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In re: Smylie Brothers Brewing Company, LLC

22 B 15005
Trustee sought court authorization under 11 U.S.C. § 365(a) to reject a lease, in a transaction that called for the landlord to pay the estate $10,000 and for the lease to be “terminated.”  In the alternative, the Trustee requested approval of the transaction under 11 U.S.C. § 363(b) as a sale of estate property.  A creditor that purportedly held an interest in the lease objected.  HELD: Motion denied.  First, rejection under § 365(a) does not equal termination.  Some courts have held that deemed rejection under § 365(d)(4) constitutes termination, but that subsection is not applicable to the facts of this case.  Since the motion and proposed order requested a finding that the lease was terminated, the court could not grant the relief sought under § 365(a).  Second, although § 363(b) provides authority for the Trustee to sell estate property with court permission, he must provide adequate protection to entities with an interest in that property.  No adequate protection was proposed for the creditor with an interest in the lease, so the court could not authorize the Trustee to sell it.

Friday, March 31, 2023