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proper liquidated damages clause. Whether summary judgment should be granted regarding which party is entitled to the bidder's good faith deposit.
Holding: The court held that the bidder did not commit anticipatory breach of the APA by successfully requesting an extension of the closing date to review the bankruptcy court's sale order. The court held that the bidder did breach the APA by not closing on the extended closing date after the bidder's financing fell through because the bidder was aware that time was of the essence, the APA was not contingent upon financing, and the bidder represented in the APA that it had sufficient funds to close. The court held that the damages provision annexed in the court's sale order was not a liquidated damages provision because the debtor was allowed to seek damages in excess of the successful bidder's good faith deposit. The court stated "[w]here there is no limit or fixed amount of damages stated in advance on what the non-breaching party may recover for breach of contract, then there cannot be a liquidated damages provision." Lastly, the court held that a genuine issue of material fact existed as to whether the debtor had actual damages due to the bidder's failure to close on the asset sale, resulting in the denial of summary judgment on which party should receive the good faith deposit. The debtor received a good faith deposit from the bidders in the asset auction. The stalking horse bidder's purchase price was roughly $22 million plus the assumption of certain liabilities. After the stalking horse bidder's failure to close, the debtor turned to the next highest bidder, whose purchase price was approximately $23.5 million plus cure amount and the assumption of liabilities. The court found that because the value of the cure amounts and assumed liabilities were not presented to the court and certain terms of the next highest bidder's sale contracts were unknown, a genuine issue of material fact as to actual damages existed to prevent the granting of summary judgment on which party was entitled to the good faith deposit.
xii. PBBPC, Inc. v. OPK Biotech, LLC, 484 B.R. 860 (B.A.P. 1st Cir. 2013)
Issue: Whether the purchaser of the debtor's assets free and clear of all interests prevented the state unemployment agency from using the debtor's experience rating in determining the purchaser's contributions to the agency.
Holding: The court held that the term "any interest" in 11 U.S.C. § 363 is not limited to in rem interests in property but is broad and includes other obligations that may flow from ownership of the property. The court also held that the state agency's right to tax the purchaser of the debtor's assets based on the debtor's experience rating was in the nature of an interest, of which the debtor's assets could be sold free and clear. The state agency appealed the bankruptcy court's ruling that the agency could not tax the purchaser of the debtor's assets at the debtor's unemployment contribution rate because the debtor's assets were sold free and clear of any interest in the assets. The court based its holding on the rationale that the state agency essentially sought to recover money the debtor would have owed if its business had continued. Such a transfer of contribution rating to the successor asset purchaser would occur solely based on its purchase of the debtor's assets. Thus, the agency's right to collect the debtor's rate was an
©2014 William L. Norton III
