The opinion of the court was delivered by: Kenneth A. Marra United States District Judge
This cause is before the Court on the appeal by WHR HOLDINGS, LLC ("Appellants" "WHR") of the Order of Bankruptcy Judge John K. Olson, entered on April 26, 2011. The Court has carefully considered the appeal, the briefs of Appellants and GEOFF & KRISTA SIMS ENTERPRISES, INC. ("Appellee" "Sims"), the entire record on appeal, and is otherwise fully advised in the premises.
The facts, based upon the parties' respective statement of facts in their appellate briefs and the appellate record, are as follows:
On May 15, 2006, the Debtor, Wilkinson Hi-Rise, LLC ("Debtor" "Wilkinson"), filed a Chapter 11 Voluntary Petition. (Voluntary Petition, DE 2-4.) On that same day, the Debtor filed a motion for an order authorizing the sale to WHR of (1) substantially all of its assets pursuant to 11 U.S.C. § 363 free and clear of all liens, claims and encumbrances, and the assumption and/or assignment by the Debtor to WHR of (2) certain executory contracts and unexpired leases pursuant to 11 U.S.C. § 365. (Motion for an Order authorizing the sale of substantially all of its assets pursuant to 11 U.S.C. § 363 free and clear of all liens, claims and encumbrances, and authorizing the assumption and/or assignment by the Debtor of certain executory contracts and unexpired leases pursuant to 11 U.S.C. § 365, DE 2-6.) Prior to the Bankruptcy Court granting the motion which approved the sale of assets to WHR (hereinafter, the "Sale Order"), the Debtor filed the May 15, 2006 Asset Purchase Agreement (hereinafter, "APA") with the Bankruptcy Court. (May 15, 2006 APA, DE 2-10; August 10, 2006 Sale Order, DE 2-15.)
Section 2.1 of the APA states in pertinent part:
2.1 Assets to be Sold. Subject to Section 2.2, the other provisions in this Agreement and Approval Order, at Closing, Sellers shall sell, convey, assign, transfer, deliver to Buyer, and Buyer shall purchase, acquire, and accept from Sellers, the following assets and rights of Sellers as same are constituted on the Closing Date (collectively, the "Assets"): . . .
(e) All executory contracts and agreements of Sellers pertaining to and necessary for the operation of the Business in the ordinary course, including, without limitation, the Customer Contracts (collectively, the Assumed Contracts) as set forth on Schedule 2.1(e) including all rights, demands, claims, actions and causes of action that Sellers may have under such Assumed Contracts, provided, however, that the Buyer may at any time prior to Closing elect (in its sole discretion) not to purchase and assume specific executory contracts and agreements; . . .
2.2 Excluded Assets. The Assets shall not include any of Sellers' rights, title or interests in or any assets or properties of Sellers that are not expressly enumerated in Section 2.1, including, without limitation, any of Sellers' rights, title or interests in or to any of the following (collectively, the "Excluded Assets"): . . .
2.4 No Assumption of Liabilities. Except for (i) the Cure Amounts, (ii) any and all post-closing obligations under the Assumed Contracts, the Equipment Leases and the Real Property Leases, (iii) the Assumed GECC Debt, and (iv) any ordinary course trade payables incurred by the Debtor after the Petition Date that remain unpaid as of the Closing Date (collectively, the "Assumed Liabilities"), Buyer shall not assume, and shall be deemed not to have assumed, any Liabilities of Sellers other than the Assumed Liabilities (collectively, the "Excluded Liabilities"), including, but not limited to, those Liabilities set forth below: (APA.)
On March 30, 2010, Sims filed a Demand for Arbitration against WHR with the American Arbitration Association. (Demand for Arbitration, DE 2-20.) The arbitration claim was based upon a September 4, 2003 settlement agreement (hereinafter, "Settlement Agreement") between the Debtor and Sims, which resolved a 2002 federal trademark action. Included in the Settlement Agreement was a provision that Sims agreed not to sell trash chutes in the United States using the Wilkinson brand name, and the Debtor agreed not to sell trash chutes in Canada using the Wilkinson brand name. (Settlement Agreement, DE 2-21.)
On August 24, 2010, WHR filed a motion to enforce the Sale Order. (DE 2-20.) The Bankruptcy Court, on April 26, 2011, denied the motion and found that the Settlement Agreement was an executory contract pertaining to and necessary for the operation of the Debtor's business which was not excluded from the sale and therefore had been assumed by WHR.*fn1 (DE 1.)
WHR seeks reversal of the Bankruptcy Court's April 26, 2011 Order. In so moving, WHR contends that the Sale Order is enforceable against Sims because the Settlement Agreement is not an assumed liability or assumed contract under the APA or Sale Order.*fn2 In responding to this point, Sims contends the Bankruptcy Court correctly concluded that the Settlement ...