services of K+N pursuant to that certain Logistics Services Agreement dated June 1, 2019 (as
- Date
- 2024-07-31
Summary
An objection by Kuehne + Nagel Inc. to the debtors' First Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts and Unexpired Leases, filed July 25, 2024 as Doc 315 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 states that K+N provided logistics and warehousing services under a Logistics Services Agreement dated June 1, 2019, and that the notice lists the cure cost as zero. The objection asserts that the debtors owe no less than $2,298,309.55 under Claim No. 35 and that K+N holds goods valued at approximately $16,253,195.02 under possessory lien rights. It asks that any assumption and assignment require payment of that amount and adequate assurance of future performance.
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Full text
Case 24-11217-BLS Doc 315 Filed 07/25/24 Page 1 of 4
IN UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
) Case No. 24-11217 (BLS)
VYAIRE MEDICAL, INC, et al., )
) (Jointly Administered)
Debtors. )
) Hearing Date: July 31, 2024 at 2:00 pm
) Obj Deadline: August 2, 2024 at 4:00 pm
OBJECTION TO DETBORS’ FIRST NOTICE TO CONTRACT PARTIES
OF POTENTIALLY ASSUMED AND ASSIGNED
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Kuehne + Nagel Inc. (“K+N”), by its undersigned counsel, hereby submits this objection
to the Debtors’ First Notice to Contract Parties of Potentially Assumed and Assigned Contracts
and Unexpired Leases [Docket No. 256] (the “Assumption Notice”). In support of the Objection,
K+N respectfully alleges as follows:
1. As the Court is aware, in the pre-petition period the Debtors employed the
services of K+N pursuant to that certain Logistics Services Agreement dated June 1, 2019 (as
amended) between K+N and the Debtors (the “Agreement”). Under the Agreement, K+N
provided logistics and warehousing services to the Debtor.
2. K+N previously interposed its Limited Objection and Reservation of Rights
[Document No. 133] (the “Sale Objection”)1 to the Debtor’s Motion of Debtors for Entry of an
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
1
K+N respectfully incorporates by reference the Sale Objection in this Objection.
Case 24-11217-BLS Doc 315 Filed 07/25/24 Page 2 of 4
Contracts, (VI) Approving the Sale of the Debtors’ Assets Free and Clear, and (VII) Granting
related relief [Docket No. 16] (the “Sale Motion”). The legal and factual basis for the Sale
Objection stems from the inability of the Debtors under section 363 of the Bankruptcy Code to sell
or otherwise seek to transfer the goods being warehoused by K+N subject to K+N’s statutory and
contractual possessory lien rights. Nevertheless, in their Assumption Notice, the Debtors list the
Agreement as a contract which may be assumed and assigned to the successful bidder and lists the
cure cost as zero. See Assumption Notice at p. 102. The proposed cure cost related to the
Agreement is in actuality in excess of $2.3MM and increasing.
Objection
3. Any assumption and assignment of the Agreement must be conditioned on
the Debtors’ compliance with the requirements of section 365 of the Bankruptcy Code, including,
but not limited to, paying all amounts due and owing under the Agreement through the effective
date of any assumption and assignment of the same
4. As evidenced in the secured of proof of claim filed on the official claims
register on July 15, 2024 and designated as Claim No. 35, the Debtors owe K+N no less than
$2,298,309.55 for services performed under the Agreement as of the date of the proof through June
2024 (the “K+N POC”). A copy of the K+N POC is attached as Exhibit A. Thus, the actual cure
cost associated with the potential assumption and assignment of the Agreement will be in excess
of $2,298,309.55.
5. Pursuant to its possessory lien rights, K+N continues to warehouse the
Debtors’ goods consisting of medical device parts and inventory with an estimated commercial
value of approximately $16,253,195.02 (the “K+N Collateral”) at a designated warehouse
facility. A scheduled of the K+N Collateral is attached as exhibit A to the Sale Objection. The
2
Case 24-11217-BLS Doc 315 Filed 07/25/24 Page 3 of 4
K+N Debt continues to accrue warehousing costs related to the K+N Collateral, including, but not
limited to, monthly rent and cost of labor to maintain the goods in the facility. 2
6. Pursuant to section 365 of the Bankruptcy Code, K+N is entitled to adequate
assurance of any proposed assignee’s future performance of the Agreement obligations, including
but not limited to the assignee’s financial wherewithal to meet its payment obligations. To the
extent the Agreement is to be assumed and assigned, K+N requests that such information be
promptly provided to K+N and its counsel, Moreover, K+N reserves its rights to object if it is not
timely provided with adequate assurance of any proposed assignee’s ability and intent to cure all
defaults under the Agreement and to provide adequate assurance of future performance, or if the
information provided is inadequate in any respect.
Reservation of Rights
7. Nothing in this Objection is intended to be, or should be construed as, a
waiver by K+N of any of its rights as a possessory lien holder and secured creditor under the
Agreement, the Bankruptcy Code, and applicable law. K+N expressly reserves all such rights,
including, without limitation, the right to: (a) supplement and/or amend this Objection and to assert
any additional objections with respect to the proposed cure amount and adequate assurance of
future performance; (b) amend the cure Amount; and (c) assert any further objections as it deems
necessary or appropriate.
2
It is undisputed that K+N is a secured creditor due by virtue of its possession of the K+N Collateral under the
Agreement, applicable state law, including but not limited to, sections 7-209, 7-210, and 9-333 of the Uniform
Commercial Code, and the common law on possession of freight forwarders and warehousemen. A possessory lien
holder’s collateral cannot be sold free and clear under section 363 of the Bankruptcy Code unless such entity’s claim
is satisfied or otherwise consents. See 11 U.S.C. 363(f)(2)
3
Case 24-11217-BLS Doc 315 Filed 07/25/24 Page 4 of 4
Conclusion
WHEREFORE, K+N respectfully requests that this Court enter an Order: (a)
sustaining this Objection; (b) sustaining K+N’s Sale Objection; (c) in the event of any proposed
assumption and assignment of the Agreement, requiring the Debtors to pay all amounts due and
owing to K+N in the amount of $2,298,309.55 plus the costs accrued through the effective date of
any assumption and assignment as well as providing evidence of adequate assurance of future
performance by any proposed assignee; and (d) granting K+N such other and further relief as this
Court deems just and proper.
Respectfully submitted,
Date: July 25, 2024 BIELLI & KLAUDER, LLC
Wilmington, Delaware
/s/ David M. Klauder
David M. Klauder, Esquire (No. 5769)
1204 N. King Street
Wilmington, DE 19801
Phone: (302) 803-4600
Email: dklauder@bk-legal.com
-and-
HALPERIN BATTAGLIA BENZIJA, LLP
Walter Benzija, Esquire
(pro hac vice admission pending)
40 Wall Street, 37th Floor
New York, NY 10005
Telephone (212) 765-9100
wbenzija@halperinlaw.net
Co-counsel for Kuehne + Nagel Inc.
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