In a 21 page opinion (the “Opinion”) released February 20, 2015, in the Trump Entertainment Resorts, Inc bankruptcy (Case No. 14-12103), Judge Gross, granted the motion of Trump AC Casino Marks, LLC (“Trump AC”) to modify the automatic stay to allow litigation to proceed, which could result in termination of their license with the Debtors.
Distributed Energy Decision Provides Analysis of Adequate Assurance and Executory Versus Non-Executory Contracts
In a recent decision in the Distributed Energy Systems bankruptcy ("DES" or "Debtors"), the Honorable Kevin Gross of the United States Bankruptcy Court for the District of Delaware provided a concise discussion of what is required for a debtor to assume and assign an executory contract. DES filed a motion seeking to assume and assign contracts with ePower and Vestas Wind Systems to CB Wind Acquisition Corp ("CB Wind"). CB Wind previously purchased all of Debtors’ assets. Due to what Debtors’ termed a "scrivener’s error," the ePower and Vestas contracts were not included in the schedules to the original asset purchase agreement.
ePower objected to the assumption of its contract on several grounds. First, ePower argued that DES failed to prove CB Wind could provide adequate assurance of future performance. Next, ePower claimed that its contract was not an executory contract and therefore not subject to assumption and assignment under section 365 of the Bankruptcy Code. Finally, ePower argued that Debtors’ failure to include its contract in the sale motion evidenced its original intent to reject the agreement. …
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