Prior to filing its bankruptcy reorganization proceedings on July 12, 2009, Bashas’ announced its intention to close unprofitable stores. Bashas’ now has followed through and requested bankruptcy court authorization to reject fifteen store leases. Bashas’ election to reject these unexpired leases, coupled with the extent to which it rejects additional store leases, serves as a forward indicator on the direction of its reorganization and the extent of recovery by the unsecured trade creditors.
Articles tagged with: Section 365
GM Bankruptcy – Selective Cure List and Substantive Objections
There were approximately 479 objections filed by the June 15, 2009 deadline by suppliers and other trade creditors to GM’s proposed cure costs (click link to see list). An additional 75 objections were filed after the deadline and on or before June 20, 2009. As in the case of Chrysler, the majority of the objections were to cure cost amounts. However, as noted in our prior post, the cure cost procedures also provided a frequent basis for objection. As a final irony, Chrysler’s objection was among the most vehement (as well as apparently a day late). In the following post, we discuss the substantive objections and provide a sampling of the differences between GM’s cure costs and cure costs computed by suppliers.
GM Bankruptcy – Cure Costs Procedures Catastrophic Failures
Automotive suppliers can only hope that GM will make better cars than they do cure cost procedures. Based on the cure cost objections (“Cure Cost Objections”) filed, the procedures approved by the Bankruptcy Court either were flawed from the beginning or improperly executed. The net result is to cast a shadow on the entire contract assignment and assumption process pursuant to the proposed 363 sale to New GM. In the following post we discuss the problems experienced by suppliers. In a later post, we summarize the substantive objections that were filed and give a sampling of the differences between the GM cure costs and the Supplier cure amounts.
GM Bankruptcy – For Suppliers Chrysler Bankruptcy Lesson 1
(Update: Since the original post date we have added two additional posts on the GM Cure Cost Procedure and the Supplier Objections that were filed to GM Cure Costs. Please Click the preceding link to see those posts.)
The Chrysler bankruptcy taught suppliers several lessons. Lesson 1 – SUPPLIERS, BE READY TO CONFIRM THE CURE AMOUNT FOR THE ASSIGNMENT OF GM SUPPLY CONTRACTS. Consider the years that your company has worked with GM. If your company got a cure cost notice from GM today, would it be ready to say “If GM pays my company this amount, my company has no further claims against GM, and if it does have additional claims, we give them up?” A lot of suppliers in the Chrysler bankruptcy found out the hard way that they were not ready to respond; the pain just has not hit yet.
Fluid Routing Solutions’ Purchaser Takes Automakers Off List
We discussed in a prior post the completion of the auction and bankruptcy court approval of sale of assets to an affiliate of Fluid Routing Solutions. Despite its success in getting the sale approved, Fluid Routing Solutions was unable to obtain the concurrence of its automaker customers to the Proposed Sale Order. Fluid Routing Solutions advised the bankruptcy court in submitting the Proposed Sale Order to the bankruptcy court that Toyota, Chrysler, Ford and General Motors (the “Automaker Customers”) provided comments to the proposed order that were “wholly inconsistent with, and went far beyond, the requirements of the Agreement”.
Ritz Camera Centers Bankruptcy – Supplier Aspects
See the Ritz Camera Docsheet™ Report for subsequent developments in the Ritz Camera bankruptcy proceedings.
In a bankruptcy that may signal the opening of the 2009 floodgates of retail sector filings, Ritz Camera Centers, Inc. filed on February 23 Chapter 11 proceedings in Delaware in Case No. 09-10617. The focus in this bankruptcy will be on the store leases – how many and which ones are to be rejected, which ones are going to be renegotiated upon threat of rejection, and which ones are going to be assumed for assignment.
Section 365 Bankruptcy Preference Defense – Overlooked, Underutilized
Feb. 19, 2009 – In an article entitled Section 365 Executory Contract Assumption Defense to a Bankruptcy Preference Claim, we discuss the absolute defense to a preference claim created when a bankrupt company or its trustee “assumes” an “executory contract”. That defense was firmly established in a 2003 decision by the Third Circuit Court of Appeals in the bankruptcy case of In re Kiwi International Air Lines Inc., so the defense is sometimes called the Kiwi defense.
The Kiwi defense is a defense that we believe may be underutilized. As we explain elsewhere on this web site, the facts needed to establish the 3 most common defenses are “fixed” at the time of the bankruptcy filing. As to establishing the subsequent new value, ordinary course of business and contemporaneous exchange defenses, there is nothing that the supplier can do but pull together books and records.