Cousins Properties, Inc. v. Treasure Isles HC, Inc. (In re Treasure Isles HC, Inc.)

Citation:
2011 FED App. 0011P (6th Cir. BAP)
Tag(s):
Ruling:
The Bankruptcy Appellate Panel for the Sixth Circuit Court of Appeals affirmed an order of the Bankruptcy Court for the Eastern District of Kentucky which held that Debtor's motion to assume a lease filed prior to the deadline for assuming or rejecting leases found in 11 U.S.C. Section 365(d)(4) complied with the deadline. The BAP compared the language of Section 365(d)(4) pre- and post-BAPCPA and concluded that changes which affected the extension of the deadline to assume or reject did not change the process of assuming leases. The BAP relied upon pre- and post-BAPCPA decisions holding that the filing of a motion to assume satisfied the deadline and that entry of an order of assumption prior to the deadline was not required. The BAP also noted its ruling fulfilled Congress's purpose of establishing a fixed time frame for debtors to decide whether to assume or reject a lease, while that numerous events outside the debtor's control could prevent the entry of an order within the applicable deadline.
Procedural context:
Lessor appealed a bankruptcy court order holding that a motion to assume a lease filed before expiration of the deadline to assume or reject a lease was sufficient to comply with the deadline to assume the lease. The bankruptcy court had also entered a bridge order which extended the time to assume or reject the lease until a hearing could be held. The lessor moved to set aside the bridge order under Bankruptcy Rule 9023, and also appealed the bankruptcy court's denial of this motion.
Facts:
* Debtor obtained an initial extension of time to assume or reject nonresidential real property leases and sought an additional extension which required lessor consent. Cousins Properties, as agent for the lessor, objected to the extension and 3 days prior to the deadline to assume or reject, Debtor filed a motion to assume the lease. On the date the deadline would have expired, the bankruptcy court entered a bridge order extending the time to assume or reject until the Debtor's motion (and lessor's objection) could be heard. The bankruptcy court entered an order holding that by filing the motion to assume prior to the deadline to assume or reject, the Debtor met the deadline for assuming the lease. The bankruptcy court did not rule on the merits of the motion to assume the lease. The lessor appealed, and the Bankruptcy Appellate Panel for the Sixth Circuit Court of Appeals framed the discrete issue as: "What constitutes assumption of a lease by a trustee for purposes of meeting the applicable deadline under 11 U.S.C. Section 365(d)(4)?" * The editor of this summary works at DelCotto Law Group PLLC, which represents the Debtor in this case.
Judge(s):
Fulton, Harris and Shea-Stonum, with decision written by Hon. Thomas Fulton

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