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2008 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

Appellate Court Decisions Related
To Bankruptcy Cases

By William Norton, III

law, and because UAL conceded that its ground lease constituted a "true lease" and not a disguised secured transaction, the entire agreement including the bond-related obligations had to be treated as a lease pursuant to S 365.)

In re Kmart Corp., 434 F.3d 536 (7th Cir. Jan. 4, 2006) (Debtor was not in breach of obligations under pre-petition contract, so contract could be assumed under S 365. Even though non-debtor party to contract purported to terminate contract after debtor allegedly breached post-assumption, resulting in state court litigation, federal jurisdiction existed to determine whether a breach existed pre-assumption and whether the contract had been assumed properly.)

28. 365(a) Executory Contracts -- Rejection

In re Adelphia Business Solutions, Inc., 482 F.3d 602 (2d Cir. Apr. 13, 2007) (Bankruptcy court did not abuse its discretion when it gave retroactive effect, 33 months after initially hearing the matter, to its order authorizing rejection of an executory lease.)

Thompkins v. Lil' Joe Records, Inc., 476 F.3d 1294 (11th Cir. Feb. 5 2007) (Record label's S 365 rejection of contract with recording artist did not rescind contract and revert intellectual property rights to artist. Upon rescission, artist's remedy was to file a claim for rejection damages, and his failure to do so precluded his later claims based on contract law, Lanham Act, and other theories.)

Agarwal v. Pomona Valley Med. Group, Inc. (In re Pomona Valley Med. Group, Inc.), 476 F.3d 665 (9th Cir. Jan. 17, 2007) (Debtor's S 365(a) rejection of contract with physician did not violate business judgment rule. Since the rejection of an executory contract does not otherwise affect the parties' substantive rights, debtor's rejection of the contract did not automatically extinguish the physician's other causes of action.)

Abboud v. Ground Round, Inc. (In re The Ground Round, Inc.), 482 F.3d 15 (1st Cir. Mar. 30, 2007) (Debtor, which was a lessee of real property used for a restaurant, was required to return liquor license to lessor when debtor rejected the unexpired lease in Chapter 11 case. )

29. 365(e)(1) Executory Contracts -- ipso facto clause

In re Mirant Corp., 440 F.3d 238 (5th Cir. Feb. 13, 2006) (Agency of the federal government violated automatic stay when it terminated contract with debtor pursuant to ipso facto clause providing for default and a termination

 

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