Bourbon Saloon, Inc. v. Absinthe Bar, L.L.C. (In re Bourbon Saloon, Inc.)

Case No. 15-30361 (5th Cir. 04/28/16) - NOT DESIGNATED FOR PUBLICATION
An agreed order between Reorganized Debtor and Lessor, which resolved pre-confirmation Debtor's motion to assume the applicable lease and Lessor's opposition thereto, was effective to assume the lease even though the order failed to explicitly address either compensation for Lessor's pecuniary loss, as required by section 365(b)(1)(B), or the adequate assurance of Reorganized Debtor's future performance, as required by section 365(b)(1)(C). While the Code provides no guidance on the requirements of any such agreed order, lease assumptions are often resolved by agreed order and the Lessor had a full opportunity to ensure that all requirements of section 365(b) had been met prior to entering into the agreed order. Further, a plain reading of the agreed order at issue indicated that the additional obligations contained in the agreed order were not suspensive conditions that had to be met prior to assumption, but rather the legal obligation of Reorganized Debtor as a result of assumption. Finally, because the the underlying Bankruptcy Court's attorneys' fees order was for an undefined amount, that order was interlocutory and was not properly before the Court.
Procedural context:
Lessor filed a motion to deem the lease at issue rejected due to Reorganized Debtor's failure to timely cure non-monetary defaults. The Bankruptcy Court for the Eastern District of Louisiana held that: (1) the agreed order between Lessor and Reorganized Debtor had resulted in an assumption of the lease; (2) Reorganized Debtor had substantially performed under the agreed order; and (3) Lessor was entitled to attorneys' fees related to those non-monetary defaults that remained after the December 31, 2012 cure deadline set out in the agreed order. On appeal to the District Court, Lessor argued that because the agreed order only addressed one of the three requirements for assumption of leases under section 365, it simply spelled out the mechanics by which Reorganized Debtor could assume the lease. Lessor argued in the alternative that the agreed order contained suspensive conditions that Reorganized Debtor failed to timely satisfy. Finally, Lessor argued that its attorneys' fees award should not have been limited to those incurred post-cure deadline. The District Court affirmed, but remanded to the Bankruptcy Court to determine whether Lessor was entitled to pre-cure deadline fees as well. Lessor appealed the District Court's ruling regarding assumption of the lease, and Reorganized Debtor cross-appealed the District Court's ruling regarding Lessor's attorneys' fees.
Pre-petition, Debtor leased property from Lessor and operated a bar on the premises. Lessor sought to terminate the lease and initiated eviction proceedings as the result of alleged monetary and non-monetary defaults. While eviction proceedings were pending, Debtor filed for Chapter 11 relief. Debtor sought to assume the lease, which was opposed by Lessor. Prior to hearing on the motion to assume, Debtor's plan was confirmed, leading to an agreed order between Reorganized Debtor and Lessor resolving the motion to assume. Under the terms of the agreed order, Reorganized Debtor was deemed to have cured all monetary defaults, and a referee was retained to determine the scope and responsibility for any remaining non-monetary defaults. The remaining defaults were to be cured prior to December 31, 2012, but Reorganized Debtor failed to timely cure all of them.
JONES, WIENER, and HIGGINSON, Circuit Judges

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