Objection and Reservation of Rights of Real Staffing Group to Proposed Cure Amounts — In re Vyaire Medical, Inc. (Doc 501)

Summary

Real Staffing Group, a trading division of Specialist Staffing Solutions, Inc., files an objection and reservation of rights to the cure amounts in the Debtors' First Cure Notice and Supplemental Cure Notice. It states that the cure amount listed for the MSA T&Cs contract is $204,598.75, while the prepetition amount due under the Master Staffing Agreement is $394,276.00 and $155,363.71 has come due post-petition. It argues that the Debtors may not assume and assign any agreements with Real Staffing without curing all defaults, including an existing monetary default of $549,639.71. It reserves the right to amend or supplement the objection. The signature block names Matthew P. Ward as counsel to Real Staffing Group.

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:

VYAIRE MEDICAL, INC., et al.,1

Debtors
)
)
)
)
)
)
)
Chapter 11

Case No. 24-11217 (BLS)

(Jointly Administered)

Re: D.I. Nos. 256, 462

OBJECTION AND RESERVATION OF RIGHTS OF
REAL STAFFING GROUP TO PROPOSED CURE AMOUNTS

Real Staffing Group, a trading division of Specialist Staffing Solutions, Inc. (“Real
Staffing”), files this objection and reservation of rights with respect to the First Notice to Contract
Counterparties of Potentially Assumed and Assigned Executory Contracts and Unexpired Leases
(Dkt. No. 256, the “First Cure Notice”) and the First Supplemental Notice to Contract
Counterparties of Potentially Assumed and Assigned Executory Contracts and Unexpired Leases
(Dkt. No. 462, the “Supplemental Cure Notice”).  In support of its objection, Real Staffing further
states as follows:
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.
On July 11, 2024, the Court entered its 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

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.
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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 (Dkt. No. 249, the “Bid
Procedures Order”).
3.
Also on July 11, 2024, pursuant to the Bid Procedures Order, the Debtors filed the
First Cure Notice, which identifies the following executory contracts (the “Contracts”) with Real
Staffing:
Row #
Vendor
Debtor
Description
Cure Amount
5929
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐04‐18
Schedule ‐ Design Assurance Engineer 1
$0.00
5930
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐11‐14 Schedule ‐
Design Assurance Engineer 2
$0.00
5931
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2021‐12‐17 Exhibit A
‐ Jasmol Dhesi
$0.00
5932
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐04‐11 Schedule ‐
Biocom Engineer
$0.00
5933
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2018‐07‐23 Exhibit A
Brandon Lee
$0.00
5934
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2018‐02‐13 MSA
T&Cs
$204,598.75
5935
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐10‐26 Schedule ‐
Manuf Engineer
$0.00
5936
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐10‐17 Schedule ‐
Labeling Specialist
$0.00
5937
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2019‐05‐27 Exhibit A
Shiv Parikh
$0.00
5938
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2022‐01‐12 Exhibit A
‐ Tim Wood
$0.00
5939
Real Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2018‐07‐25 MSA
$0.00

4.
On August 24, 2024, the Debtors filed the Supplemental Cure Notice, which
contains the following revision to the First Cure Notice:
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4855-6411-1584v.1
Row #
Vendor
Debtor
Description
Cure Amount
5934
Real
Staffing
Group
Vyaire Medical,
Inc.
Real Staffing Group 2018‐02‐13 MSA
T&Cs
$204,598.75

5.
On August 29, 2024, pursuant to an agreement with the Debtors to extend the proof
of claim deadline, Real Staffing filed proof of claim no. 172 (the “POC”) in the Vyaire Medical,
Inc. (“Vyaire Medical”) bankruptcy case.
6.
As set forth in the POC, Real Staffing and Vyaire Medical are parties to a Master
Staffing Agreement (the “MSA”), pursuant to which Real Staffing provides staffing and personnel
placement related recruiting services to Vyaire Medical.
7.
Though the First Cure Notice and the Supplemental Cure Notice purport to
differentiate between the MSA and the other Contracts, the relationship between Real Staffing and
Vyaire Medical is governed first and foremost by the MSA, which the other Contracts merely
supplement.
8.
In fact, most of the other Contracts are no longer in effect, and the First Cure Notice
and the Supplemental Cure Notice omit other supplementary agreements pursuant to which Real
Staffing is currently providing employees to Vyaire Medical.
9.
The POC demonstrates that the pre-petition amount due under the MSA (and
therefore the other Contracts and all unlisted supplementary agreements) is $394,276.00.  Vyaire
Medical has also failed to pay $155,363.71 that has come due post-petition.
ARGUMENT AND AUTHORITIES
10.
Section 365(b)(1) of the Bankruptcy Code provides, which governs the assumption
of executory contracts and unexpired leases, provides in relevant part:
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–
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(A) cures, or provides adequate assurance that the trustee will
promptly cure, such default other than a default that is a breach of a
provision relating to the satisfaction of any provision (other than a
penalty rate or penalty provision) relating to a default arising from
any failure to perform nonmonetary obligations under an unexpired
lease of real property, if it is impossible for the trustee to cure such
default by performing nonmonetary acts at and after the time of
assumption …; and
(C) provides adequate assurance of future performance under such
contract or lease.
11 U.S.C. § 365(b)(1).  The powers and obligations of a trustee under this section apply with equal
force to a debtor in possession.  11 U.S.C. § 1107(a).
11.
The purpose of Section 365(b)(1) is to restore the debtor-creditor relationship to a
pre-default condition and bring it back into compliance with the terms of the contract.  In re DBSI,
Inc., 405 B.R. 698, 704 (Bankr. D. Del. 2009); In re Rowland, 292 B.R. 815, 818 (Bankr. E.D. Pa.
2003) (“There is no dispute that in order for a debtor to assume an executory contract, it must cure
existing defaults.”).  When assuming a contract, the debtor must do so cum onere, with all the
burdens as well as the benefits.  N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 531 (1984)
(“[s]hould the debtor in possession elect to assume the executory contract, … it assumes the
contract cum onere”).  The requirement to cure all defaults or to provide adequate assurance of a
prompt cure exists “to insure that the contracting parties receive the full benefit of their bargain if
they are forced to continue performance.” In re Ionosphere Clubs, Inc., 85 F.3d 992, 999 (2d Cir.
1996) (quoting In re Superior Toy & Mfg. Co., 78 F.3d 1169, 1174 (7th Cir. 1996)).
12.
To date, the Debtors have not filed anything with the Court indicating whether they
actually intend to assign any agreements with Real Staffing.  To the extent the Debtors do intend
to assume and assign the MSA, the other Contracts, or any other agreements with Real Staffing,
they may not do so without curing all defaults, including the existing monetary default of
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$549,639.71.  Real Staffing therefore objects to the cure amounts set forth in the First Cure Notice
and the Supplemental Cure Notice.
RESERVATION OF RIGHTS
13.
Real Staffing reserves the right to amend and/or supplement this objection,
including, without limitation, by adding and supplementing objections to the First Cure Notice and
the Supplemental Cure Notice.  Real Staffing reserves the right to assert any amounts that may
come due and owing prior to the proposed assumption of the MSA, the other Contracts, or any
other agreements with Real Staffing.  Real Staffing also reserves the right to seek allowance and
payment of administrative claims for amounts coming due post-petition under the MSA, the other
Contracts, or any other agreements with Real Staffing.
RESPECTFULLY SUBMITTED the 6th day of September, 2024.
Dated: September 6, 2024
Wilmington, Delaware

WOMBLE BOND DICKINSON (US) LLP
/s/ Matthew P. Ward

Matthew P. Ward (Del. Bar No. 4471)
1313 North Market Street, Suite 1200
Wilmington, Delaware 19801
Telephone: (302) 252-4320
Facsimile:  (302) 252-4330
Email: matthew.ward@wbd-us.com

Julian P. Vasek (Pro Hac Vice pending)
MUNSCH HARDT KOPF & HARR P.C.
500 N. Akard St., Ste. 4000
Dallas, TX 75201
Telephone: 214-855-7528
Email: jvasek@munsch.com
Counsel to Real Staffing Group

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