Limited Objection and Reservation of Rights of Fischer USA, Inc. — In re Vyaire Medical, Inc. (Doc 342)

Summary

Fischer USA, Inc. (Fischer) files a limited objection to the cure amounts in Vyaire Medical, Inc.'s First and Second Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts. Fischer states that it assembled and balanced the Debtor's Rotor Assemblies under individual purchase orders, while the notice lists only a Confidential Disclosure Agreement with a $0.00 cure amount. It states that the Debtor owes Fischer $114,708.19, and asks that the Court require payment of that amount as a condition of assumption, plus additional amounts due before the effective date. Fischer reserves its rights to make further objections. The signature block names William A. Hazeltine and L. Katie Mason as attorneys for Fischer.

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Full text

QB\91394133.1

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

)

)
Chapter 11
In Re:
)

)
Case No. 24-11217 (BLS)
VYAIRE MEDICAL, INC., et al.,1
)

)
(Jointly Administered)

Debtors.
)
Related Docket Nos. 249, 256, 263 and 311

)

LIMITED OBJECTION AND RESERVATION OF RIGHTS OF FISCHER USA, INC. TO
VYAIRE MEDICAL, INC.’S FIRST AND SECOND NOTICE TO CONTRACT PARTIES
OF POTENTIALLY ASSUMED AND ASSIGNED EXECUTORY CONTRACTS AND
UNEXPIRED LEASES

Fischer USA, Inc. (“Fischer”) by its attorneys, hereby files this limited objection
(“Objection”) to the cure amounts contained in Vyaire Medical, Inc.’s (“Debtor”) and its Debtor
Affiliates First and Second Notice to Contract Parties of Potentially Assumed and Assigned
Executory Contracts and Expired Leases (the “Cure Notice”) [Dkt. No. 256]. In support of this
Objection, Fischer states:
Background
1.
On June 9, 2024, (the “Petition Date”), the Debtors each filed a voluntary petition
for relief pursuant to Chapter 11 of the Bankruptcy Code.
2.
Before the Petition Date, the Debtors were in the business of providing respiratory
solutions to hospitals, health centers, and private practices.

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 342    Filed 08/01/24    Page 1 of 5

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3.
On July 11, 2024, the Court entered an order granting the Debtor’s 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
(the “Bidding Procedures Order”). [Dkt. No. 249].
4.
The Assumption and Assignment Procedures contained within the Bidding
Procedures Order required the Debtor to file a schedule listing the contracts and leases that may
potentially be assumed and assigned as part of the sale together with providing a “Cure Cost” for
each contract that the Debtors may potentially assume and assign as part of the sale of their assets.
[Dkt. 249].
5.
On July 11, 2024, the Debtor filed the Cure Notice with Exhibit A [Dkt. 256].
Exhibit A sets forth the contracts that the Debtors may potentially assume and assign as part of
their sale to a third-party buyer. Per the Assumption and Assignment Procedures, Exhibit A also
contains the Debtor’s proposed “Cure Costs” for each contract and lease it will potentially assume
and assign.
6.
In its respiratory products, the Debtor uses shaft ventilator assemblies, which
consist of a shaft, key, retaining ring, and rotor (“Rotor Assemblies”).
7.
Before the Petition Date, Fischer assembled and balanced the Debtor’s Rotor
Assemblies. The Debtors would deliver the raw material for the Rotor Assemblies to Fischer, and
Fischer would assemble and then perform other services to the Rotor Assemblies including
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grinding, balancing, and reassembly. The Rotor Assemblies would then be shipped back to the
Debtors and Fischer would invoice the Debtors for the work.
8.
Debtor’s Exhibit A identifies a Confidential Disclosure Agreement, effective May
5, 2020, (“CDA”) that the Debtor will potentially assume and assign to a prospective buyer. [Dkt.
No. 256 at 74]. Debtor proposes the cure amount for the CDA is $0.00. [Dkt. No. 256 at 74].
9.
The CDA referenced in the Debtor’s Exhibit A does not govern the trade
relationship between the Debtor and Fischer related to the Rotor Assemblies; rather, the trade
relationship between the Debtor and Fischer is conducted on the basis of individual purchase
orders.  Nevertheless, for the avoidance of doubt, Fischer submits this Objection to clarify that the
Debtor owes Fischer $114,708.19 for services performed on the Debtor’s Rotor Assemblies
pursuant to various purchase orders as described above, and that assumption of the CDA and
payment of a $0 Cure Amount is not sufficient to result in the assumption of any outstanding
purchase orders.
10.
Fischer objects to the Cure Notice to the extent it suggests that the amount due to
Fischer to cure past defaults under the trade relationship or individual purchase orders is $0.
CURE CLAIM OBJECTION
11.
Section 365 provides:
(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

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(C) provides adequate assurance of future performance under such
contract or lease.

11 U.S.C. § 365(b)(1).

12.
Fischer does not object per se to the assumption and assignment of the purchase
orders governing the trade relationship between the Debtor and Fischer; however, the Debtor
incorrectly alleges that their cure obligation is $0.00, and identifies only the CDA as an agreement
to be potentially assumed and assigned.  See Cure Notice, Exhibit A, at p. 74.
13.
 Fischer further objects to the cure amount identified in the Cure Notice because it
fails to provide for payment of the Cure Amount (defined above) due to Fischer pursuant to the
parties’ trade relationship and individual purchase orders, plus any additional amounts that become
due to Fischer through the effective date of assumption.
RESERVATION OF RIGHTS
14.
Fischer hereby reserves its rights to make such other and further objections as may
be appropriate, including, but not limited to, objecting regarding adequate assurance of future
performance under 11 U.S.C. § 365.
CONCLUSION
15.
For the reasons set forth above, Fischer respectfully requests that this Court: (i)
sustain this Objection; (ii) require the Debtor to correctly identify the purchase orders subject to
assumption and assignment as described herein; (iii) require as a condition of assumption that the
Debtor pay $114,708.19 (the “Cure Amount”) to cure the outstanding obligations as they exist as
of the date of the Cure Notice, plus pay all additional amounts that will become due prior to the
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effective date of any assumption of any purchase orders between the parties; and (iv) grant Fischer
such further relief as this Court deems proper.

Date: August 1, 2024

SULLIVAN ∙ HAZELTINE ∙ ALLINSON LLC

Wilmington, Delaware

/s/ William A. Hazeltine

William A. Hazeltine (No. 3294)
919 North Market Street, Suite 420
Wilmington, DE 19801
Tel: (302) 428-8191
Fax: (302) 428-8195
Email: whazeltine@sha-llc.com

and

QUARLES & BRADY LLP

/s/ L. Katie Mason

L. Katie Mason (WI: 1060063)
(pro hac vice pending)
411 E. Wisconsin Avenue, Suite 2400
Milwaukee, WI  53202
Telephone: (414) 277-3018
Email:  Katie.Mason@quarles.com

Attorneys for Fischer USA, Inc.

Case 24-11217-BLS    Doc 342    Filed 08/01/24    Page 5 of 5

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