concurring in part and dissenting in part:
I agree with the majority that the bankruptcy and district courts properly subordinated the greater part of the judgment lien asserted by the Millers. I respectfully disagree, however, with the conclusion that the lower courts erred in subordinating the Millers’ bond claim. As a practical matter, the majority opinion will result in the distribution of the majority of Lemco’s assets to the Millers to the detriment of the remaining creditors. This result is clearly inequitable under the facts of this case.
There can be no dispute that the Millers were insiders who owed a fiduciary duty to Lemco. In re N & D Properties, 799 F.2d 726, 731 (11th Cir.1986). As insiders and fiduciaries, special scrutiny must be given to the Millers’ dealings with Lemco. In re Multiponics, 622 F.2d 709, 714 (5th Cir.1980). I agree with the majority that the insider claimants, the Millers, can rescue their bond claim from subordination only by proving the good faith and fairness of their dealings with the debtor. This, in my opinion, the Millers failed to do. They increased the salary of Frank Miller from $14,000 to $25,000 per year at a time when the corporation had been suffering ongoing substantial losses. At the same time, the Millers were moving to satisfy the bond claim and Frank Miller was dissuading creditors from pursuing legal action against Lemco. As the bankruptcy court found, the choice of structuring of the bond transaction was the Millers’, made while Lemco was insolvent. It had the effect of giving them a larger secured claim in the instant bankruptcy proceeding, instead of an unsecured one, when those same assets could have been utilized at an earier date to improve Lemco’s financial position.
While not explicitly rejecting the Millers’ testimony that their motive in satisfying the bond debt was to improve their chances of obtaining new financing for Lemco, a rejection of this testimony is implicit in the bankruptcy court’s findings that the effect of the Millers’ actions was to confer on themselves the status of secured creditors. The district court concurred when it stated that this inequitable conduct by the Millers, the purchase of the bonds, conferred an unfair advantage on the Millers and caused injury to Lemco’s creditors. We should not substitute our judgment on this credibility determination for that of the bankruptcy court, affirmed by the district court, unless it is clearly erroneous. DeMet v. Harral-son, 399 F.2d 35, 38 (5th Cir.1968).
I would affirm the judgment of the district court in its entirety.