In re Haggen Holdings, LLC

Case Type:
Business
Case Status:
Affirmed
Citation:
17-3159 (3rd Circuit, Jul 17,2018) Not Published
Tag(s):
Ruling:
Profit-sharing provision in a lease triggered upon assignment of the lease is an unenforceable anti-assignment provision pursuant to 11 U.S.C. 365(f)(1)
Procedural context:
Appeal from order of the District Court for the District of Delaware affirming order of Bankruptcy Court for the District of Delaware approving assumption and assignment of lease and prohibiting enforcement of "profit-sharing" provision.
Facts:
Haggen Holdings, LLC, and its subsidiaries filed chapter 11 petitions in 2015. Haggen filed a sale motion, which among other terms, sought the assumption and assignment of a lease between Haggen and Antone Corp. The lease included a "profit-sharing" provision, which provided that, upon the assignment of the lease, the tenant (Haggen) would owe the landlord (Antone) 50% of the net profits realized by the tenant from the assignment. Antone objected to the sale motion to the extent that the debtor sought assign the lease to the purchaser without complying with the "profit-sharing" provision. The Bankruptcy Court overruled the objection and approved the sale / assignment motion.
Judge(s):
McKee, Shwartz, Cowen

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