MEMORANDUM OPINION
FACTS AND BACKGROUND
This mаtter is before the Court on the defendant’s motion for summary judgment of dismissal of the plaintiffs preference action. The primary issue, one of first impression in this District, is whether the debtor may pursue preference claims posteonfirmation, where the plan contains no reservation of rights or retention of jurisdiction tо prosecute such actions.
The debtor filed this Chapter 11 case on May 18, 1993. On its Statement of Affairs, the debtor listed payments to the defendant and a number of other creditors within the 90-day preference period. The debtor proposed an amended plan providing that creditors would be paid from the debtоr’s future net profits. Neither the plan nor the disclosure statement makes any reference to potential preference actions or avoidance actions generally, either in the description of creditor treatment, the means for implementing the plan, or the liquidation analysis. The jurisdictional paragraph provides that the Court retains jurisdiction to:
1. Determine the allowance or disallowance of claims and interests;
2. Determine all matters related to the Reorganization Plan until substantial consummation of the Reorganization Plan....
5. For such other matters as may be set forth in the order of confirmatiоn.
Plan at p. 17.
Shortly before the confirmation hearing, the debtor, the creditors’ committee, and their respective counsel met and discussed a number of matters, including preferences. Neither the defendant nor its counsel attended the meeting. The amended plan was overwhelmingly accepted by creditors, including the dеfendant, and it was confirmed on August 27, 1993. The order confirming the plan does not contain any provision for the retention of jurisdiction, or any mention of preference actions.
Following confirmation, the debtor filed a number of preference actions, including the one now before the Court. Ultimately the debtor defaulted on its obligations under the plan, and its secured lender foreclosed on its collateral. The creditors’ committee filed an action to revoke confirmation and to lay claim to the preference recoveries. The debtor, committee, and the secured creditor resolved the matter by stipulating that a specific portion of the preference recoveries would be paid to the committee for distribu
In support of its motion for summary judgment, the defendant asserts that the plaintiff’s action must fail for lack of standing. As a corollary, the defendant contends that the complaint should be dismissed, sinсe any recoveries will not inure to the benefit of the estate. In addition, the defendant asserts res judicata, equitable estoppel, and judicial estoppel. All of these theories center on the failure of the plan and disclosure statement to give notice of the debtor’s intent to pursue prefеrence actions, to direct the disposition of proceeds from such actions for the benefit of creditors, or to provide for the retention of jurisdiction for such purpose.
The Court granted the defendant’s motion for summary judgment of dismissal on the basis that the debtor lacks standing as a matter of law, and it did not reach the substance of the defendant’s other theories. Thereafter the debtor moved for reconsideration, alleging, in addition to facts already presented, that Polymerland’s counsel conferred with counsel for the creditors’ committee both before and after the meeting between the committee, the debtor, and their respective counsel. According to the affidavit of counsel for the committee, he communicated to the debtor the defendant’s concerns and obtained certain concessions regarding the proposed treatment of unsecured creditors. After the meeting, he informed the defendant’s counsel of his discussion with the debtor. Allegedly relying on this information and changes made in the plan, the defendant changed its vote to an acceptance. See Northrup Affidavit at p. 3.
STANDARD FOR SUMMARY JUDGMENT
To prevail on a motion for summary judgment, the moving party must show by reference to pleadings, discovery, admissions, and аffidavits, if any, that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Rule 56(a), (c), F.R.Civ.P.; Rule 7056, F.R.Bankr.P. If the moving party meets its burden, the burden of production then shifts to the nonmoving party, who must produce by admissible evidence “specific facts showing that there is a genuine issue fоr trial.” FRCP 56(e). The moving party is entitled to a judgment as a matter of law if the nonmoving party has failed to make a sufficient showing on an essential element of its ease 'with respect to which it has the burden of proof.
Celotex Corp. v. Catrett,
DISCUSSION
Section 547(b) of the Bankruptcy Code provides the basis for a trustee’s power to avoid preferеntial transfers. Pursuant to § 550(a), any recoveries resulting from avoided transfers are held for the benefit of the estate. Section 1107(a) confers on a debtor-in-possession the rights and powers of a trustee, including the power to prosecute avoidance actions on behalf of the estate. After confirmаtion of a plan, the ability of the trustee, the debtor, or other representative of the estate to enforce a claim once held by the estate is limited to that which has been retained in the plan. This is the import of § 1123(b)(3), which states that a plan may provide for:
(A) the settlement or adjustment of any claim or intеrest belonging to the debtor or to the estate; or
(B) the retention and enforcement by the debtor, by the trustee, or by a representative of the estate appointed for such purpose, of any such claim or interest....
The statutory scheme and case law establish two conditions for a debtor’s post-confirmation prosecution of avoidance actions. First, any recoveries must benefit the estate under § 550. Second, pursuant to § 1123(b)(3)(B), the plan must expressly retain the right to pursue such actions.
No legal dispute exists regarding the first element, although there is a factual dispute whether it has been met in this case. First, the plаn provided for payment to creditors out of profits; hence the defendant asserts that any preference recoveries would ultimately inure to the benefit of the debtor. However, since the debtor was unable to perform its obligations under the plan, a
Concerning the requirement of § 1123(b)(3)(B), this Court adopts the conclusion reached in
In re Mako, Inc.,
Because the confirmation of a Chapter 11 Plan dissolves the bankruptcy estate and the rights and powers created under the Bankruptcy Code, the retention provision of § 1123(b)(3)(B) requires specific and unequivocal language of reservation. Without this language, the avoidance powers of the Trustee stemming from the Bankruptcy Code at §§ 544, 546, 547, 548, 549 and 550 perish and become unenforceable.
Cases that are in accord with
Mako
include
In re Harstad,
The debtor has cited several cases which it charaсterizes as disagreeing with
Harstad. In re Jennings,
The
Harstad
Court criticized
Jennings,
stating that it “is not controlling and simply wrong.”
While section 1141(b) may aid [the Court] in determining what assets remain property of the estate, it has nothing to do with the retention of preference actions. [Citation omitted].... Congress specifically enacted section 1123(b)(3)(B) for that purpose. Any other interpretation of the Code would render section 1123(b)(3)(B) nugatory.
Id.
Further,
Jennings
is internally inconsistent on several points. For example, the
The remaining eases cited by the debtor do not support its position. In
Texas Consumer Finance Corporation v. First National City Bank,
In
In re Fogarty,
Finally,
In re Churchfield Management & Investment Corp.,
The primary issue was whether the assign-ee, who was neither the debtor nor the trustee, had standing to enforce a claim belonging to the estate. The Court hеld that § 1123(b)(3) permits the assignment, since pursuant to the plan, the assignee had been appointed and was pursuing the actions as a representative of the estate. Nowhere does the Court suggest that such an action could have been pursued had the authority to do so not been specifically retained in the plan.
This Court having agreed with
Mako
and
Harstad
that § 1123(b)(3)(B) requires that a plan contain “specific and unequivocal” language to support a debtor’s standing to commence a preference action postpetition, the only remaining issue is whether the language contained in the debtor’s plan satisfies the standard. The Court concludes that it does not. As previously indicated, the plan contains no reference to preference actions, either in the description of creditor treatment, the means for implementing the plan, the liquidation analysis, or the retention of jurisdiction. The most specific language in the jurisdictional paragraрh relates to “allowance or disallowance of claims and interests,” which the Court concludes does not encompass avoidance actions. Some courts have concluded that retention of the right to object to claims includes the right to pursue preferences.
See,
e.g.
In re Centennial Industries, Inc.,
The defect in the debtor’s plan is fatal to its standing to pursue the present action. The Court has already implicitly ruled that this defect is not cured by the disclosure of preferential payments in the debtor’s State
In its motion for reconsideration, thе debt- or reiterates its original legal position and raises only one additional factual allegation, namely that defendant’s counsel talked to counsel for the committee before and after his meeting with the debtor and debtor’s attorney, that the defendant obtained certain concessions, and that it changed its vote thereafter. Based on these vague assertions, the debtor implies that the defendant changed its vote based on specific knowledge of the debtor’s intent to file this action post-confirmation. There is no basis for such an inference, and the Court concludes that the new allegation doеs not constitute a material fact creating a genuine issue for trial.
Again, the problem inheres in the plan and its failure specifically and unequivocally to retain rights which can be exercised posteon-firmation only in accordance with § 1123(b)(3)(B). For this and the foregoing reasons, the defendant’s motion for summary judgment is granted, and the plaintiffs motion for reconsideration is denied.