Limited Objection of Ewald Fleet Solutions LLC to Cure Notice — In re Vyaire Medical, Inc. (Bankr. D. Del.)
- Date
- 2024-06-09
Summary
A limited objection filed July 24, 2024 as Doc 310 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 debtors' First Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts and Unexpired Leases [D.I. 256], which lists cure amounts of $0.00 for Ewald. Ewald states that it leases 46 vehicles to Vyaire under Master Lease No. 19-17941 dated February 13, 2019, and that the cure amount is $47,613.70 as of August 1, 2024, or no less than $56,113.70 with estimated attorney's fees. Citing 11 U.S.C. § 365(b)(1), it argues any assumption must cover the entire Master Lease Agreement cum onere. The filing is signed by counsel Matthew P. Austria of Austria Legal, LLC.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 1 of 7
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. 256
LIMITED OBJECTION OF EWALD FLEET SOLUTIONS LLC TO FIRST NOTICE
TO CONTRACT PARTIES OF POTENTIALLY ASSUMED AND ASSIGNED
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Ewald Fleet Solutions, LLC (“Ewald”), by and through its undersigned counsel, files this
limited objection (the “Limited Objection”) to the Debtors’ proposed cure amounts set forth in the
First Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts and
Unexpired Leases [D.I. 256] and reserves its rights with regard to the proposed assumption and
assignment to a yet-to-be identified Successful Bidder. In support of the Limited 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 310 Filed 07/24/24 Page 2 of 7
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
“Notice of Potential Assumption and Assignment”). Exhibit A thereto lists Potentially Assumed
and Assigned Contracts. Rows 2413 to 2428 on Exhibit A to the Notice of Potential Assumption
and Assignment appear 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”). A copy of the Master Lease Agreement is attached
hereto as Exhibit A. Pursuant to Section 1.b of the Master Lease Agreement, the Lessee agreed to
pay the total monthly rent set forth on the applicable Schedule A’s in advance without deduction,
setoff or counterclaim, on the first day of each month during the term of the Lease. The Lessee is
obligated to pay various other amounts under the Master Lease Agreement including, but not
limited to, maintenance, repair, and storage costs per Sections 2.a and 2.b, insurance costs per
2
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 3 of 7
Section 3, taxes, licensing and registration costs and fees per Section 4, and repair and replacement
costs per Section 5.
LIMITED OBJECTION
5. 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 –
(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).
A. The Notice of Potential Assumption and Assignment Does Not Accurately
Identify the Potentially Assumed and Assigned Executory Contract and
Unexpired Lease
6. Exhibit A to the Notice of Potential Assumption and Assignment lists 16 Cure
Amounts of $0.00 at Rows 2413 to 2428 with Ewald as the Vendor. The “Description” column in
those Rows lists two “CDA’s” at Rows 2413 and 2414, respectively, various Schedule A’s, a
“2019-02-08 Vehicle Lease” at Row 2423, and a “2019-06-24 Letter re Vyaire Signature
Authority” at Row 2427. As there is no vehicle lease between Ewald and Vyaire dated February
8, 2019, it is possible the “Vehicle Lease” identified by the Debtors at Row 2423 was intending to
refer to the Master Lease Agreement dated February 13, 2019. However, only a few of the
Schedule A’s listed on Exhibit A to the Notice of Potential Assumption and Assignment align with
3
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 4 of 7
the 46 Schedule A’s to the Master Lease Agreement. 2 Therefore, the Notice of Potential
Assumption and Assignment does not accurately describe the potentially assumed and assigned
executory contract and unexpired leases with regard to Ewald and it is unclear which agreement(s)
with Ewald the Debtors are proposing to potentially assume and assign. Ewald objects to the Notice
of Potential Assumption and Assignment to the extent it is purporting to identify any vehicle
lease(s) with Ewald other than the Master Lease Agreement.
B. The Debtors’ Asserted Cure Amounts of $0.00 are Incorrect
7. In the interest of clarity, a spreadsheet itemizing the portion of the cure amount due
under the Master Lease Agreement attributable to each leased vehicle is attached hereto as Exhibit
B. The total cure amount due as of August 1, 2024 to assume and assign the Master Lease
Agreement, excluding attorney’s fees, is $47,613.70. It is noted that the cure amount owed to
Ewald will continue to accrue and is subject to adjustment based on the assumption and assignment
date, whether the Debtors continue to make lease payments when due between the filing date of
this Limited Objection and the date of any assumption and assignment, and Ewald’s attorney’s
fees. To the extent that the Notice of Potential Assumption and Assignment purports to identify
multiple lease agreements between Ewald and Vyaire with separate cure amounts due under each
such lease, Ewald objects on the basis that the Master Lease Agreement is the only lease agreement
between the parties that is subject to potential assumption and assignment and, as such, the cure
amount is due under the Master Lease Agreement.
8. 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
2
With regard to any Schedule A with VIN No. listed in Rows 2413 to 2428 of the Notice of Potential Assumption
and Assignment that is not included in the 46 Schedule A’s attached hereto as Exhibit A as part of the Master Lease
Agreement, Ewald has determined that the lease term on the corresponding vehicle terminated prior to the Petition
Date.
4
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 5 of 7
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.”).
9. 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. As of July 22, 2024, the estimated amount of Ewald’s attorney’s
fees is approximately $8,500.00. As such, the total cure amount is no less than $56,113.70. Ewald
will provide a liquidated amount of attorney’s fees in the event of assumption and assignment for
inclusion in the final cure amount.
10. The Notice of Potential Assumption and Assignment does not accurately reflect the
Master Lease Agreement between the parties and the total cure amount owed thereunder as set
forth on Exhibit B hereto. Absent full payment of the total cure amount including attorney’s fees
owed under the Master Lease Agreement through the effective date of assumption, and
confirmation that the Master Lease Agreement is the lease agreement being potentially assumed
and assigned, Ewald objects to the assumption and assignment.
C. Any Assumption and Assignment Must Be Cum Onere
11. Ewald further objects to the Notice of Potential Assumption and Assignment to the
extent the Debtors are asserting that separate executory contracts and/or unexpired leases exist
with Ewald as to each leased vehicle. The Master Lease Agreement expressly states in Section 1.a
that the Schedule A’s “which may now or from and at any time hereafter be signed by Lessor and
5
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 6 of 7
Lessee, which Schedule(s) (including their terms and conditions) are hereby expressly
incorporated by reference and made a part hereof in the same manner and with the same legal
effect as though they had been executed and attached hereto contemporaneously with the execution
of this Agreement.” Further, each Schedule A states “IT IS UNDERSTOOD AND AGREED that
Schedule A is hereby made a part of the Vehicle Lease Agreement between the Parties hereto dated
the 13th day of February, 2019 and that all of the terms and conditions of said Vehicle Lease
Agreement are incorporated by reference as the agreement between the parties upon Lessee signing
this Schedule A.” The Master Lease Agreement attached to this Limited Objection as Exhibit A
dated February 13, 2019 is the only lease agreement entered by the parties on that date.
12. A debtor seeking to assume a lease must do so cum onere, accepting both its
benefits and burdens. See In re Fleming, 499 F.3d 300, 308 (3d Cir. 2007) (“Section 365(f) requires
a debtor to assume a contract subject to the benefits and burdens thereunder”), citing In re ANC
Rental Corp., 277 B.R. 226, 238 (Bankr.D.Del. 2002) (holding that debtor may not assume only
part of a contract but must assume the entire agreement). "Should the debtor-in-possession elect
to assume the executory contract…it assumes the contract cum onere.” NLRB v. Bildisco &
Bildisco, 465 U.S. 513, 531 (1984); citing In re Italian Cook Oil Corp., 190 F.2d 994, 996 (CA3
1951). As the Master Lease Agreement is the only lease agreement between the parties, any
potential assumption and assignment must include the assumption and assignment of the entire
Master Lease Agreement, including the 46 Schedule A’s thereto, and the total cure amount
corresponding with Vyaire’s lease of the 46 vehicles thereunder.
6
Case 24-11217-BLS Doc 310 Filed 07/24/24 Page 7 of 7
RESERVATION OF RIGHTS
13. Ewald hereby reserves its rights to revise this objection and make such other and
further objections as may be appropriate, including but not limited to, objecting to the assumption
and assignment based on the lack of adequate assurance of future performance and any other
grounds.
CONCLUSION
For the reasons set forth above, Ewald respectfully request that this Court (a) sustain this
Limited Objection; (b) require that any order authorizing the assumption and assignment of the
Master Lease Agreement or any other agreement between the Ewald and Vyaire affirmatively
compel the Debtors to pay all amounts owing thereunder as set forth herein through the effective
date of any such assumption and assignment, including attorney’s fees; and (c) grant Ewald such
further relief as it deems proper.
Dated: July 24, 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
7
File and source
- File
- gov.uscourts.deb.193283.310.0.pdf
- Size
- 286,176 bytes
- SHA-256
- fbedb765e75734fbe52940b1cae0ef1aea8a4b513ad27361259d2a4c65ae8fb8
- Original
- PACER (login required)