Issue link: https://mbozikis.ufcontent.com/i/1422521
146 C. Operation of the Business 1. Authorization to Operate the Business The Bankruptcy Code authorizes the debtor-in-possession or the trustee to operate the debtor's business as a matter of course and without further court order, although the bankruptcy court may terminate such authority on request of a party in interest and upon notice and a hearing. 11 U.S.C. § 1108. See Goss v. Morgansen's Ltd., No. 04-CV-0268, 2005 U.S. Dist. LEXIS 43600, at *13–14 (E.D.N.Y. Sept. 27, 2005). In operating the business, the debtor- in-possession or trustee "has a duty to exercise that measure of care and diligence that an ordinary prudent person would exercise under similar circumstances . . . to conserve the assets of the estate and to maximize distribution[s] to creditors." In re Rigden, 795 F.2d 727, 730 (9th Cir. 1986). Additionally, the debtor-in- possession or trustee is also bound by a duty of loyalty, which requires it to refrain from self-dealing, avoid conflicts of interest and the appearance of impropriety and treat all parties to the case fairly. See In re Coram Healthcare Corp., 271 B.R. 228, 235 (Bankr. D. Del. 2001). Holdings, LLC and In re Residential Capital, LLC, include the following: (1) the circumstances surrounding the prepetition futures and options positions the debtors held; (2) a certain sale of assets a week prior to the bankruptcy filing and the potential improper use of the debtors' funds; (3) all transactions involving off-balance sheet, omitted, or unrecorded special purpose vehicles or other entities created or structured by or for the debtors, or involving potential avoidance actions against the debtors' prepetition insiders or professionals; (4) the existence of colorable avoidance action claims by affiliates against the parent company; (5) the existence of colorable breach of fiduciary duty and/or aiding and abetting claims against the debtors' officers and directors; (6) claims stemming from the financial condition of the debtors' enterprise prior to the chapter 11 filings; (7) the existence of administrative claims against the parent debtor stemming from its cash sweeps of affiliates' accounts; (8) intercompany accounts and transfers during a period prior to the petition date; (9) transfers and transactions among the debtors and their lenders and financial participants; (10) the debtors' conduct with respect to prepetition restructuring transactions; (11) potential fraudulent transfers; and (12) the debtors' capability of confirming a plan.