2. On July 11, 2024, the Court entered the Order (I) Approving Bidding Procedures
- Date
- 2024-06-09
Summary
An objection and reservation of rights filed September 6, 2024 as Doc 505 by Ewald Fleet Solutions, LLC in In re Vyaire Medical, Inc., et al., Case No. 24-11217 (BLS), in the U.S. Bankruptcy Court for the District of Delaware. It objects to the $0.00 cure amount the debtors assigned to Ewald's Master Lease No. 19-17941 in the First Supplemental Notice to Contract Parties [D.I. 462]. The objection states that Ewald leases 46 vehicles to Vyaire, that a monthly payment of $42,120.40 due September 1, 2024 had not been received, and that the cure amount is $42,120.40 excluding attorney's fees and late fees. Citing 11 U.S.C. § 365(b)(1), it asks that cure include contractual attorneys' fees and requests adequate assurance of future performance from the Successful Bidder. It is signed by Matthew P. Austria of Austria Legal, LLC.
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Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 1 of 6
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
In re:
Case No. 24-11217 (BLS)
VYAIRE MEDICAL, INC., et al.,1
(Jointly Administered)
Debtors,
Re: Docket No. 462
OBJECTION OF EWALD FLEET SOLUTIONS LLC TO FIRST SUPPLEMENTAL
NOTICE TO CONTRACT PARTIES OF POTENTIALLY ASSUMED AND
ASSIGNED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
AND RESERVATION OF RIGHTS
Ewald Fleet Solutions, LLC (“Ewald”), by and through its undersigned counsel, files this
objection and reservation of rights (collectively, the “Objection”) to the Debtors’ proposed cure
amounts set forth in the First Supplemental Notice to Contract Parties of Potentially Assumed and
Assigned Executory Contracts and Unexpired Leases [D.I. 462] (the “Supplemental Notice”). In
support of the Objection, Ewald states as follows:
BACKGROUND
1. On June 9, 2024, Vyaire Medical, Inc. (“Vyaire”) and certain of its subsidiaries
filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors are
operating their business and managing their property as debtors in possession pursuant to section
1107(a) and 1108 of the Bankruptcy Code.
1
The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495. A complete list of
each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be obtained
on the website of the Debtors’ claims and noticing agent at https://omniagentsolutions.com/Vyaire. The location of
Debtor Vyaire Medical, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases
is 26125 North Riverwoods Boulevard, Mettawa, Illinois, USA 60045.
Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 2 of 6
2. On July 11, 2024, the Court entered the Order (I) Approving Bidding Procedures
in Connection with the Sale of Substantially All of the Debtors’ Assets, (II) Authorizing the Debtors
to Enter into a Stalking Horse Agreement and Provide Bid Protections, (III) Approving the Form
and Manner of Notice Thereof, (IV) Scheduling an Auction and Sale Hearing, (V) Approving
Procedures for the Assumption and Assignment of Contracts, (VI) Approving the Sale of the
Debtors’ Assets Free and Clear, and (VII) Granting Related Relief [Docket No. 249] (the “Bidding
Procedures Order”).
3. Also on July 11, 2024, the Debtors filed the First Notice to Contract Parties of
Potentially Assumed and Assigned Executory Contracts and Unexpired Leases [D.I. 256] (the
“First Notice”). Exhibit A thereto listed Potentially Assumed and Assigned Contracts. Rows 2413
to 2428 on Exhibit A to the Notice of Potential Assumption and Assignment appeared to assert
multiple executory contracts and unexpired leases between Ewald and Vyaire.
4. Ewald, as Lessor, currently leases 46 vehicles to Vyaire, as Lessee, pursuant to
Master Lease No. 19-17941 dated February 13, 2019. Master Lease No. 19-17941 includes forty-
six (46) Schedule A’s that are expressly incorporated by reference and made a part of said Master
Lease. (Master Lease No. 19-17941 including the Schedule A’s thereto are collectively referred to
herein as the “Master Lease Agreement”).
5. On July 24, 2024, Ewald filed the Limited Objection of Ewald Fleet Solutions LLC
to First Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts and
Unexpired Leases [D.I. 310] (the “Limited Objection”). In sum, the Limited Objection asserted
that: 1) the First Notice of Assumption and Assignment did not accurately identify the potentially
assumed and assigned executory contract and unexpired lease which is the Master Lease
2
Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 3 of 6
Agreement; 2) the Debtors’ asserted cure amounts of $0.00 as to Ewald were incorrect; and 3) any
assumption and assignment of the Master Lease Agreement must be cum onere.
6. Thereafter, Ewald and the Debtors discussed appropriate revisions to the First
Notice which resulted in the Debtors adding the Master Lease Agreement, removing all of the
Schedule A’s, and removing the purported “Vehicle Lease” dated 2-08-2019. Ewald confirmed
that no such vehicle lease was entered by the parties on 2-08-2019. The Debtors provided the
following chart to Ewald confirming the reflected revisions to the First Notice:
7. On August 24, 2024, the Debtors filed the Supplemental Notice. The Master Lease
Agreement appears at Row 8249 thereon and the Debtors assert a cure amount of $0.00.
8. As of the filing of this Objection, the monthly lease payment due on September 1,
2024 under the Master Lease Agreement (Invoice No. 81524 in the amount of $42,120.40) has not
been received by Ewald.
OBJECTION
9. Section 365(b) of the Bankruptcy Code provides in pertinent part as follows:
(b)(1) If there has been a default in an executory contract or unexpired lease
of the debtor, the trustee may not assume such contract or lease unless, at
the time of assumption of such contract or lease, the trustee –
3
Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 4 of 6
(A) cures, or provides adequate assurance that the trustee will promptly cure,
such default…
(B) compensates, or provides adequate assurance that the trustee will promptly
compensate, a party other than the debtor to such contract or lease, for any
actual pecuniary loss to such party resulting from such default; and
(C) provides adequate assurance of future performance under such contact or
lease.
11 U.S.C. § 365(b)(1).
10. The total cure amount due as of September 1, 2024 to assume and assign the Master
Lease Agreement, excluding attorney’s fees and any late fees, is $42,120.40. The cure amount
owed to Ewald will continue to accrue and is subject to adjustment based, among other things, on
the assumption and assignment date, whether the Debtors makes subsequent monthly lease
payments when due between the filing date of this Objection and the date of any assumption and
assignment, and Ewald’s attorney’s fees.
11. Contractual attorneys’ fees may be recovered as part of the cure amount to the
extent the contract being assumed provides for recovery or it is allowable under applicable law. In
re Williams, 2011 WL 2533046, *1 (Bankr. D. Del. 2011) (citing In re Crown Books Corp., 269
B.R. 12, 15 (Bankr. D. Del. 2001) (“It is beyond cavil that attorneys’ fees incurred because of
actions taken to enforce the underlying lease or contract may be properly recoverable as part of a
cure payment if such lease or contract provides for attorneys’ fees.”).
12. Pursuant to Section 9 of the Master Lease Agreement, “[l]essee shall pay all costs
and attorney’s fees incurred by Lessor in the enforcement of this Lease.” Therefore, the cure
amounts set forth above should be increased by the amount of Ewald’s attorneys’ fees through the
date of assumption. Given that these bankruptcy cases are ongoing, the amount of Ewald’s
attorney’s fees continue to accrue. Ewald will provide a liquidated amount of attorney’s fees in the
event of assumption and assignment for inclusion in the final cure amount.
4
Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 5 of 6
13. As a condition to assumption and assignment, Ewald is also entitled to adequate
assurance of future performance pursuant to Section 365 of the Bankruptcy Code, including the
assignee’s financial ability to cure all defaults and perform moving forward under the assumed
and assigned contract. Ewald requests adequate assurance of the Successful Bidder’s financial
ability and intention to promptly cure all defaults under the Master Lease Agreement in the event
of assumption and assignment. To the extent such adequate assurance of future performance is not
promptly provided or is insufficient, Ewald also objects herein on the basis of lack of adequate
assurance of future performance.
RESERVATION OF RIGHTS
14. Ewald hereby reserves the right to revise and/or supplement this objection and
make such other and further objections as may be appropriate, including, but not limited to, the
assertion of additional cure amounts.
CONCLUSION
For the reasons set forth above, Ewald respectfully request that this Court: (a) sustain this
Objection; (b) enter an order requiring the Debtors or Successful Bidder, as applicable, to pay all
amounts owing to Ewald under the Master Lease Agreement or any other agreement through the
date of any such assumption and assignment, including the cure amounts set forth herein and any
additional cure amounts accruing after the date of this Objection; and (c) grant Ewald such further
relief as it deems proper.
5
Case 24-11217-BLS Doc 505 Filed 09/06/24 Page 6 of 6
Dated: September 6, 2024
Respectfully submitted,
AUSTRIA LEGAL, LLC
/s/ Matthew P. Austria
Matthew P. Austria (No. 4827)
1007 North Orange Street, 4th Floor
Wilmington, DE 19801
Telephone: (302) 521-5197
Facsimile: (302) 291-1772
Email: maustria@austriallc.com
Counsel for Ewald Fleet Solutions, LLC
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