Fairchild Aircraft Inc. v. Cambell (In Re Fairchild Aircraft Inc.)

AMENDED * MEMORANDUM DECISION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

CAME ON for consideration the foregoing matter. Fairchild Aircraft Incorporated (“FAI”) filed its Complaint for Declaratory and Injunctive Relief in the bankruptcy case of Fairchild Aircraft Corporation (“FAC”). Defendants moved for dismissal for lack of subject matter jurisdiction and failure to state a cause of action. Fed.R.Civ.P. 12(b)(2), (6). After denying these motions, both parties moved for summary judgment. After hearing, the court took the matter under submission. This decision now resolves the cross-motions for summary judgment and decides the adversary proceeding.

The issue of future claims in bankruptcy has bedeviled the federal courts for many years now. What happens after a bankruptcy plan disposes of all the assets of a debtor and, years later, someone suffers an injury alleged to have arisen from a defective product produced by the prepetition debtor? Does the injured party have a claim against the successor entity for damages, unaffected by the bankruptcy process? Or may bankruptcy alter or even eliminate those claims before they even mature into an injury? That is the issue with which this decision struggles and attempts to resolve.

Background Facts

The facts surrounding this matter span over a decade, beginning sometime before 1985 and ending with the filing of this adversary proceeding in August 1994. As they relate to the resolution of the present controversy, the facts are undisputed.

Fairchild Aircraft Corporation manufactured and sold commuter aircraft, one a 19-seat passenger aircraft sold to civilians as a Metro III and to the military as the C-26, and the other a smaller aircraft sold as the Merlin II and III or the Fairchild 300. This case concerns the crash of one these smaller aircraft, a Fairchild 300. FAC stopped production of the Fairchild 300 in 1982. FAC continued to sell the aircraft as late as 1985, because it held several of the airframes in inventory. It is undisputed that the aircraft in question in this case was manufactured no later than 1982 and sold no later than 1985— five years before FAC’s later chapter 11 bankruptcy.

*914 FAC filed for chapter 11 relief on February 11, 1990. Shortly after the filing, a chapter 11 trustee was appointed (the “Trustee”), with full authority to operate the debtor’s business. The Trustee, Bettina M. Whyte, decided that reorganization was not a viable option for the estate, and solicited a buyer for the company’s assets, which she proposed to sell as a going concern. On August 14, 1990, the Trustee entered into an asset purchase agreement with a group of investors who formed a corporation for the purpose of the acquisition, called appropriately enough Fairchild Acquisition, Inc. FAI was to pay $5 million in cash and was to assume liability for FAC’s secured debt to Sanwa Business Credit, in the range of $36 million. The estate was to retain some cash, its estate causes of action (including preference actions), and a share of an anticipated tax refund. The asset purchase agreement also contained the following provision, which the acquiring entity maintains was an essential element of the bargain and induced the seller to purchase the assets for as much as it did:

Purchaser shall not assume, have any liability for, or in any manner be responsible for any liabilities or obligations of any nature of Seller or the Trustee, including without limiting the generality of the foregoing: ... (ii) any occurrence or event at any time which results or is alleged to have resulted in injury or death to any person or damage to or destruction of property (including loss of use) or any other damage (regardless of when such injury, death or damage takes place) which was caused by or allegedly caused by (A) any hazard or alleged hazard or defect or alleged defect in manufacture, design, materials or workmanship ...

The sale took place as part of the confirmation of the Trustee’s First Amended Plan of Reorganization and was of course subject to the approval of the bankruptcy court. See 11 U.S.C. § 1123(b)(4). On September 17, 1990, the court confirmed the Trustee’s Plan and the asset sale agreement which was its central feature. The confirmation order expressly stated that the assets were sold “free and clear of all liens, claims, and encumbrances,” except for those hens and encumbrances assumed by the buyer under the plan. See 11 U.S.C. § 1141(c). The order further stated that the purchaser would not “assume, have any liability for, or in any manner be responsible for any liabilities or obligations of any nature of Debtor, Reorganized Debtor, the Trustee or the Fiscal Agent.” Finally, the order enjoined and stayed “all creditors, claimants against, and persons claiming or having any interest of any nature whatsoever” from “pursuing or attempting to pursue, or commencing any suits or proceedings at law, in equity or otherwise, against the property of the Debt- or’s estate ... the proceeds of the sale ... or any other person or persons claiming, directly or indirectly, including the Purchaser under the Asset Purchase Agreement ...”

The court found that the consideration to be paid by FAI (the cash and the assumption of secured debt) was “fair and adequate and fully representative of the maximum value that can be realized at this time for Debtor’s Property.” The court also made a finding that the notice provided concerning the plan and disclosure statement was reasonable under the circumstances. The Trustee had published notice of the disclosure statement, plan of reorganization and confirmation hearing in the Weekly News of Business Aviation, and in two local newspapers, the San Antonio Light and the San Antonio Express-News.

The Trustee made no provision in her plan for claimants in the position of these defendants. Indeed, the debtor had not even listed any of the owners or operators of FAC aircraft in its bankruptcy schedules, though their identities were available and ascertainable from the records of FAC. 1 The Trustee made no particular effort to reach these persons in the plan process, and the plan itself made no particular provision for these persons.

*915 On April 1, 1993, a Fairchild 300 aircraft, originally sold and manufactured by FAC crashed near Blountville, Tennessee. Four individuals lost their lives. Multiple lawsuits were of course filed on the heels of this crash, in both federal and state courts in Georgia, Tennessee and South Carolina. Three of the plaintiffs were persons suing both individually and on behalf of estates of the individuals killed in the aircraft crash. The plaintiffs also included Eastern Foods, Inc. and Hooters of America, Inc., the owners of the airplane, as well as Insurance Company of North America, the owner’s insurance carrier. The plaintiffs named FAI as one of the defendants, alleging that the aircraft was defectively manufactured by FAC, and that FAI is now liable for the manufacture and sale of a defective product on a successor liability theory. 2 FAI filed this adversary proceeding as a preemptive strike, seeking an order for declaratory and injunctive relief premised on the provisions of the plan, the asset purchase agreement, and the court’s order confirming the plan. As such, the plaintiffs in the products liability lawsuits find themselves as defendants in this action for declaratory relief.

Discussion

1. Framing the Issue

The legal issues presented can be stated simply. FAI claims that the provisions of the asset purchase agreement and order confirming the plan “cleansed” the property acquired of any liability for the acts of FAC, including any successor liability growing out of the sale of those assets to FAI by the trustee of FAC’s bankruptcy. FAI says that the sale was free and clear of this sort of liability, and that the bankruptcy court should here so declare. FAI also contends that any lawsuit to force liability on FAI based upon its acquisition of assets would violate the bankruptcy court’s injunction contained in the confirmation order, and asks the court to enforce that injunction.

FAI would like to stop the defendants in their tracks without ever having to defend against a successor liability lawsuit. It is not hard to understand why. Even if FAI believes the successor liability allegation to have little merit (and that is its position), it must still incur the cost of defense and risk the uncertainty of litigation. Moreover, there are still other FAC aircraft out there, and if another one crashes, an adverse outcome in this litigation could all but assure an adverse outcome in other litigation as well. Rather than endure these risks, FAI would like to rely on what it believes to have been the effective protections built into the court-supervised sale process, protections for which it believes it bargained. If those protections prove to be worthless, then it will not have received the benefit of its bargain, a result with consequences reaching far beyond this litigation not only for FAI but also for bankruptcy estates in general.

FAI first argues that, because the assets were sold under the plan “free and clear of all liens, claims and encumbrances,” and of “interests in such property,” the assets must have, ipso facto, also been sold free of any successor liability. Defendants counter that the self-same asset purchase gave rise to the successor liability of FAI. Alternatively, FAI argues that the court had the authority to enter an injunction to cut off suits such as this, incident to its powers under sections 1123 and 105 of the Code.

II. Subject Matter Jurisdiction

At the outset, we must address the challenge to the court’s subject matter jurisdiction to even entertain this dispute. That challenge is premised on two important circuit court decisions, which suggest that a bankruptcy court cannot enjoin successor liability lawsuits arising out of injuries which occurred post-confirmation. Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159, 161-63 (7th Cir.1994); Mooney Aircraft Corp. v. Foster (Matter of Mooney Aircraft), 730 F.2d 367, 372-75 (5th Cir.1984). According to Cox, *916 bankruptcy jurisdiction cannot extend to claims which come into existence after the bankruptcy and certainly cannot extend to protect a third party (the successor).

Certainly, the Seventh Circuit is right in its conclusion that section 1334(b), while a reservoir of jurisdiction, is not a bottomless well. Bankruptcy has an ending as well as a beginning, and after it is all over, so also is the federal court’s role in the ongoing life of the debtor entity post-bankruptcy. But section 1334(b) is not the only source for a federal court’s exercise of jurisdiction in a bankruptcy-related matter. All-encompassing (and by extrapolation, all delimiting) as that section is, it does not supplant other bases for a federal court’s involvement having a much older lineage.

For example, all federal courts have the jurisdiction to enforce their own orders. Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S.Ct. 695, 697, 78 L.Ed. 1230 (1934); Royal Insurance Company of America v. Quinn-L Capital Corporation, 3 F.3d 877, 881 (5th Cir.1993); Lee v. Hunt, 631 F.2d 1171 (5th Cir.1980), cert. denied, 454 U.S. 834, 102 S.Ct. 133, 70 L.Ed.2d 112 (1981); Paris, 132 B.R. at 508; In re White Motor Credit Corp., 75 B.R. 944, 947 (Bankr. N.D.Ohio 1987). This jurisdiction includes the power to declare and determine the scope and effect of an order entered in prior bankruptcy proceedings, and the ability to rule on the legality of plan provisions, and releases and injunctions which may be part of the plan. Public Service Co. of New Hampshire v. Richards (In re Public Service Co. of New Hampshire), 148 B.R. 702, 705 (Bankr.D.N.H.1992); Matter of Specialty Equipment Companies, Inc., 3 F.3d 1043, 1045 (5th Cir.1993). That is essentially what FAI is asking the court to do in this case — to declare and enforce a prior order of this court. Nothing in section 1334 even vaguely suggests a congressional intent to carve out any sort of “bankruptcy exception” to the time-honored doctrine announced in Local Loan. 3

Both Cox and Mooney recognized that courts have jurisdiction to enforce their own orders, but noted that this ancillary jurisdiction is itself limited by the jurisdictional limits of the order sought to be enforced. Cox, 23 F.3d at 163; Mooney, 730 F.2d at 374-75. The subject matter of the injunctive relief sought in the current proceeding must be “encompassed in the court’s prior order.” Id.; see also Royal, 3 F.3d at 881 (a court may not use the ancillary proceedings doctrine to enforce an order which it did not make). No doubt Cox is correct on this point. Before any court can decide whether enforcement of a given order is appropriate, it must first explore the prior order to determine its scope and effect. See Specialty Equip., 3 F.3d at 1043; Public Service Co., 148 B.R. at 708. Implicit in that process is the need to determine whether the prior order was one properly within the subject matter of the jurisdiction of the court to enter. Both Cox and Mooney at least implicitly recognized this when they held that the prior orders sought to be enforced there could not, as a matter of subject matter jurisdiction, encompass the claims sought to be affected by the enforcement action. Cox, 23 F.3d at 163; Mooney, 730 F.2d at 375.

Precisely the same issue is presented here. In order to rule with finality whether this court has the requisite ancillary jurisdiction to enforce the prior orders of this court regarding the sale of assets to FAI, the court must make the subsidiary finding that the prior orders themselves fell within the court’s subject matter jurisdiction. The *917 court may proceed with that task because a court always has the jurisdiction to determine its own jurisdiction. Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (5th Cir.1994); Gilchrist v. Westcott (Matter of Gilchrist), 891 F.2d 559, 561 (5th Cir.1990); In re Sax, 796 F.2d 994, 998 (7th Cir.1986).

The process of evaluating the injunctive orders contained in the order of confirmation and sale has two parts. First, we must ask whether, under the powers granted under the Bankruptcy Code, the court’s prior order could have encompassed, and thereby affected, the defendants’ lawsuits. Second, we must know whether the court’s prior order did in fact encompass and affect the Defendants’ lawsuits.

Turning to the first question (which, if answered in the negative, would be disposi-tive of the case), we note that there are two possible bases for the notion that the orders in question could have affected the defendants’ lawsuits. One is that, via the confirmation of the trustee’s plan, the debtor’s assets were sold “free and clear of all liens, claims and encumbrances,” invoking the extraordinary cleansing powers of section 363(f). See 11 U.S.C. § 363(f). All parties of course agree that the asset purchase agreement, and the order of confirmation which approved that agreement, purport to achieve precisely this result. But does the statute in fact permit sales free and clear of the sorts of interests held by the defendants in this case? If it does not, then the court’s order exceeds the authority conferred by the statute, and cannot be enforced in this ancillary proceeding. 4 The other is that, the liabilities associated with the defendant’s injuries may have been bankruptcy claims. If this were the case, then these liabilities would have been discharged under section 1141(d). See 11 U.S.C. § 1141(d). Arguably, at least at this time, the discharge of these liabilities as against the predecessor-debtor would leave nothing for the successor to assume.

III. Sale Free and Clear

For the proposition that the assets were property sold free and clear, FAI relies upon two arguments to supports its position. First, FAI points to the broad language of the section, emphasizing the term “any interest.” FAI says that this language means that a sale free and clear must insulate the buyer from the claims of any person whose claim could be said to be assertable against the property, and one such claim is the trailing liability that gives rise to the successor liability being asserted here against FAI. FAI cites several decisions in support of this contention. See In re Paris Industries Corp., 132 B.R. 504, 508 (D.Maine 1991); In re White Motor Credit Corp., 75 B.R. 944, 947 (Bankr.N.D.Ohio 1987); In re All American of Ashburn, Inc., 56 B.R. 186, 189-90 (Bankr.N.D.Ga.1986). Secondly, FAI argues that its interpretation is consistent with the broader policy of maximizing value for estate assets and encouraging reorganization.

FAI’s argument, however, does not square with the plain language of the statute. Patterson v. Shumate, 504 U.S. 753, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1993); United States v. Ron Pair Enter., Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). FAI is entirely correct that the phrase any interest suggests that it be interpreted broadly, and could conceivably be interpreted to embrace “trailing” tort liability. But the phrase cannot be read in isolation. Dewsnup v. Timm, 502 U.S. 410, 420, 112 S.Ct. 773, 779, 116 L.Ed.2d 903 (1992) (Scalia, J., dissenting). Section 363(f) does not authorize sales free and clear of any interest, but rather of any interest in such property. These three additional words define the real breadth of any interests. The sorts of interests impact *918 ed by a sale “free and clear” are in rem interests which have attached to the property. Section 363(f) is not intended to extinguish in personam liabilities. Were we to allow “any interests” to sweep up in person-am claims as well, we would render the words “in such property” a nullity. No one can seriously argue that in personam claims have, of themselves, an interest in such property.

One could plausibly argue that, in bankruptcy at least, entities with otherwise purely in personam claims against a prepetition debtor might, via the bankruptcy filing, acquire an “interest” in the bankruptcy estate (which consists essentially of the debtor’s assets). This interest in the estate’s assets might be thought of as in rem, bringing the unsecured creditor’s claim within the sweep of section 363(f), and providing an important linchpin for the “discharge of future claims” argument urged here by FAI.

But the argument will not withstand scrutiny. For one, the argument unnecessarily (and perhaps impermissibly) blurs the distinction between secured and unsecured creditors’ interests in the estate. Even though all creditors have an interest in the estate, they do not have the interest in property that would be cognizable under 506(a) for example. Otherwise, the distinctions drawn there between secured and unsecured claims would be all but obliterated. Moreover, we know (or should know) that unsecured creditors of an estate do not have the right to “credit bid” their claim at the sale. 11 U.S.C. § 363(k); see In re Moritz, 162 B.R. 618, 619 (Bankr.M.D.Fla.1994) (unsecured creditors are not entitled to bid in all or part of their claims). And if unsecured creditors had an “interest in property” sufficiently cognizable that a special provision is required to achieve a sale “free and clear,” then those selfsame creditors should also be entitled to adequate protection of those interests during the pendency of the case. But that notion too essentially renders the distinctions drawn in the Code a nullity. 11 U.S.C. § 362(e); see also 11 U.S.C. § 362(d)(1) (providing for relief from the automatic stay for cause, including “lack of adequate protection of an interest in property of such party in interest”). We must respect the argument for its ingenuity, but reject it as inconsistent with the plain language of the statute. 5

To be sure, as a matter of policy, perhaps bankruptcy courts should have the power to sell property “with no strings attached,” both because it would encourage buyers to pay more for estate assets, to the benefit of the process’s intended beneficiaries, the creditors, and because it encourages equality of distribution. Purchasers are certainly more likely to pay more for assets with no trailing liability, and will likely discount the price they will pay to account for the possibility of having to absorb trailing liabilities. And allowing a post-bankruptcy claimant whose claim arose from the debtor’s pre-petition conduct to follow property into the hands of a purchaser skews the bankruptcy distribution scheme, permitting that creditor to receive what amounts to a priority of payment over claimants whose injury happens to have manifested itself before plan confirmation. Goes the argument, the same conduct gave rise to both claims. Only serendipity explains why one claimant is bound by the plan, while the other is permitted to pursue full recovery, based only upon the timing of the injury, and serendipity seems a poor decisional point for such a major policy choice.

Other courts have appreciated these concerns as well. See Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7th Cir. 1994); Matter of UNR Industries, Inc., 20 F.3d 766, 769-70 (7th Cir.1994); Forde v. Kee-Lox Manufacturing Company, Inc., 437 *919 F.Supp. 631 (W.D.N.Y.1977); Paris Manufacturing Corporation v. Ace Hardware Corporation (In re Paris Industries), 132 B.R. 504 (Bankr.D.Maine 1991); American Living Systems v. Bonapfel (In re All American of Ashburn, Inc.), 56 B.R. 186 (Bankr.N.D.Ga.1986). But they have also recognized that it was and is for the legislature to pass on this policy choice. It is left to the courts only to give effect to the policy choices already made in the existing statute. For better or worse, it does not appear that the current statute achieves all of these policy aims. The job of the courts is limited to ascertaining what policy choice Congress did make, not what policy choice Congress should have made.

And in fairness to the policy choices Congress apparently did make, section 363(f) does not need to reach beyond in rem interests in order to effectively achieve an appropriate bankruptcy result within the scope of the policies evinced in the current Code. We do not require a special provision to strip off interests that never attach in the first place. 6 Property is never “subject to” these interests absent the debtor’s consent to a security interest or the creditor’s attachment of the property resulting in a lien. Insofar as the estate is concerned, whatever “interests” such creditors might have in estate property can be effectively eliminated via an ordinary section 363(b) sale, without resort to the special “free and clear” mechanism found in section 363(f). See 11 U.S.C. § 363(b). 7

Of course the other side of this observation is that, if the claims at issue here are prepetition claims against the estate, then they could conceivably have been eliminated by the sale of assets via section 363(b), without resort to section 363(f). Recognizing this, the defendants have argued vigorously that they do not hold prepetition claims. They also note that state law gives them independent claims against FAI under various successor liability theories, and that those claims could not have been discharged by either the sale or the confirmation of the plan in FAC. See generally, W. Page Keeton et al„ Pros-seR and Keeton on the Law of Toets (5th Ed.1984). Finally, they have maintained that they do not and never did have an “interest in property” via their successor liability actions. Their claims are in personam.

But this raises a deeper and far more important question. Can bankruptcy affect these sorts of claims at all? We turn to that question next.

TV. Claims

To resolve this question, we must first be sure to understand the nature of the particular claim with which we are here presented. Then we must next determine whether it is in fact a “bankruptcy claim” within the meaning of section 101(5) of the Code. If it is, then we must determine whether the bankruptcy process could have affected this claim. 8 Finally, we must decide whether the bankruptcy process employed in this case did in fact affect this claim in a manner such as to cut off the ability of these defendants to maintain their action against FAI. We turn *920 to the first question, an understanding of the nature of this claim.

A. Successor Liability

Successor liability has its antecedents in corporate law. In corporate law, the general rule has always been that the transfer of assets from one company to another does not pass on the debts or liabilities of the transferor, including liability for torts or products liability actions. Upholsterers’ International Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1326 (7th Cir.1990); Conway, 885 F.2d at 93. See also 15 W. Fletcher, Cyclopedia of the Law of Private Corporations, § 7122 (Perm.Ed. 1983). The general rale is not absolute, and four exceptions have been traditionally recognized. Artistic Furniture, 920 F.2d at 1326. A successor by purchase may be held liable for the debts or liabilities of its predecessor where: (1) there is an express or implied assumption of liability; (2) the transaction amounts to a consolidation, merger or similar restructuring of the two corporations; (3) the purchasing corporation is a “mere continuation” of the seller; or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts. Id. In recent years, a few courts have recognized a fifth exception, springing essentially from the nature of the defect and the product in question. 9 See Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 18-19, 434 A.2d 106, 107-108 (1981); Ray v. Alad Corp., 19 Cal.3d 22, 136 Cal. Rptr. 574, 560 P.2d 3 (1977).

Regardless the exception, successor liability does not create a new cause of action against the purchaser so much as it transfers the liability of the predecessor to the purchaser. Fletcher, supra, at § 7122; see Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 181-86, 94 S.Ct. 414, 423-26, 38 L.Ed.2d 388 (1973); see also Northern Ins. Co. of New York v. Allied Mut. Ins., 955 F.2d 1353, 1357 (9th Cir.1992) (the liability of the predecessor is transferred to the successor); Clark Equipment Co. v. Dial Corp., 25 F.3d 1384, 1387 (7th Cir.1994) (successor liability distinguished from personal and independent liability of the successor); Preyer v. Gulf Tank & Fabricating Co., Inc., 826 F.Supp. 1389, 1395 (N.D.Fla.1993) (successor liability does not create new rights in the plaintiff); Russell v. SunAmerica Securities, Inc., 1991 WL 352563 (S.D.Miss.1991) (liability of successor is coterminous with liability of predecessor; if predecessor is not liable then neither is successor). The nature of the liability itself does not change. Thus, while successor liability may give a party an alternative entity from whom to recover, the doctrine does not convert the claim to an in rem action running against the property being sold. 10 Nor does the claim have an existence independent of the underlying liability of the entity that sold the assets.

If this “claim” is in fact one properly characterized as a “claim” within the meaning of the Bankruptcy Code (i.e., a “bankruptcy claim”), then the sale of assets via the bankruptcy process could certainly transfer the assets free of any such in personam bankruptcy claims against the estate. What is more, we know from the nature of successor liability itself that a successor cannot legitimately be presumed to have “assumed” *921 claims that were already being handled in the bankruptcy process when the successor purchased assets out of a bankruptcy estate. 11 For this reason, we must turn our focus to what sort of claim, if any, the defendants can be said to have had against FAC, the predecessor entity. Here, importantly, we are speaking of claim in the bankruptcy sense, for it is only if the claims of the defendants can properly be said to have been the subject of the bankruptcy process that we can maintain that the bankruptcy court had any authority to issue orders affecting their rights. Mooney, 730 F.2d at 375. 12

B. The Concept of a Bankruptcy Claim

“Claim” is a specifically defined term under the Bankruptcy Code. It means “[a] right to payment, whether or not such right is reduced to judgment, liquidated, unliqui-dated, fixed, contingent, matured, unma-tured, disputed, undisputed, legal, equitable, secured or unsecured.” 11 U.S.C. § 101(5). According to the legislative history (quoted almost universally by virtually every court that has ever tried to construe the definition of claim found in the Code),

The effect of the definition [of claim] is a significant departure from present law [i.e., the Bankruptcy Act]. Under present law, ‘claim’ is not defined in straight bankruptcy. Instead it is simply used, along with the concept of provability in section 63 of the Bankruptcy Act, to limit the kinds of obligations that are payable in a bankruptcy ease. The term is defined in the debtor rehabilitation chapters of the [the Bankruptcy Code] more broadly. The definition ... adopts an even broader definition of claim_ By this broadest possible definition, and by the use of the term throughout title 11, especially in subchap-ter I of chapter 5, the bill contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case. It permits the broadest possible relief in the bankruptcy court.

H.Rep. 95, 95th Cong, 2d Sess 308-14 (1977), reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 6265-71 (1978).

Courts have struggled to give content to the extraordinarily broad definition of claim found in the Code, with an eye on the impact that bankruptcy now has on a given creditor who is held to have a “claim” in the bankruptcy case. On the one hand, all recognize that Congress fully intended to move away from the relatively restricted definition in the Act, toward a concept that would permit the bankruptcy process to accord broad and complete relief to debtors. After all, what’s the point in having a remedy for financial restructuring that leaves a substantial portion of the debt outside the process? By the same token, however, more and more courts and commentators also recognize that the concept must have some limits. Due process, fundamental fairness, and the limits of subject matter jurisdiction all seem to mark the outer boundaries of the concept. Courts are still struggling with a formulation that reconciles these competing considerations.

The defendants have tried to argue that the Fifth Circuit’s decision in Mooney is dispositive of this case, but, as an Act case, it sheds far less light on our problem than one might desire. To be sure, Mooney discusses the “outer limits” of the claim concept in terms of due process, but the circumscribed *922 definition of claim in the Bankruptcy Act was itself dispositive of the issue there before the court. In Mooney, as in our case, persons injured in the crash of an airplane manufactured by the debtor sought to hold the purchaser liable. The plane was manufactured prepetition, the assets of the debtor were sold via the bankruptcy process “free and clear,” and the injury occurred post-bankruptcy. Mooney, 730 F.2d at 375. In reversing the bankruptcy court’s injunction in favor of the purchaser in Mooney, the Fifth Circuit said that the lower court lacked the ancillary jurisdiction to enter the injunction, because the prior sale order could not have affected the post-bankruptcy injury. Explained the court, those persons did not have “claims” at the time the sale order was entered. Id. at 374-3. The finding was mandated by the Act’s rather restrictive definition of “claim,” which required that a claim be “provable.” Id. at 375 n. 6. Of cours