2008 Chapter 11 Open Forum: Year In Review

carrier for deductibles would not have excused the carrier's obligation to continue covering claims under the existing policy.

* Nickels Midway Pier, LLC v. Wild Waves, LLC (In re Nickels Midway Pier, LLC),

372 B.R. 218 (D.N.J. Aug. 2007) (Irenas, J.) Pre-petition breaches of a lease did not automatically terminate the lease. The chapter 11 debtor sought to reject a lease agreement under section 365. Then, in a separate motion, the debtor contended that, because the non-debtor entity breached the lease pre-petition, the lease was terminated pre-petition and did not become part of the bankruptcy estate such that the debtor must assume or reject it under section 365. The district court disagreed with this latter contention and reminded that debtor that breach does not equal termination. Rather, said the court, the pre-petition breach merely gave the non-breaching party the option to terminate the lease. Termination, said the court, does not occur automatically. In all events, the district court remanded to the bankruptcy case for further determination of the effect of any pre-petition breach by either party.

• In re Exide Techs., 378 B.R. 762 (Bankr. D. Del. Dec. 2007) (Carey, J.)
• A so-called "Selective Executive Retirement Program" was not an executory contract subject to assumption or rejection. So what? Prior to commencing these joint chapter 11 cases, one of the debtors entered into an agreement with a "selected executive" to make annual payments to the executive as part of a so-called retirement program (the "SERP"). After making three annual SERP payments, the debtors commenced the bankruptcy cases and ceased making payments under the SERP. The executive filed a proof of claim for the amounts due under the SERP, and because the confirmed plan ostensibly deemed the SERP as an executory contract, the executive filed a motion seeking to compel the debtors to assume the SERP and to make payments under it immediately. The bankruptcy court, recognizing that this executive owed no further duties under the SERP agreement, concluded that the SERP was non-executory and could not be assumed or rejected by the debtors, despite the confirmed plan's language to the contrary. The court further held that the SERP payments did not fall within the definition of "retiree benefits," as protected by section 1114. Without discussing what obligations, if any, the debtors did owe the executive, the court denied his motion. It is unclear from the opinion whether the executive was out of luck all together or whether he could still receive distributions from the debtors on his proof of claim as plain, vanilla breach of contract claim.
• In re Student Fin. Corp., 378 B.R. 73 (Bankr. D. Del. Nov. 2007) (Carey, J.)

Lease was potentially subject to section 365(d)(5) because stay violations were void and could not terminated the lease. The debtor was current on its lease payments as of the date of the involuntary petition. However, the debtor did not consent to an order for relief until several months after the initial filing. During that interim period, the debtor defaulted on a lease, and the lessor took actions against the debtor (i.e., accelerated the lease payments and drew down on a letter of credit). The lessor then sought to compel the debtor to assume or reject the lease. Over the trustee's objection, the court held that the lease was still subject to assumption or rejection because the lessor's post-petition actions were void as violating the