Chapter 7 of the Bankruptcy Code. Various disputes arose between the bankruptcy trustee and Aaroma, including whether the sale of Emoral's assets constituted a fraudulent transfer. Subsequently, the trustee and Aaroma entered into a settlement agreement resolving the fraudulent transfer action whereby, among other things, Aaroma agreed to pay $500,000 to the bankruptcy estate and the trustee agreed to release Aaroma from "any causes of action . . . that are property of the Debtor's Estate".

Certain individuals who asserted personal injury claims relating to diacetyl exposure from Emoral's products objected to the settlement agreement, concerned that its proposed releases might bar them from bringing claims against Aaroma as an alleged successor to Emoral. At the hearing to approve the settlement, a representative for the bankruptcy trustee stated its position that the diacetyl claimants' successor liability claims against Aaroma did not belong to the estate and thus could not be released by the trustee. Regardless, the parties adding language to the order approving the settlement to provide that:

"Nothing contained in this Order or in the Aaroma Settlement Agreement will operate as a release of, or a bar to prosecution of any claims held by any person which do not constitute Estate's Released Claims as defined in the Aaroma Settlement Agreement."

The Bankruptcy Court approved the settlement as amended, but did not resolve the issue of whether the individual claimants' potential claims against Aaroma were included within its release.

Subsequently, the individual claimants filed complaints against Aaroma in New Jersey state court alleging personal injuries resulting from diacetyl exposure and asserting that Aaroma was liable for their injuries as a "mere continuation" of Emoral.(4) While the general rule is that an acquiring company is not liable for the debts and liabilities of the selling company simply because it has succeeded to the ownership of the seller's assets, an exception exists where the purchaser is a mere continuation of the seller. To establish mere continuation liability a plaintiff must demonstrate that there is continuity in management, shareholders, personnel, physical location, assets and general business operation between the seller and purchaser following the acquisition.(5)

As a result of its settlement with the estate, Aaroma filed a motion in Emoral to enforce the settlement agreement and to compel dismissal of the state actions arguing the release barred such claims. The Bankruptcy Court denied the motion, holding that the plaintiffs' personal injury causes of action were not estate property because the plaintiffs had alleged "a particular injury not generalized injury suffered by all shareholders or creditors of Emoral".(6) Because neither the corporation nor its creditors as a general whole had suffered any personal harm, the court found that both the successor liability and underlying state tort claims belonged to the individual creditors, not to the bankruptcy estate.(7)

The district court reversed, holding in an unpublished opinion that the plaintiffs had no cause of action against Aaroma – which, it was not disputed, had neither manufactured nor sold diacetyl – because the facts giving rise to the alleged successor liability claim were common to all creditors.(8) The district court reasoned that if it could be established that Aaroma constituted a mere continuation of Emoral and was thus liable for all of its obligations it would benefit all the debtor's creditors generally, and therefore such a cause of action for successor liability was a generalised claim belonging to the estate.(9) The plaintiffs then appealed to the Third Circuit.

Third Circuit's majority opinion

The Third Circuit affirmed, stating that in order to determine whether the plaintiffs' cause of action against the alleged successor corporation constituted property of the bankruptcy estate it "must examine the nature of the cause of action itself".(10) Whereas the plaintiffs in Emoral focused primarily on the threshold issue of the individual nature of their personal injury claims, the Third Circuit focused on their ultimate claim for successor liability. The court articulated the legal framework for determining whether a claim is property of the estate, recognising that the determination is made pursuant to state law, and stating that in order to be property of the estate, the claim must have "existed at the commencement of the filing and the debtor could have asserted the claim on his own behalf under state law" and the claim "must be a general one, with no particularized injury arising from it". However, claims that are personal or specific to the creditor are not property of the estate, but are legal or equitable interests only of the creditor: "A claim for an injury is personal to the creditor if other creditors generally have no interest in that claim."(11)

Under its analysis, the court found that the plaintiffs' successor liability claims were generalised and so constituted property of the bankruptcy estate, stating that the "purpose behind . . . successor liability", like the purpose of veil piercing, "is to promote equity and avoid unfairness, and it is not incompatible with that purpose for a trustee on behalf of a debtor corporation, to pursue that claim".(12)

The court noted that the plaintiffs' only theory of liability against Aaroma, a third party that was not alleged to have caused any direct injury to the plaintiffs, was that, as a matter of state law, Aaroma allegedly constituted a mere continuation of Emoral such that it has also succeeded to all of Emoral's liabilities.(13) The court went on to hold that the plaintiffs "fail[ed] to demonstrate how any of the factual allegations" required to establish mere continuation under applicable New York or New Jersey state law were "unique to them as compared to other creditors of Emoral"(14) nor had they demonstrated "how recovery on their successor liability cause of action would not benefit all creditors of Emoral" given that Aaroma, as a mere continuation of Emoral, would succeed to all of Emoral's liabilities.(15) Therefore, the court found that the successor liability action properly belonged to the bankruptcy trustee, but that any such claim had been forfeited as the result of the settlement agreement.(16) As a result, the tort claimants had no apparent recourse against Aaroma and could seek remedies only directly against Emoral in its bankruptcy proceeding.(17)

Dissent

One member of the Emoral appellate panel rejected the majority's view, stating in a strong dissent that in deciding whether the plaintiffs' claims were individual or general the court should have looked to the nature of the underlying tort claims, not the allegations of successor liability.(18) The dissent pointed out that the plaintiffs' personal injury claims against Aaroma could not have been brought by any other creditors of the debtor, and thus constituted individual claims belonging to the plaintiffs and not to the debtor or its estate and emphasised that the "successor liability theory alleged by the Diacetyl Plaintiffs is inextricably tied to – and can not be considered separate and apart from – their personal injury and product liability allegations".(19)

The dissent discussed several cases that supported this rationale, particularly Board of Trustees of Teamsters Local 863 Pension Fund v Foodtown, Inc,(20) in which the Third Circuit found that a pension fund creditor had standing to seek to pierce a bankrupt debtor's corporate veil in order to reach individual defendants for withdrawal liability owed to the debtor's pension fund under the Employee Retirement Income Security Act.(21) Because the alleged injury to the pension fund was the defendants' evasion of withdrawal liability, the Foodtown court stated that such withdrawal liability "is not owed to [the debtor]; rather, it is owed to the pension fund",(22) and thus could be brought by the pension fund directly.(23)

Stating that the unliquidated tort claims at issue in Emoral implicated "important state interests, such as providing adequate compensation to individuals injured by defective products",(24) the dissent asserted that, in determining whether the individual claimants had standing to bring direct claims against Aaroma, the court should have adopted the more liberal approach taken in Foodtown and allowed their action to proceed.(25)

Analysis

When is a claim the "property of the estate"? While the debtor's interest in property is determined by state law, the question of what constitutes property of the bankruptcy estate under 11 United States Code Section 541 "is a federal one".(26) Once a bankruptcy petition has been filed, whatever legal and equitable interests the debtor has in property from the date of that petition is the property of the bankruptcy estate,(27) and the right to sue parties for the recovery of all property of the estate belongs to the bankruptcy trustee.(28)

This legal fiction gives the trustee no standing or power over real creditors' actual causes of action against third parties.(29) The prudential limitation on standing that a party must "assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties";(30) "coincides with the scope of the powers the Bankruptcy Code gives a trustee, that is, if a trustee has no power to assert a claim because it is not one belonging to the bankrupt estate, then he also fails to meet the prudential limitation that the legal rights asserted must be his own".(31)The bottom line is "simply that the trustee is confined to enforcing entitlements of the [debtor]. He has no right to enforce entitlements of a creditor".(32) The debtor must have suffered an injury in order for the claim to be the property of the estate, allowing the trustee to step into the debtors' shoes and have standing to bring a claim.(33) The trustee has no right to bring direct claims that belong solely to the estate's creditors.(34) The flipside of this rule is equally settled: creditors lack authority to bring claims based on injuries that are derivative of an injury to the debtor.(35)

Under what circumstances would a bankruptcy creditor have standing to litigate, against a non-debtor outside of the bankruptcy proceeding, any state law rights arising from the creditor's claim against the debtor? In successor liability or alter ego cases, courts have begun their standing analysis by considering whether, under relevant state law, the corporation could bring such claims against either itself on an alter ego theory or another entity alleged to be its own successor.(36)

Because, as recognised in Emoral, state law dictates whether claims belong to the creditors or the debtor, the cases reach varying conclusions.(37) However, when courts have found that the trustee has standing to bring alter ego claims under state law,the debtor has suffered an injury and the creditors' claims are derivative of that injury.(38)

In Emoral the circuit court noted that other courts applying either New York or New Jersey state law have held that causes of action for successor liability, as well as alter ego and veil piercing causes of action, could be asserted, and are thus properly categorised as property of the bankruptcy estate.(39) It went on to cite with approval the analysis of other courts which have considered both successor liability and veil piercing cases to reach the assets of corporate shareholders, directors or officers and found that such claims are an equitable means of expanding the assets available to satisfy creditor claims which, if successful, would have the effect of increasing the assets available for distribution to all creditors and thus should be asserted by the bankruptcy trustee on behalf of all creditors.(40)

The diactetyl plaintiffs in Emoral maintained that the alleged successor corporation was a mere continuation of its bankrupt predecessor and thus was liable for their tort claims against the predecessor.(41) To determine the plaintiffs' standing to seek such a remedy, the Third Circuit first had to decide whethera debtor corporation could recoup assets from its alleged successor corporation,under applicable state law, and, second, whether the individual tort plaintiffs had independent standing to bring such a claim.(42) After finding that the debtor could indeed bring such a successor liability action under applicable state law, the court went on to hold that the successor claim was the property of the bankruptcy estate.(43) However, the majority in Emoral did not expressly find that the debtor had suffered an injury sufficient to support standing.

Opining on the successor liability and alter ego doctrines, the Emoral court stated that while "it might seem strange" to hold that such causes of action belonged to the debtor,(44) the equitable purposes of these doctrines – to promote equity and avoid unfairness – were not incompatible with those of a bankruptcy trustee charged with increasing the pool of assets available to all creditors.(45) Therefore, the court continued, such actions could be made available to a debtor corporation.(46) However, the court explained, because the tort claimants had not demonstrated that reaching Aaroma's assets would benefit only those particular tort creditors as opposed to all of Emoral's creditors generally, that claim remained the property of the bankruptcy estate and had been preempted by the settlement agreement.(47)

Successor claims as property of the estate

In conducting its analysis, the Emoral court asked whether the claim asserted against the alleged successor corporation is a "general one", with no particular injury to any specific creditor, or alternatively, a "specific claim" with injury only to the particular creditor(s). If the claim is deemed to be a general one, the trustee is held to be the proper entity to assert the claim.(48) If instead the claim is a legal or equitable interest only of particular creditors, the individual creditors have standing to proceed.(49) Other courts in the Second and Third Circuits that have addressed creditor attempts to reach a debtor's putative assets by either piercing the corporate veil or establishing successor liability against an alleged successor have conducted similar analyses and reached similar conclusions.

For example, in In re Buildings by Jamie,(50) a New Jersey bankruptcy court rejected arguments that the corporate debtor's fraudulent and post-petition transfers and failure to pay loan obligations warranted an order permitting individual creditors (as opposed to the trustee) to attempt to pierce the debtor's corporate veil.(51) Stating that "the trustee is the proper party to bring a veil piercing action against the debtor"(52) because under Section 541 of the Bankruptcy Code, "the corporate debtor's interest in its alter ego assets is the property of the bankruptcy estate",(53) the court concluded that "the trustee as representative of the estate succeeds to the debtor's right to assert an action on its own behalf".(54) However, as noted by the Emoral dissent, in In re Buildings by Jamie the debtor had suffered an injury: the "trustee [in that case] had standing to pursue an alter ego action on behalf of the corporate debtor to recover on a defaulted loan".(55)

Similarly, in St Paul Fire and Marine Insurance Co v PepsiCo, Inc,(56) the Second Circuit held that a claim asserted by PepsiCo – that a third-party corporation had used a former PepsiCo subsidiary and its new parent company as alter egos, thus causing the now-bankrupt subsidiary to default on a bond that PepsiCo had indemnified –(57) was the property of the subsidiary's bankruptcy estate and should be properly asserted by the trustee.(58) Recently, the Second Circuit clarified in In re Bernard L Madoff Inv Securities LLC, that St Paul decided the specific question of whether a creditor may bring an alter ego claim against the debtor's parent when the debtor itself also possesses such a claim and would not apply if the trustee "seeks to assert claims that are property only of the creditors, not of the debtor".(59)

In re Keene, Corp,(60) a case cited and discussed in Emoral by both the majority and dissent,(61) the US Bankruptcy Court for the Southern District of New York applied New York state law to deny standing to a group of asbestos personal injury plaintiffs who had filed lawsuits against several third-party non-debtor defendants seeking to disregard the corporate separateness among Keene and the defendants on various theories, including piercing the corporate veil and successor tort liability. The plaintiffs asserted that:

  • Keene had made wrongful asset transfers to the defendants and thereby had illegally reduced the plaintiffs' recovery from Keene; and
  • by acquiring Keene's assets, the third-party defendants had succeeded to the now-bankrupt company's asbestos-related liabilities.(62)

The court enjoined the individual plaintiffs' action, holding that a proceeding against an alleged successor corporation for the tort liability of its purported predecessor is, like the veil piercing remedy, an equitable means of expanding the assets available to satisfy all creditor claims against the predecessor.(63) Moreover, the standing of the plaintiffs who sought to bring the successor action was dependant on their status as creditors of Keene and their success would have the effect of increasing the assets available for distribution to all of Keene's creditors.(64) Accordingly, the court held that standing to assert such a remedy belonged to the bankruptcy estate.(65)

Direct verses indirect injury: Seventh Circuit's ruling in Steinberg

The appeal courts agree that "[if] a cause of action alleges only indirect harm to a creditor (i.e., an injury which derives from harm to the debtor), and the debtor could have raised a claim for its direct injury under the applicable law, then the cause of action belongs to the estate".(66) The approach applied by the court in Emoral, based on an inquiry as to whether the claim asserted by the creditor was "general" or "specific", was criticised in Steinberg v Buczynski, a Seventh Circuit alter ego case in which the court affirmed a district court finding that a bankruptcy trustee had no standing to pierce a debtor's corporate veil in order to hold its shareholders personally liable for the corporation's debt to its pension fund.(67) The court noted that the trustee had not argued that the shareholders had looted or otherwise injured the corporation by its actions.(68) While emphasising that "we do not question the right of a trustee in bankruptcy to maintain a 'veil piercing' suit on behalf of the corporation",(69) the court described the general or specific distinction as "not an illuminating usage"(70) Instead, it reformulated the standing test to ask merely whether the alleged wrongful action had injured the corporation, stating:

"[I]f the corporation is injured by the shareholders' disregard of corporate formalities, or stated differently but equivalently if a claim against the shareholders arising from their disregard of corporate formalities is the property of the corporation, then the trustee can sue; otherwise, he cannot."(71)

The trustee's role was limited to enforcing the corporation's entitlements, the court continued, and when a third party has injured not the bankrupt corporation itself but rather a creditor of that entity, the trustee has no interest in the suit:(72)

"The point "is simply that the trustee is confined to enforcing entitlements of the corporation. He has no right to enforce entitlements of a creditor. . . . But there is a difference between a creditor's interest in the claims of the corporation against a third party, which are enforced by the trustee, and the creditors own direct-not derivative claim against the third party, which only the creditor himself can enforce."(73)

The test for standing as set out by the Seventh Circuit in Steinberg would appear to be a simpler and more efficient manner of conducting the standing inquiry. Rather than attempting to separate a debtor's claims from those of its individual creditors – an effort that, as evident from Foodtown, can be difficult and may raise additional questions of federal or state law(74) – the court's approach focuses simply on the harm caused by the alleged wrongful act: whether the alleged wrongful act caused injury to the debtor corporation.

Several courts of appeal have applied the standard articulated in Steinberg. For example, in In re American Cartage, Inc.(75) the First Circuit held that a bankruptcy trustee could pursue commercial tort claims alleging that an employee of the debtor took actions that diminished the value of the debtor's property where the defendants' alleged conduct was "directly adverse to the debtor's interests…and diminished its estate generally", and any "alleged injury to a creditor [was] indirect or derive[d] solely from injury to the debtor".(76)

Similarly, in Highland Capital Mgmt LP v Chesapeake Energy Corp(77) the Fifth Circuit "dispel[ed] any notion that a claim belongs to the estate or is otherwise only assertable by the trustee merely because it could be brought by a number of creditors, instead of just one".(78) The debtor in that case "sugges[ed] that the claims . . . allege a "generalized injury" or raise a "generalized grievance" and that the trustee, rather than the bondholders, is therefore the appropriate party to advance them".(79) The court agreed with the Seventh Circuit's statements in Steinberg, adding that the terms 'general' and 'personal' were "perhaps best understood as descriptions to be applied after a claim has been analyzed to determine whether it is properly assertable by the debtor or creditor, and not as a substitute for the analysis itself".(80) That is, claims for an indirect injury to the creditors, derivative of a direct injury to the debtor, are property of the estate. Other claims that allege distinct and direct injury to individual creditors belong to those creditors, not the estate.(81)

Comment

The more liberal view advocated in the Emoral dissent – that in analysing whether the trustee or an individual creditor has standing to bring a claim outside bankruptcy against a third-party corporation, the court should look to the underlying or predicate claim rather than the ultimate successor liability claim – may yet have resonance, despite being rejected by the majority. While, at least in the Third Circuit, the approach taken by the majority in Emoral would appear to vest standing to allege successor liability or to pierce a debtor's corporate veil exclusively in the bankruptcy trustee under the state law interpreted in that case, the enquiry does not dispense with the constitutionally required presence of an injury. The debtor must have suffered harm. Further, the question has not been settled in all circuits or under the law of all states, and room may exist to re-address the issue even in the Third Circuit. The alternative reasoning advanced by the Seventh Circuit in Steinberg, which focuses on the nature of the injury for which the recovery is sought, could clearly guide such further examination.

For further information on this topic please contact Ronald E Reinsel at Caplin & Drysdale's Washington DC office by telephone (+1 202 862 5000), fax (+1 202 429 3301) or email (rreinsel@capdale.com). Alternatively, please contact Rita C Tobin at Caplin & Drysdale's New York office by telephone (+1 212 319 7125), fax (+1 212 644 6755), or email (rtobin@capdale.com). The Caplin & Drysdale website can be accessed atwww.caplindrysdale.com.

Endnotes

(1)In re Emoral, Inc, 740 F3d 875 (3rd Cir 2014).

(2) Id.

(3) Id at 883.

(4) Id at 877.

(5)Id at 880.

(6)Id at 878, citing [Bankruptcy Court Opinion].

(7) Id.

(8) Id.

(9) Id.

(10) Id at 879.

(11) Emoral, 740 F3d at 879 (internal citations omitted).

(12) Id at 881.

(13) Id at 883.

(14) Id.

(15) Id at 880

(16) Id at 882.

(17) Id.

(18) Id at 883.

(19) Id at 883.

(20) Id, citing Board of Trustees of Teamsters Local 863 Pension Fund ("Foodtown"), 296 F2d 164 (3rd Cir 2002)

(21) Id at 883-84, citing Foodtown, 296 F3d at 883-84.

(22) Id.

(23) Id.

(24) Id a7 886.

(25) Id at 885, fn 1.

(26) Id, citing HR Rep No 595, 95th Cong, 1st Session 367-68 (1977); S Rep No 989, 95th Cong, 2d Sess 82-83 (197), US Code Cong & Admin News 1978, p 5787.

(27) Id.

(28) Id.

(29) In re Educators Group Health Trust, 25 F3d 1281, 1284 (5th Cir 1994).

(30)Warth v Seldin, 422 US 490, 499 (1975).

(31) Shearson Lehman Hutton, Inc v Wagoner, 944 F2d 114, 118 (2d Cir 1991) (holding that an essential part of the analysis is "whether in the case at hand there is any damage to the corporation, apart from that done to the third-party creditor noteholders".).

(32) Steinberg, 40 F3d at 893.

(33) "If the cause of action does not explicitly or implicitly allege harm to the debtor, then the cause of action could not have been asserted by the debtor as of the commencement of the case, and thus is not property of the estate." Schertz-Cibolo-Universal City, Independent School Dist v Wright (In re Educators Group Health Trust), 25 F3d 1281, 1284 (5th Cir 1994). See also In re Miller, 197 BR 810, 814–815 (WDNC 1996) (finding, under Fourth Circuit law, that there must be an injury to the debtor before a trustee can pursue alter ego and veil piercing claims against insiders even though the action may benefit the whole creditor body); Boston Trading Group, Inc v Burnazos, 835 F2d 1504, 1517 (1st Cir 1987) (refusing to allow the trustee to bring a claim when there was no allegation of a breach of duty to the debtor that harmed the debtor; "The Receiver may represent the interests of the creditors by seeking to recover corporate damages, but he lacks the authority to seek redress for harm suffered only by the creditors."). See also Steinberg, 40 F3d at 892–93 ("When a third party has injured not the bankrupt corporation itself but a creditor of that corporation, the trustee in bankruptcy cannot bring suit against the third party. He has no interest in the suit.").

(34) See Caplin v Marine Midland Grace Trust Co, 406 US 416(1972); Schertz-Cibolo-Universal City, Independent School District v Wright, 25 F3d 1281, 1284 (5th Cir1994) ("If, on the other hand, a cause of action belongs solely to the estate's creditors, then the trustee has no standing to bring the cause of action").

(35) See Official Committee of Unsecured Creditors v RF Lafferty & Co, Inc, 267 F3d 340, 347-48 (3d Cir 2001) (bankruptcy estate representative has standing where injury to creditors was not "separately cognizable" from injury to debtor); Honigman v Comerica Bank ( In re van Dresser Corp), 128 F3d 945 (6th Cir 1997) (creditor lacks standing because injury was derivative of harm to debtor corporation); Steinberg v Buczynski, 40 F3d 890, 893 (7th Cir 1994) (a trustee enforces a creditor's interest in claims where they are derivative of the debtor corporation's claims); St Paul Fire and Marine Ins Co v PepsiCo Inc, 884 F2d 688, 704 (2d Cir 1989) (creditor lacked standing where its injury "alleged a secondary effect from harm done to" the debtor); Regan v Vinick & Young ( In re Rare Coin Galleries of Am, Inc), 862 F2d 896, 900-01 (1st Cir 1988) (trustee has standing when alleging claims based on injury to debtor, even though wrongdoing caused debtor's customers to lose money); Delgado Oil Co, Inc v Torres, 785 F2d 857, 862 (10th Cir 1986) (claim based on transferring assets from corporation states injury to corporation, and so belongs to trustee, not individual creditor).

(36) In re Emoral, 740 F3d at 880, citing In re Keene Corp, 164 BR 844, 849 (Bankr SDNY 1994); see also, Koch Refining v. Farmers Union Central Exchange, 831 F.2d at 1344; St Paul Fire and Marine Insurance Co v PepsiCo, Inc, 884 F2d 689, 700 (2d Cir 1989).

(37) Compare, eg, Kalb, 8 F3d at 132 (alter ego claim belongs to corporation under Texas law, so claim was exclusive to trustee and creditor lacked standing), St Paul Fire, 884 F2d at 703-4 (same under Ohio law), CBS, Inc v Folks (In re Folks), 211 BR 378, 385 (BAP 9th Cir 1997) (same under California law), with Ozark Restaurant Equip Co, 816 F2d at 1225 (alter ego claim belongs to creditor under Arkansas law, so trustee lacked standing), cert denied, 484 US 848 (1987); Ahcom, Ltd v Smeding, 623 F3d 1248 (9th Cir 2010) (under California law judgment creditor that won international arbitration award against debtor, rather than corporation's Chapter 11 bankruptcy trustee, had standing to assert claim against corporation's shareholders).

(38) See Steinberg v Buczynski, 40 F3d 890, 892 (7th Cir 1994) ("If the corporation is injured by the shareholders' disregard of corporate formalities then the trustee can sue; otherwise he cannot.").

(39) Id, citing In re Keene, 164 BR at 849.

(40) In re Emoral, 740 F3d at 880, citing In re Keene Corp, 164 BR 844, 853 (Bankr SDNY 1994).

(41) Id.

(42) Id.

(43) Id at 881, citing In re Buildings by Jamie, Inc, 230 BR 36, 43 (Bankr DJJ 1998) and Phar-Mor, Inc v Coopers & Lybrand, 22 F3d 1228, 1240 n 20 (3rd Cir 1994).

(44)Id at 881.

(45) Id, citing Phar-Mor, Ind, 22 F3d at 240 n20 (additional citations omitted).

(46) Id at 881.

(47) Id at 880.

(48) In re Emoral Inc, 740 F3d at 879; Bd Of Trustees of Teamsters Local 863 Pension Fund v Foodtown, Inc ("Foodtown"), 296 F3d 164, 170 (3rd Cir 2002); St Paul Fire & Marine Ins Co v PepsiCo, Inc, 884 F2d 688, 701 (2nd Cir 1989); Koch Refining v Farmers Union Cent Exch, Inc, 831 F2d 1339, 1348-49 (7th Cir 1987)Id at 701.

(49) Id.

(50) In re Buildings by Jamie, Inc, 230 BR at 36, 43.

(51) Id at 43.

(52) Id.

(53) Id.

(54) Id at 43-44.

(55) In re Emoral, 740 F3d at 885.

(56) St Paul Fire and Marine Ins Co v PepsiCo, Inc, 884 F2d 688, 690-91 (2nd Cir 1989).

(57) Id at 690.

(58) Id at 702.

(59) 721 F3d 54, 58 (2d Cir 2013) (cert petition filed October 9 2013).

(60) In re Keene Corp, 164 BR at 849.

(61) In re Emoral, 740 F3d at 880, 885.

(62) Id.

(63) Id at 853.

(64) Id.

(65) Id.

(66) In re Educators Group Health Trust, 25 F3d 1281, 1284 (5th Cir 1994) (citations omitted).

(67) Steinberg v Buczynski, 40 F3d 890, 893 (7th Cir 1994)

(68) Id.

(69) Id at 892, citing Koch Refining v Farmers Union Central Exchange, Inc, 83j1 F2d at 1346; In re Kaiser, 791 F2d 73, 75 (7th Cir 1986); St. Paul Fire & Marine Ins Co v PepsiCo, Inc, 884 F2d at 696-700.

(70) Id.

(71) Id.

(72) Id at 893.

(73) Id (citations omitted)

(74) See, eg, In re Emoral, 740 F3d at 883-84 (dissent).

(75) 656 F3d 82 (1st Cir 2011)

(76) Id at 90.

(77) Highland Capital Mgmt LP v Chesapeake Energy Corp, 522 F3d 575 (5th Cir 2008).

(78) Id at 588-89.

(79) Id.

(80) Id.

(81) Id at 1285.