Opinion ID: 160589
Heading Depth: 2
Heading Rank: 2

Heading: Assumption of cure

Text: 23 Our second issue of statutory interpretation requires us to determine the time in which Overland Financial's duty to assume the cure matures and attaches. Again, we find Firstcorp well-reasoned and persuasive. In Firstcorp, the acquisition of a savings and loan was conditioned on the holding company's maintenance of capital at or above a specified level. 973 F.2d at 244. The holding company ultimately refused to infuse capital to cure the savings and loan subsidiary's capital deficiency. Id. at 245. Thrift Supervision served the holding company with a notice of charges and hearing and with a temporary order to cease and desist. Id. Shortly after the agency's action, the holding company filed a Chapter 11 bankruptcy petition. Id. Two days after filing for bankruptcy, Thrift Supervision appointed Resolution Trust Corporation as receiver for the savings and loan. Id. The Fourth Circuit held: 24 [A]ssumption and cure under § 365(o) are prerequisites to obtaining Chapter 11 protection. If a debtor cannot immediately cure a deficit under a capital maintenance commitment that exists at the time of a bankruptcy filing, then § 365(o) requires that debtor to proceed not under Chapter 11 but under Chapter 7, to which § 365(o) does not apply. 25 Id. at 247. Consistent with the Fourth Circuit, we hold before a debtor may proceed with Chapter 11, and acquire Chapter 11 protection, the debtor's commitment to assume and cure its capital deficit must be satisfied. OVERLAND FINANCIAL'S DEFENSES 26 Despite the five years of litigation in this case, Overland Financial has not had the opportunity to be heard by a court on each of its defenses. As we previously stated, the bankruptcy court ruled in favor of Overland Financial, thereby obviating the need to consider further defenses. Subsequently, the district court declined to address the remaining defenses because the bankruptcy court did not address the defenses in the first instance. On appeal, Thrift Supervision believes Overland Financial's remaining defenses should be resolved simply because Thrift Supervision briefed the defenses. However, as a general rule, we do not consider issues not passed upon below. R. Eric Peterson Constr. Co. v. Quintek, Inc. (In re R. Eric Peterson Constr. Co.), 951 F.2d 1175, 1182 (10th Cir. 1991). We hold the bankruptcy court is the appropriate initial forum to hear and address Overland Financial's remaining defenses not addressed in this opinon. Based on our resolution at this time, we decline Thrift Supervision's invitation to fashion an immediate cure remedy using all the bankruptcy estate assets.