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”.
Articles tagged with: contract assumption 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.