A recent decision issued by the U.S. Bankruptcy Court for the District of New Jersey addresses the issue of whether the sponsor of a competing Chapter 11 plan may assume a debtor’s executory sale contract, or whether this power may only be exercised by a debtor.
The court, in In re Nickels Midway Pier, LLC?? (Bankr. D.N.J. May 21, 2010), held a creditor that sponsored a competing plan of liquidation could require the debtor’s estate, through a confirmed plan, to assume or reject an executory contract without violating section 365(a) of the Bankruptcy Code. The Nickels court adopted the reasoning and result reached by the bankruptcy court for the District of Kansas in In re Dynamic Tooling Systems, Inc. , the only other published case analyzing this issue. These two decisions could have a strong impact on potential objections that may be raised in the context of competing plans.
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