Upgrade Corp. v. Government Technology Services, Inc. (In re Softwaire Centre International, Inc.)

This case presents the question whether 11 U.S.C. § 546 (a), a bankruptcy code statute of limitations provision, applies to debtors in possession. We hold that it does.

I

Softwaire Centre International (SCI) filed its complaint in the instant action more than two years after it filed its bankruptcy petition. Section 546(a), entitled “Limitations on *683 Avoiding Powers”, states that actions brought under a variety of bankruptcy code provisions “may not be commenced after the earlier of 1) two years after the appointment of a trustee ... or 2) the time the case is closed or dismissed.” Here the case has not been closed or dismissed, nor has a trustee been appointed. Instead, SCI is a debtor in possession. SCI argues that because it is a debtor in possession and no trustee has been appointed, § 546(a) does not apply in this ease.

This is a question of first impression in this circuit. The only other circuit to have addressed the issue is the Tenth, which held that § 546(a) limits debtors in possession as well as trustees. Zilkha Energy Co. v. Leighton, 920 F.2d 1520, 1523-24 (10th Cir. 1990). Zilkha construed § 546(a) in light of § 1107(a), which says that debtors in possession…