02/13/2008 360 Motion to Approve Assignment of Certain Executory Contracts and Unexpired Leases Previously Assumed by Pro Mold, Inc., filed by Kenneth C. Henry. Hearing scheduled for 3/13/2008 at 02:15 PM at Lexington Courtroom, 3rd Floor. (Attachments: # 1 Proposed Order) (Thompson, Elizabeth) (Entered: 02/13/2008)
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Doc 360
In Re:
Case No. 07-50935
Chapter 11
PRO MOLD, INC.
Debtor.
MOTION FOR ORDER APPROVING ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES PREVIOUSLY ASSUMED BY PRO MOLD, INC.
Comes Chapter 11 Trustee Kenneth Henry, the duly appointed Trustee of the Bankruptcy Estate of Pro Mold, Inc. (the “Trustee”), by counsel, and hereby moves the Court (the “Assignment Motion”) for entry of an Order pursuant to 11 U.S.C. § 365 of the United States Bankruptcy Code (the “Bankruptcy Code”) authorizing specific contracts and leases previously assumed by the Debtor Pro Mold, Inc. (“Pro Mold”) to be assigned to John P. Murphy III Revocable Trust No. 1; Pro Plas, LLC, a Missouri limited liability company; 10315 LLC, a Missouri limited liability company; and John P. Murphy III (collectively the "Murphy Entities").
In support of the Assignment Motion, the Trustee states as follows:
Jurisdiction
1. The Court has jurisdiction regarding this matter pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157 and the Local Rules for the United States District Court for the Eastern District of Kentucky.
2. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b )(2)(D).
Background
3. On May 16, 2007 Pro Mold filed its Voluntary Chapter 11 Petition for Relief in the United States Bankruptcy Court for the Eastern District of Kentucky, Lexington Division (the "Court").
4. Pro Mold continued to operate its business and manage its financial affairs pursuant to Sections 1107 and 1108 of the Bankruptcy Code from May 16, 2007 until October 3, 2007, under the control of James N. Turek, Sr., Pro Mold's President.
5. On October 3, 2007, this Court ordered the Appointment of a Chapter 11 Trustee.
6. The Office of the United States Trustee appointed the Trustee, Kenneth Henry, to serve as the Chapter 11 Trustee.
7. On January 4, 2008, Pro Mold, the Trustee, the Murphy Entities, Debtor Plasticon International, Inc. (“Plasticon”) of United States Bankruptcy Court Case No. 07-50934, and Plasticon’s Trustee, Stephen Palmer entered into a Compromise and Settlement Agreement (the “Agreement”) in order to settle and resolve any and all claims or causes of action that Pro Mold, Plasticon and/or their estates had or may of had against the Murphy Entities and that the Murphy Entities had or may of had against Pro Mold, Plasticon and/or their estates.
8. On January 4, 2008, a Joint Motion for Approval of Compromise and Settlement Agreement (the “Joint Motion”) was filed with the Court [Doc. 338].
9. On January 10, 2008, the Court held a hearing on the Joint Motion. The Joint Motion was approved by entry of the Amended Order Approving Compromise and Settlement Agreement on January 14, 2008 [Doc. 350].
10. According to the Agreement, if the Murphy Entities were the successful bidder at the foreclosure sale of Pro Mold’s assets, the Murphy Entities would indemnify the estate of Pro Mold as additional consideration for the settlement of claims Pro Mold has against the Murphy Entities by accepting assignment of the following executory contracts or leases that were previously assumed by Pro Mold:
(1) Dolphin Capital;
(2) John Henry Foster Company of St. Louis;
(3) Sumner Group DBA Copying Concepts;
(4) New Hampshire Insurance Co.;
(5) The Hartford;
(6) Anthem Blue Cross Blue Shield; and
(7) ADP, Inc. (collectively the “Assumed Contracts”)
11. A foreclosure sale of Pro Mold’s assets was held on January 10, 2008 and the Murphy Entities were the successful bidders.
12. Pursuant to the Agreement, if the Court approves the assignment, the Murphy Entities will defend Pro Mold’s estate from any claim arising from the Assumed Contracts.
13. Further, once assigned, should any of the Assumed Contracts be subject to a default, upon notice (as defined in the Agreement) by Pro Mold to the Murphy Entities, the Murphy Entities shall promptly cure the default and/or defend Pro Mold’s estate in accordance with the provisions of the Agreement.
Relief Requested
14. The Trustee seeks authority to assign the Assumed Contracts specified in numerical paragraph 10, in accordance with the applicable terms of the Agreement, to the Murphy Entities under section 365 of the Bankruptcy Code. Assignment of these Assumed Contracts is an integral part of the Agreement and should be approved.
15. 11 U.S.C. § 365(f) authorizes a trustee to assign a contract or lease if the trustee assumes such contract or lease in accordance with the provisions of the section and adequate assurance of future performance by the assignee of such contract or lease is provided.
16. Accordingly, Pro Mold has already assumed the Assumed Contacts specified in numerical paragraph 10 and section 365 of the Bankruptcy Code authorizes the proposed assignment of these Assumed Contracts, provided that the Murphy Entities provide adequate assurance of future performance on the Assumed Contracts.
17. Among other things, adequate assurance may be given by demonstrating the assignee’s financial health and experience in managing the type of enterprise or property assigned. See In Re Bvgaph, Inc., 56 B.R. 596, 605-606 (Bankr. S.D.N.Y. 1986) (adequate assurance is present when assignee has financial resources and has expressed a willingness to devote sufficient funding to business to give it a strong likelihood of succeeding); In re Natco Industries, Inc., 54 B.R. 436, 440 (Bankr. S.D.N.Y. 1985).
18. Pursuant to section 365 of the Bankruptcy Code, the terms of the Agreement provide each counterparty to the Assumed Contracts adequate assurance of future performance by the Murphy Entities. Moreover, the Murphy Entities have the financial capabilities to satisfy any and all obligations they may incur in connection with the Assumed Contracts, if assigned.
19. Based on the foregoing, the Trustee respectfully requests that the Court approve the assignment of the Assumed Contracts specified in numerical paragraph 10, in accordance with the applicable terms of the Agreement, to the Murphy Entities.
WHEREFORE, the Trustee respectfully requests entry of an Order authorizing the Trustee to assign the Assumed Contracts to the Murphy Entities and grant such other and further relief as is just and proper.
Notice
PLEASE TAKE NOTICE that the foregoing will be brought on for a hearing before the Honorable William S. Howard at the United States Bankruptcy Court, 100 E. Vine Street, Third Floor, Lexington, Kentucky on March 13, 2008 at 2:15 p.m., or as soon thereafter as counsel may be heard.
Respectfully submitted,
/s/ Elizabeth Lee Thompson
Elizabeth Lee Thompson
STITES & HARBISON, PLLC
250 West Main Street, Suite 2300
Lexington, KY 40507-1758
Telephone:(859) 226-2300
Counsel for Kenneth C. Henry,
Chapter 11 Trustee
CERTIFICATE OF SERVICE
This is to certify that the foregoing was served this the 13th day of February, 2008, electronically in accordance with the method established under this Court’s CM/ECF Administrative Procedures upon all parties in the electronic filing system in the case, by electronic mail and/or first class mail.
/s/ Elizabeth Lee Thompson
Elizabeth Lee Thompson |
