Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
The U.S. Court of Appeals for the Second Circuit, on remand from the Supreme Court, further remanded to the district court the key issue of whether the Chapter 11 debtor gave "adequate assurance of future performance of" a commercial real property shopping center lease "as required by [Bankruptcy Code] §365(b)(3)(A)," after the debtor's assignment of its lease to Transform Holdco LLC (T). In re Sears Holding Corp., 2023 WL 7294833 (2d Cir. Nov. 6, 2023). MOAC Mall Holdings LLC (M), the shopping center lessor, had objected to the lease assignment because the assignee had not met the Code's financial condition requirement; lost in the bankruptcy court; initially prevailed in the district court on appeal; but lost again in that court and in the Court of Appeals on jurisdictional grounds. The Supreme Court, however, rejected the Second Circuit's jurisdictional holding and remanded for a review of the merits of M's appeal. MOAC Holdings LLC v. Transform Holdco LLC, 143 S. Ct. 927, 933 (2023) (" … §363(m) is not a jurisdictional provision.").
The superficially complicated fact pattern in Sears can be simplified. M was a shopping center landlord who challenged the debtor's lease assignment to T because T failed to provide "the requisite adequate assurance of future performance" required by Bankruptcy Code (Code) §365(b)(3) ("similar … financial condition and operating performance" as the debtor when "the debtor became the lessee under the lease"). After the bankruptcy court denied its objection, M initially prevailed on appeal in the district court. In re Sears Holdings Corp., 613 B.R. 51 (S.D.N.Y. 2020). In its initial decision, the district court held that T "failed to prove financial and operating similarity between [the debtor] in 1991 [when lease signed] and [T] today, under any standard …." Id. at *78. "Congress … decided that only an assignee with a financial condition and any operating performance that resembled the debtor's ab initio would provide a shopping center landlord with 'adequate assurance' that the bargain originally struck would be performed by the lease's assignee." Id. It further rejected the bankruptcy court's unsupported finding that T was "an entity with equity of $50 million …." Id. The evidentiary record failed to meet "the congressionally-mandated standard for providing adequate financial assurance of future lease performance." Id. at *79. Because of the inadequate record and erroneous legal analysis, the district court vacated the bankruptcy court's approval of the assignment of the lease to T and remanded for further findings. T then sought a rehearing instead, requiring the district court to dismiss M's appeal on jurisdictional grounds, based on Second Circuit precedent construing Code §363(m). The U.S. Supreme Court, however, held that §363(m) is not jurisdictional, vacated the Second Circuit's affirmance of the district court, and remanded the case to the Second Circuit for a review of the merits. 143 S. Ct. at 305.
The Second Circuit agreed with M that it should "consider the merits of [T's] cross-appeal and, in effect, affirm the District Court's initial order of February 27, 2020 …." 2023 WL 7294833 at *1. Reviewing the merits, the Second Circuit held that "for the reasons stated in the district court's [initial] February 27, 2020 opinion, [T] has not given 'adequate assurance of future performance of [the] lease' as required by [Code] §365(b)(3)(A)." The court then further remanded the case to the district court because that court's initial opinion "charted a remedial course it might again consider on remand." Id.
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?