or before i get to really what the substantive issues on appeal are i think the court is aware that the apple lease have have raised in their  three c a stay should be requested and put in place and a an appeal may be deem moot if that doesn't happen so why does our perception here exception here your honour's for a number of reasons and i think just the statutory language number one proves that out and then there's also a case law which i can discuss that also addresses the particular circumstances of this case first of all as we've been briefed we are not appealing a say authorization under three sixty three b or c which is specifically the language of three sixty three m requires it to be a sale authorization under b or c that's all we're appealing we're not appealing  the sale itself the validity or the finality of the sale we're only appealing a subsequent order that was a determination of my client's rights in the property itself and the sale you're only trying to save to lisa's of course expressly reserved this issue to be determined at another time so they were perfectly willing and knowingly went forward with the sale with that uncertainty there knowing that it someday the issue of my client's rights would be determined at another and another proceeding and i think that's the that's that's what's different and that's what distinguishes this matter from all of the case law that cross harbor sites today say to numerous cases that really just i think set forth a general rule of what three sixty three m can do and finding an appeal moot there's a difference between a statutory butis argument than an equitable argument it seems that you conjoined it to be these are separate conceptual matters are they not why would this not be equitably well number one well first of all they cross over specifically states that it is not arguing for equitable  that this was a three sixty three dynamic and not a three sixty five based upon these facts that the district court filed obviously as least seems to be one that's home called in that's within the same group of  troubles me because i know there's this big debate out there in that world that bankruptcy about three sixty three three sixty five but do we make that determination based upon s back again if i don't but i do think that there is there is a more it would be more aligned with a pristine analysis of those two code sections when they're both implicated and we have a case here where they are both implicated we have a three sixty three authorized we also have we says that were rejected triggering my client's rights when would they reject it i don't see a three sixty five rejection proceeding here maybe you can educate me about that they visit vehicle by which you can seek to have a lease rejected by a trustee i guess you trigger an application you have some time constraints within which to do that that wasn't done here at all if i read the record correctly actually it was your honor subsequent to the sale the sale after the sale because because the say order preserved this three sixty five age issue then in order for that issue i think to proceed the trustee then specifically move to reject the leases and my clients exercise their three sixty five  these concepts play in the back to i mean generally when they're both not implicated you would have a three sixty three sale that would most likely involve a divestment of rejection results in special rights under three sixty five age those types of rights don't exist under three sixty three it's just a divestment of a lease or a lien or any other type of claim when and that's when assets are being sold from the estate generally three sixty five age is implicated when when a trustee or a debtor decides that it's not necessarily selling its assets but it doesn't want this lease so it's going to reject this particular lease the lessees and congress says an act this just specifically for this reason is so as not to deprive a lessee of its rights is then able to elect to remain in possession but that did not happen here at all it did happen your honor went to the happened after the sale it happened after the sale sale again preserved to this issue and then that issue proceeded afterwards when the trustee move court right i'm i'm just i'm not sure if that's possible i'm just wondering is there anything in the i can tell you that at and the record shows that cross harbor testified that they believe that there they were purchasing the property that was a condition of the sale that it would be free and clear of leases there was rebuttal testimony from the trustee in the case actually saying that he didn't believe that to be the case that is essentially the whole of my testimony my just the bankruptcy court order that authorizes the sale and sets forth the terms on which that sale was to proceed after the sale you have to look at the chain of title right must be something that is the excuse me the deed is created by the bankruptcy court i believe it's created by the bankruptcy court i think that the trustee would be involved in the ration of that document mr wallach could correct i wasn't involved in th order authorizing the sale governance when you when you say well they are getting well regardless of what that lease as the bankruptcy court order governs what title they got and the title that they got was subject to the determination of this lease issue can you point to the precise language of the bankruptcy court order upon which you are rely on yes i got your brief i got some some e r s here if you've got in your brief yes at the bottom of page you'll see the defined term page five or three twenty three ok i'm there it's a graph i and you'll see it says the assets of proposed to be free and clear of any interest it's a defined term including any of the following and then on the following page it goes on to list all the interests that are being divested by the sale so the buyers getting this the property free and clear of all of these interests if you go to the middle of paragraph little i will see a parent thought a call that says accept any right alessi may have under eleven u s c section three sixty five age with respect to v forcible lease all is determined through a motion brought before the court by proper procedure so what that does is it accepts that right it says that if you are less see and it's later determined that you have a valid right under three sixty five  debate as to that i think that the i don't know the bankruptcy court ever made a distinct finding on that issue but it went through numerous i would say factual issues that seem to play into it the totality of the circumstances standard that it eventually came to in the end of that by the bankruptcy court made a determination that the lease was not going to be sustained any more i mean is that germination was that was the end result of the bankruptcy of course this isn't he yes and the district court agreed with that right the district court agreed with that or that it was a determination that the lease was basically  has a right but may have and there'd been no motion to reject the lease prior to this time so why is there a right that persists if it were well after the terminated any leases and specifically because it was reserved for that issue to be determined the parties agreed these lease issues will be determined in another proceeding but that's why that parent had a call was in there may not be worded as  articulately as maybe it should have been but that was what that's why it's there because everyone agreed that we're not deciding this lease issue today we're saving it for another day well that's what confused me because you just told me before that that issue was resolved by the bankruptcy court and the district court in this particular proceeding so i don't know what are the proceeding at talking about i'm talking about the the sale proceeding which which is where the sale authorization order comes from the sale authorization order which we were just looking at is the is the document that preserves this issue that ended up being in this proceeding but the district court specifically made findings that would be t suspect right and as a result of that it said this is a three sixty three sale well melissa well there certainly was a three sixty three so that that absolutely occurred but then the three sixty five h rights were implicated and that's where the interplay between these two sections comes into effect and that has been where all of the argument on both sides of this issue has has come down in the court knows that there are sensually two lines of thinking on this issue and that is the issue that we have there is what is has become known as the majority position which we believe to be the you know the accurate position or the more rational position and what's known as the minority position which cross harbor whether there was a lease rejection going not it's an irrelevancy because if it's the sixty three that applies then that's really what we have to determine whether the so called  of all of the courts addressing those two lines of cases it's i don't understand your argument now because if you're right in the argument you're making as to how we're supposed to review this order the one we've just been looking at there's no tension between three sixty five age and three sixty three f because the sale is subject to the right of three sixty five age it's been saved so we don't have a free and clear sale that purported to eliminate it so if we agree with your reading i don't i don't get to the majority minority position the three sixty five eight rejection of the recent release rejection of the lease procedure has been saved well i agree it's been saved but i apologize if i misled you to think that this sale order that we just looked at is what the order that's on appeal because it is not and i understand that ok so what is on appeal now on appeal is the order that eventually was entered by the bankruptcy court nearly a year later and i saying that if you have basically that you don't have three sixty five h rights if you did their divested so it was the subsequent proceeding that was there was on the restaurant lease he was not on as to the montana ought to come lease but there was nothing beyond that there was nothing to say that that had any effect on the commercial reasonability of the lease they went on to argue  that the value of the lease was below market but then they presented evidence that didn't support that and i mean there we could talk about why i think the bankruptcy courts findings in that in those regards were clearly erroneous if you look at the record  yes you're right the bankruptcy judge did make did use or take those allegations and seem to use them in his and decision that regardless your rights are divested based on all of these factors an inference is that i'm going to take into account the problem here and i think with this court can really take into account is that that standard that he employed diverges from either the majority position or the minority position they were the establish lines of cases dealing with this very issue in the bankruptcy court went off on his own did a completely separate analysis so let's you believe that this is the totality of the circumstances standard should be applied to situations where you have three sixty three and three sixty five a play as opposed to i have a majority position of the minority position you have to reverse you know you keep calling majority minority there's only one court of appeals is welcome to the  issue and they tend to prevail there they've got the position that you're calling the minority position that's correct and when i say majority minority it's been used in other cases based on i think i want to numerosity fact i'm not charging misusing the term as the way that it is being used generally out  d literature but i want to point out the seventh circuit is there was sort of this everest of the question that's true and i'm glad you say that because i mean the minority position even even if it's not the position that we advocated but even in that position you'll and the in the in the cases a follow quality back not only are they they agree or it's their opinion that three sixty five h right can be divested in a three sixty three sale ok but it's common there's a big alternative pretty much every chance they got you never got to a point until this order was entered where there was any way to determine what the scope of their answers they were being divested worthwhile attack yes adequate protection but that's under three fifty three he corrected three sixty three yes your honor it is three sixty three right and here the district court says sorry you didn't make a motion of the sixty three you're gone i don't think the adequate protection argument is what we have said and that motion we had yet to have any interest divested and we didn't know what the scope of the divestment would be whether it would be divested at all i don't know what we would have argued for because we didn't know if we needed adequate protection what we did say all the way up until that point is if our interests are divested we should be we need to be given adequate protection it would just be a matter of quantifying what that what adequate protection would be to protect those interests but fact the idea that we didn't request it i believe is is clearly erroneous we set it every step of the way that if our interests are divested or entitled to adequate protection but until we know what's going to be divested we don't know please the court i'm james wallach of girls in stores representing the app l e c h s b acquisition l l c i mean refer to them as cross farmer your honour's you should have the decision of the district court which affirm the decision of the bankruptcy court for three basic reasons and i'm going to start with the first one really goes to where judge block i think started his questioning and that is what really governs here three sixty three or three sixty five if there is a conflict and i do believe that this court should interpret those statutes harmoniously but the essence of what happened here was property  there's no question about that that's what three sixty three addresses three sixty five days two statutes i guess that's what's part of the the so called debatable as the bankruptcy bought from what i glean right how do you harmonize t sections on the cape libyan harmonize well you just have to just disregard one or not the other they are capable of being harmonized by the court finding that in a sale situation three six three sixty three governs and that in a situation where the debtor or the trustee retains the property but wants to get rid of the lease because the lease is burdensome three sixty five governs th lease is burdensome you know i want to reject that now there's something i understand why you're confused and the real i mean if you are and i would be if i were in your situation because judge kirshner said you need to reject the lease before i decide this issue he didn't need to do that he didn't have the legal issue before him of whether or not section three sixty five h writes somehow survived a sale i would suggest you that he didn't have to actually ask them to reject the motion because any sale or the lease isn't assumed what's going to happen but but if you can just say i bought the property i'm the owner and now i'm kicking you out but in bankruptcy your honor well in bankruptcy what you're you're if you're a buyer you either say i want  please assume and assign it to me or you leave it behind it does not automatically walk across the table to you you in bankruptcy that that's that's there it's what the code does is if you want to buy leases so let me ask you this could not your client have asked the trustee to specifically reject the lease sixty five before there was any asset sale whatsoever well we could have your honor but it wasn't question two opposing counsel you said wasn't there a document that govern the sale there was there was an asset purchase agreement the asset purchase agreement said we buy this property subject to search where  it's a problem with having things digitally you can put your finger  put your finger right and that document did not have the leases as permitted incumbrances so in any event the question here was what the judge reserved your honor what do you make what do you a later point in time whether the legal issue of whether or not the thing that the insider leases were entitled to protection under section three sixty five h he did resolve that issue at a later time he resolved it in march two thousand and fourteen and he found no joy three sixty five eight right do not protect you under section and that's what we're reviewing correct but if we turn out subject to a later the termination by the bankruptcy court where the rights of the three sixty five age absolutely correct and if we should look at what the bankruptcy court did and reverse then your client would have of the consequence of that is absolutely the fact there was no state doesn't well that was let me get to that point let me get to that point later i thought that was the whole point of this whole discussion because if in fact failing to get started right the reason why we believe it's moot is we believe that that water that was entered in march of two thousand and fourteen was a subsequent sale authorization order we believe that this was essentially a two part sale authorization the first part was sell the property to us but reserve the right in terms of our entitlement to the property that was really subject to the pinnacle went up to come leases so what happened in two thousand and fourteen is there was a change in the your your issue is is this a sale authorization is the march two thousand and fourteen order a sale authorization when it's weak when you know that's not the one in three that's that's the decision that's being appealed here i'm sorry this is thirty four thirty five or is it pays to thirty thirty five of the memorandum of decision i see i can do that you are talking about the e r fifteen fifty one yes very last the very last paragraph on the last paragraph of the order of the order of the decision oh this isn't a title of the decision so i want page thirty five or fifty one the very last paragraph ok is further ordered further ordered that c h s be acquisition elsie's motion for determination of the assets are sold free of the insider leases is granted the sale of substantially all the debtors assets the c h s b acquisition was free and clear of the insider leases and the demotion under three sixty five age for rejection of the leases where did he do that this is the decision your honor the whole decision i know that we're going to find that section three sixty three f governs bet the sale is free and clear of the insider least i know that but the order of sale that we've previously reviewed seems to save out a decision under three sixty five  interrupt that will be made at a later time and i'm trying to figure out ok when does he decide the three sixty five age issue that has been saved out i don't find it in this order well it's in this it's in this whole decision where is it you know he keeps discussing whether or not a sale a free and clear sale prevails over three sixty five age rights but as i read or at least he argues that i should read the overrides and i think you told me that he resolved the three sixty five age but maybe you're just telling me he was although by saying there is no three sixty five age right is that what you're t that's correct here in other words you nors the saving out of the three sixty five provision in the sale in this in the order of sale when he decided in this decision that's on appeal is that there are no section three sixty five h rights in this cases about the the tension between section three hundred sixty three and three sixty five ok give me a page range on page twenty two of the of the actual order and it goes all the way to the end thirty five if those thirteen pages which is the essence of what's on appeal here but my problem with this is that i've got a disconnect and it may be a disconnect with the arguments that both of you are making from time to time because i heard her adversary are also talking about the tension between three sixty three and three sixty five but if in fact we're supposed to read the order of the order of sale as saving out in the sale saving out the three sixty five right there's no tension whatsoever because the order of sale saves it out was a dozen trying to abolish it but as i read judge kirshner here he seems to think that the order of sale abolished it so that it is correct so what happened to that excepting out that we have here on ear three twenty four what happened your honor is he considered the issue of whether or not section three sixty five age governs in this situation and decided that it didn't but he seems not to pay any attention to the wording of the order there's no dealing with that phrase in the order that either i'm putting to one side i mean he just don't talk about it well he talks about in all of it in all the language of supported by what the seventh circuit did in the quality case and i think this is the crux of maybe my confusion if not other people's confusion it seems that he dealt with all of these discrete factual matters that pertain to this particular lease obviously is was not a very favored lease was it inside deals cetera et cetera and because he came to that analysis he said this must be three sixty three the cases that i read which is apparently the majority of you adopt seem to be leases which are more valuable and in those cases that seemed to be that the code said that you know it's a three sixty five situation does it depend upon the quality of the lease if i'm still trying to how we get into the specific facts and with the specific facts shape the application is the sixty three could be a three sixty five or once again you just look upon this is a matter of statutory interpretation and say that three sixty  analyzed in that context well your honor i don't think it's a matter of whether luis is valuable or not i think it is a matter of statutory construction and again but that's not what the district court did the district court said that the quality of as to whether the quality of that lease is such that it should be saved and not rejected on the three sixty five i'm just trying to get a sense of the process here which is confusing me i can understand if this is separate application to the  trustee before there's an asset sale that asks the trustee to determine and three sixty five whether this is a lease that's going to be rejected or not i can understand that but i'm a bit confused when you seem to tell me that that's really totally n tory the only thing that plies is that three sixty three asset sale we don't hear about anything else that's the source of my critique of the confusion i understand your honor again what we're urging you to do is to follow the reasoning of the both say that you cannot sell from clear unless you satisfy one of those subdivision another three sixty five they would have rights they would be a breach of contract they can sue on the underlying breach of contract they would be rights preserved as well and the three is well under three sixty five if the lease were rejected they would have the they would have a possessory right but that right again that isn't what happened here it isn't the essence of what happened here was a three sixty three sale and  the the this was important it was a three sixty three sale under the terms of the order approving the sale that appears on beginning on either three nineteen i mean that's the order of sale that we've been reading from yes and all is determined a motion brought before the court by proper procedure this just seems to have disappeared from view when judge person or right says what rights the order were appealing from i just did just isn't there correct he doesn't talk about it well what he does talk rejected the three sixty five and the asset sale would talk about here do we resolve that this is that is you have to be is that something is hanging out here that has been addressed well i would say no your honor my i would say no because the bankruptcy court in its subsequent decision found that section three sixty five is not applicable he would raise that the possible applicability in the sale order resolved in th second order and memorandum decision was about the equal call that you say was resolved in the bankruptcy court's decision the district was the terminations in effect resolve the three sixty five issue and rejected the lease so to speak is that what you're saying what i'm saying three sixty five does apply to your argument and that is the except clause except as they may have in other words he's postponing the decision as to the tension between the majority and the much minority position and then when he gets to his order he resolves the tension i guess turns out you don't have any rights you may have had that's what i said before deciding and you don't and this is not a true carve out this is only saving for later decision resolving of the tension between the majority in the positions that your argument your honor that's my argument and i would respectfully submit that's the only reasonable way to read these two documents together the judge kirshner wrote it's the only it's the only in it just very briefly the question under three sixty three am is is this order that was entered on march two thousand and fourteen a sale authorization i would argue that this is what authorized the sale free and clear of those leases you may be right but so what well if i'm right if you're a sixty three m applies but there's nothing to say if it doesn't this if that order doesn't then finding out that you know he has less than he bought but if if you admit that this thing was carved out and what does it say what should have been stated is the march order the march two thousand and fourteen order should have been stayed not the priority because that's the order they can get essentially said we get the property free and clear of the lease is this order which i pointed to you the last paragraph that is the order until that point in time they're not authorized to sell this property to us free and clear of these two leases that was the seminal event which said the conveyance of this property is from clear that those lease after that point and only after that point your honor and this is in the record after that point we took possession we didn't take possession of the restaurant until then they stripped away but it's subject to an appeal the issues in the man case that is a case where there was a relief from the automatic stay and you said that that was subject to three sixty three m this case is that this is an analogous case what happened here was that in march two thousand and fourteen that this second order that the bankruptcy judge entered is what gave us peaceful use and enjoyment of this property we didn't have it before then that's clear in the in the record before you it's clear from the briefs it's clear from the declaration of mr middleton in the record only then did we take possession and that's when they needed to come forward and seek a stay under three sixty three i'm here we are three years later we've been operating operating this restaurant for three years employing forty people in the restaurant spending over and you know close to a million dollars that they want to take us out they want you to kick us out and by the way they didn't even operate the restaurant for the three years before it's been six years we respectfully submit that that's what the mootness provisions of three sixty three are intended to do they're intended to give us finale sixty three m is specifically there to protect innocent parties from uncertainty and in this case you have a party who agreed to that uncertainty they agreed to purchase assets subject to the very uncertainty that we're dealing with today think i finally understood the argument from the other side with respect to the call of the carve out clause that we've got here on our three twenty four it was an argument that it occurred to me before and i think i finally understood him to make it  and it might have been my slowness in understanding but one way to read this carve out that i judge kirshner i'm reserving for a later decision the question as to whether or not a free and clear sale overrides three sixty five age not that you have three sixty five age rights but you may have them and i haven't yet decided that why is that not the right reading of that carve out clause i think the say that i haven't decided yet whether or not you have three sixty five a traits but the damage of whether you have three sixty five age rights at all or whether you can make a motion under three sixty five age i mean those are two very different questions right  am proposing to you and asking you why that's an unreasonable reading is he says i'm now reading this as i haven't decided whether a free and clear sale under three is at fifty three sixty three i mean number zero three sixty three or under three sixty three i haven't yet decided whether a sale under three sixty three age simply overrides and eliminates any rights you might have under three sixty five age that i'm going to decide later why is that in the wrong reading of this car vocal i don't think i don't think that's what it says it says that these interests are divested except it's almost he makes a decision all these interests are except except this very specific interest if it exists and that interest is three sixty five a truck but that depends as you see the word may here the function it serves as ambiguous i think it's if to the extent they exist so they may exist and they only arrive sense or another i mean it may be he's saying i'm going to let you make the three sixty five each motion decide that motion on its merits as one way of reading at henri's going to say i'm going to decide whether you're going to make a three sixty five motion at all that's another way of reading and he seems to have read it the second way because and his order of march town two thousand and fourteen he only addresses the tension between three sixty five and three sixty three i agree but i disagree with that reading and i think we know one of arguments in our brief is that a judge purchaser erred in not doing that because he preserved the issue of determining whether or not we had valid three sixty five h wri in and that's the only issue he preserved but in the order that and that is on appeal today he didn't do that he jumped right to whether or not three sixty three he jumped to the second reading that i proposed without making articulate but there are two possible shooting this one you just jump to that reading right and i think that's wholly contrary to the same order and the exception language in the say order you can't read them both consistently and that's one of our main arguments in a in our  brief and if i could take ten seconds regarding out of corporate action of some sort your on it i think it's important we haven't talked about this it has been in the brief but it's important to read these leases and understand that they are ground leases where my client was leasing the ground and that it had the obligation to spend millions of dollars building this restaurant that cross harbor now possesses and that pursuant to the leases my clients own that restaurant they owned all improvement s so arguably to this day well number one the building that the debtor didn't known could have been sold arguably to this day we continue to own that building that they're in and at the very least this order  that before well we did make a request for a specific dollar amount but we said no we did before absolutely at every juncture we said that if we are divested not only of our the holy spirit is really dependent upon reversing the decision that we had dealing with it's an important point to know that there's a distinction between the ground lease and the fact that we've actually been divested from a building that we own and that there is significant value in that and i think it was judged personally response to that argument i'm on page thirty four fifty judge person who writes the debtor affiliates have provided no evidence that they will suffer any economic harm if their possessory interests are terminated in the absence of any request for adequate protection type in order to actually to actually prove what damages would be and number two as i mentioned before at that point we didn't know what would be divested we could have been just thrown off the land on one we could have been just on one lease we could have b again we own a building we had no idea what the scope of any divestment would be in order to articulate a loss but obviously when we were pleading in the alternative that if we are divested we need our interests have to be adequate adequately protected we're advocating the position that we are going to suffer a loss it's just from a dollar standpoint we are unable to articulate at that point i think he erred in that regard as well i think you are ok thank you