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In re Granite Broadcasting Corp., 369 B.R. 120 (Bk. S.D.N.Y. 2007) (rejecting expert testimony when not supported by actual offer of preferred stockholders); In re Oneida Ltd., 351 B.R. 79 (Bk. S.D.N.Y. 2006) (rejecting testimony because discount was too low and lack of credibility because expert retained on a contingent fee basis); In re Nellson Nutraceutical, Inc., 2006 WL 3438582 (Bk. D. Del. 2006) (expert used metric not generally accepted by experts, and different from 3 other experts in case); In re Med Diversified, Inc, 346 B.R. 621 (Bk. E.D.N.Y. 2006) (expert's application of metrics was subject to manifest, pervasive and systematic bias). The Oneida case also was one of several "loan to own" cases. Another was In re Radnor Holdings Corp., 353 B.R. 820 (Bk. D. Del. 2006) (no subordination or recharacterization).
Court finds Bankruptcy Court finding of solvency at time of $29.5MM preferential transfer to banks was not clearly erroneous. Bankruptcy Court credited bank's expert over debtor's expert, and the data was consistent with marketplace data. Also, bank produced additional evidence regarding the state of the debtors' business that rebutted the statutory presumption of insolvency, and the court rejected arguments that the projections relied on by the banks' expert were not reasonable or reliable when prepared. In re American Classic Voyages Co., 384 B.R. 62 (D. Del. 2008).
Assume a nondebtor has a lease from the debtor with an option to purchase. The lessee goes into possession under the lease. After the debtor files, it proposes to reject the purchase option and the nondebtor seeks to exercise its purchase rights. Can it do so? Section 365(h)(1)(A)(ii) provides that a lessee in possession under a rejected lease may retain its rights under the lease including the right to possession. And, section 365(i)(2) provides that a purchaser in possession under an executory contract to purchase can exercise its purchase rights notwithstanding rejection of the contract. The question is whether a lessee in possession under the lease is also a purchaser in possession under the purchase option and can exercise its purchase rights notwithstanding rejection of the purchase contract. In In re Nickels Midway Pier, LLC, 2007 WL 4171114, 49 BCD P 35 (3d Cir. 2007), the Court said that (a) although the lease and purchase option were in the same contract, they were divisible and should have been treated as divisible, (b) the nondebtor was not in possession under the purchase option portion of the agreement, and (c) the nondebtor could not exercise its rights under section 365(i)(2) to purchase the property. In such cases, the purchaser must probably take a security interest in the property to fully protect its purchase option.
An important assumption issue is whether the debtor or an assignee must take the whole agreement. There is a doctrine that nonmaterial terms can be excised, but what is nonmaterial is often in the eyes of the beholder. In In re Fleming Companies, 2007 WL 2390776 (3d Cir. 2007) the contract was for a debtor food wholesaler to supply groceries to a retailer from its Tulsa facility. The debtor sought to assume and assign, but to delete the Tulsa facility provision because the Tulsa facility had been closed and its lease rejected.
