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* President Casinos, Inc. v. Columbia Sussex Corp. (In re President Casinos, Inc.), 380 B.R. 786 (Bankr. E.D. Mo. Dec. 2007) (Surratt-States, J.)
Purchasers did not breach the purchase agreement because the debtors could not prove that the gaming commission would have granted the purchasers' license, a condition precedent. As part of a 363 purchase agreement, the purchasers would acquire stock in one of the debtors' casino on the condition that the purchasers could acquire gaming and liquor licences from the state gaming commission. After the purchasers submitted a licensing application, the commission expressed several concerns and indicated that the purchasers were not fit for licensing. When the purchasers withdrew the application, the debtors sued for breach of the purchase agreement. The bankruptcy court granted summary judgment in favor of the purchasers, reasoning that the purchasers' licensing was a condition precedent to their obligation to buy the debtors' assets. Even though the purchasers withdrew the licensing application, the debtors could not prove that the gaming commission was likely to grant the purchasers's licensing applications. Furthermore, even if the granting of licenses was not a condition precedent, the court held, the lack of licensing would have excused performance under the purchase agreement, because the purchasers' purpose for acquiring the debtors' assets under the agreement would have been frustrated. The court further granted summary judgment in favor of the purchasers for the return of the deposit under the purchase agreement. The court granted summary judgment in favor of the debtors, however, for tort damages based on the purchasers' attempts to detour the debtors from bringing this breach action.
* Integrated Water Res., Inc. v. Shaw Envtl., Inc. (In re IT Group, Inc.), 377 B.R. 471 (Bankr. D. Del. Oct. 2007) (Walrath, J.)
Purchasers of the debtor's assets did not acquire the debtor's contractual rights with a third party and so could not sue the third party for breach of that contract. During the section 363 sale process, the third-party general contractor objected to the assignment of its contract with the debtor, and the bankruptcy court ultimately entered a sale order which explicitly excluded the general contractor's rights under that contract from the sale. A plan was later confirmed, and the court approved a settlement agreement between the liquidating trust and the general contractor. Subsequently, the asset purchaser commenced an action in state court to recover from the general contractor for its breach of the contract. The general contractor filed a declaratory judgment action in the bankruptcy court, seeking to enjoin the asset purchaser from pursuing its state court action. The bankruptcy court entered the declaratory judgment in favor of the general contractor, holding that the sale order and the terms of the asset purchase agreement excluded the assignment of the contract from the sale.
* Liani v. Baker (In re Baker), 374 B.R. 498 (Bankr. E.D.N.Y. Aug. 2007) (Milton, J.)
Non-debtor parties lacked standing to request approval of a settlement under Bankruptcy Rule 9019. The successful bidder of a section 363 sale commenced an action against the chapter 11 debtor and the escrow agent. After mediation, the bidder and escrow agent asked the court to approve a settlement with which the debtor did not agree. Relying upon In re Smart World Technologies, 423 F.3d 166 (2d Cir. 2005), the court held that only the trustee or debtorin-possession had standing to request court approval under Rule 9019.
