The court prepared findings and recommendations for the district court in a contractual dispute in which one of the defendants was a debtor in a Chapter 11 case arising after the contracts were entered into. The debtor had not included the creditor or the contracts in its bankruptcy and gave no notice to the creditor in time to permit it to protect its rights. Accordingly, the creditor was not bound by the terms of the debtor's confirmed reorganization plan, nor did the plan discharge the debtor's obligation under the contracts. In addition, the contracts were not executory, but even if they were, they were deemed rejected as part of the bankruptcy process. The court found that the creditor retained its rights and remedies under the contracts to enforce the debtor's performance of its obligation. A pre-petition dispute over certain terms of the contract was resolved in the creditor's favor in an administrative hearing under state law; that outcome is final and is res judicata. The debtor did not defend itself in this adversary proceeding, so the court recommended default judgment be entered against the debtor. The court also recommended the dismissal of the individual defendant, as he was not a proper party to the lawsuit.
Date:
Thursday, May 22, 2014
Judge:
Judge Thomas L. Saladino