UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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WANDER TELECOMMUNICATIONS, et al., No. 97-13900
WANDER TELECOMMUNICATIONS, et al.,
v. A.P. No. 99-1034
FINOVA CAPITAL CORPORATION
Memorandum on Reconsideration
The debtor seeks reconsideration of the court's ruling that it has no standing to prosecute an
action against Finova for a declaration that Finova has waived its security interest in estate property.
The basis for its motion is that "[t]here is no estate once the Plan is confirmed." This is not correct.
Generally speaking, there are three types of Chapter 11 plans. In one type, the estate ceases to
exist on confirmation. In the other two, an estate remains..
In some plans, creditors are given stock or other securities issued by the debtor on
confirmation; in such cases, there is no estate remaining after confirmation.
In some plans, estate assets are purchased by the debtor or a new entity and the sale proceeds
are divided among the creditors. In such cases, the estate assets are no longer property of the estate
but there is an estate consisting of the proceeds of sale.
Some plans are liquidating plans. In these cases, there is only an estate. An estate
representative remains to reduce the estate to cash and distribute it in the same manner as if the case
was in Chapter 7.
Section 1141(b) of the Bankruptcy Code provides that "[e]xcept as provided in the plan or the
order confirming the plan, the confirmation of a plan vests all of the property of the estate in the
debtor." The key language is "except as provided." This section merely makes the first type of plan
discussed above the "default" type of plan. It does not, as the debtor argues here, mandate that in all
cases the debtor is vested with estate assets upon confirmation.
The plan in this case could have been drafted more precisely, but it is clear that the plan is a
liquidating plan with the Chapter 11 trustee remaining in possession of the estate. Under the plan,
only the trustee is entitled to exercise any dominion and control over the assets. Therefore, only the
trustee has standing to seek avoidance of a security interest in those assets.
For the foregoing reasons, the motion for reconsideration will be denied. Counsel for Finova
shall submit an appropriate form of order.
Dated: September 22, 1999 ____________________________
United States Bankruptcy