Court Opinion

ID: 6958076
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:40:49.799707+00
Date Added: 2024-06-11T16:08:20.700432
License: Public Domain

RYMER, Circuit Judge,
concurring in part and dissenting in part:
The path to deciding whether 11 U.S.C. § 365 allows a lessee debtor in bankruptcy to exercise an option to renew despite being in default, contrary to an express condition precedent in the lease, is uncharted. While the majority’s view is plausible, I see nothing in § 365 that allows debtors to disregard then-leases and renew while in default. •
Because exercising the option to renew was conditioned on not being in default on the leases, and the leases were in default at the time the debtors tried to exercise the option, the right to renew was lost. Section 365 does not extend the time to exercise the option or to meet conditions precedent. Nor does § 365 give the debtor the right to opt to renew a contract that is in default when the contract by its terms requires that a default first be cured.
To hold otherwise rewrites the lease and, as I read it, § 365. Therefore, for the reasons given by Bankruptcy Judge Russell in his BAP dissent, Coleman Oil Co., Inc. v. The Circle K Corp. (In re The Circle K Corp.), 190 B.R. 370, 378-82 (1995) (Russell, B.J., dissenting), I would reverse.
Although I agree that Coleman’s arguments about the chain of title and the statute of frauds fail, there are disputes of fact about who was in default and where. I would leave these issues, as well as state law forfeiture issues, to the bankruptcy court on remand.