VYR - Motion to Extend Deadline to Assume or Reject Unexpired Leases
- Date
- 2024-10-02
Summary
A motion of the debtors for an order extending the time within which they must assume or reject unexpired leases of nonresidential real property, filed September 11, 2024 as Doc 522 in Vyaire Medical, Inc., et al., Case No. 24-11217 (BLS), a Chapter 11 case in the United States Bankruptcy Court for the District of Delaware. It asks for a ninety-day extension of the section 365(d)(4) deadline through and including January 6, 2025, noting that ninety days from the current deadline falls on Sunday, January 5, 2025. The background section says the company operates approximately 27 offices and manufacturing facilities and employs approximately 950 people, and recites the June 9, 2024 petition date and the sales of the ventilation and respiratory diagnostics assets to Zoll Medical Corp. and Trudell Medical Limited. The caption sets a hearing for October 2, 2024.
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 1 of 11
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re: ) Chapter 11
)
VYAIRE MEDICAL, INC., et al.,1 ) Case No. 24-11217 (BLS)
)
Debtors. ) (Jointly Administered)
)
) Hearing Date: October 2, 2024, at 1:30 p.m. (ET)
) Obj. Deadline: September 25, 2024, at 4 p.m. (ET)
MOTION OF DEBTORS FOR ENTRY OF AN
ORDER (I) EXTENDING THE TIME WITHIN WHICH
THE DEBTORS MUST ASSUME OR REJECT UNEXPIRED LEASES OF
NONRESIDENTIAL REAL PROPERTY AND (II) GRANTING RELATED RELIEF
The above-captioned debtors and debtors in possession (collectively, the “Debtors and,
each, a “Debtor”), state as follows in support of this motion.2
Relief Requested
1. The Debtors seek entry of an order, substantially in the form attached hereto as
Exhibit A (the “Proposed Order”), (a) extending the deadline by which the Debtors must assume
or reject unexpired leases of nonresidential real property (collectively, the “Unexpired Leases,”
and such deadline, the “365(d)(4) Deadline”) by ninety days through and including January 6,
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.
2
A detailed description of the Debtors and their business, including the facts and circumstances giving rise to the
Debtors’ chapter 11 cases, is set forth in the Declaration of John Bibb, Group Chief Executive Officer of Vyaire
Medical, Inc., in Support of Debtors’ Chapter 11 Petitions and First Day Motions [Docket No. 15] (the “First
Day Declaration”). Capitalized terms not defined herein shall have the meanings ascribed to such terms in the
First Day Declaration or the Bidding Procedures Order, as defined herein.
Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 2 of 11
20243, and (b) granting related relief. The Debtors seek this relief without prejudice to their rights
to seek further extensions of the time to assume or reject the Unexpired Leases as contemplated
under section 365(d)(4) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the
“Bankruptcy Code”).
Jurisdiction and Venue
2. The United States District Court for the District of Delaware has jurisdiction over
this matter pursuant to 28 U.S.C. §1334, which was referred to the United States Bankruptcy Court
for the District of Delaware (the “Court”) under 28 U.S.C. § 157 and the Amended Standing Order
of Reference from the United States District Court for the District of Delaware, dated February 29,
2012. The Debtors confirm their consent, pursuant to Rule 9013-1(f) of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of
Delaware (the “Local Rules”), to the entry of a final order by the Court in connection with this
motion to the extent that it is later determined that the Court, absent consent of the parties, cannot
enter final orders or judgments in connection herewith consistent with Article III of the United
States Constitution.
3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
4. The statutory bases for the relief requested herein are section 365(d)(4) of the
Bankruptcy Code, Rule 9006 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”) and Local Rule 9006-2.
3
Because 90 days from the current 365(d)(4) Deadline to assume or reject unexpired leases of nonresidential real
property is January 5, 2025, which is a Sunday, the Debtors request an extension through and including January
6, 2025.
2
Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 3 of 11
Background
5. Vyaire Medical, Inc., together with its direct and indirect subsidiaries (collectively,
“Vyaire” or the “Company”), is a global company focused on developing products and providing
related services for the diagnosis, treatment and monitoring of various cardiology, pulmonology
and respiratory health conditions. With a 70-year history of pioneering breathing technology, the
integrated solutions offered by the Company help enable, enhance and extend lives.
Headquartered in Mettawa, Illinois, Vyaire operates approximately 27 offices and manufacturing
facilities and employs approximately 950 individuals around the world. The Company has a global
reach, and Vyaire products are available in more than 100 countries. Its customers are the
hospitals, health centers and private practice facilities delivering life-enhancing products and
services to patients every day.
6. On June 9, 2024 (the “Petition Date”), Vyaire Medical, Inc. and certain of its
subsidiaries filed voluntary petitions 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 sections 1107(a) and 1108 of the Bankruptcy Code. On June 11, 2024, the Court entered an order
authorizing the procedural consolidation and joint administration of these chapter 11 cases pursuant
to Bankruptcy Rule 1015(b) and Local Rule 1015-1. See Docket No. 84. No request for the
appointment of a trustee or examiner has been made in these chapter 11 cases.
7. On June 26, 2024, the Office of the United States Trustee for the District of
Delaware (the “U.S. Trustee”) appointed the Official Committee of Unsecured Creditors
(the “Committee”). See Docket No. 121.
8. 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
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 4 of 11
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”). The Bidding Procedures Order approved, among other things, the Debtors’
right to reject, and not assume and assign, any contract depending on the ultimate resolution of
any cure amount in dispute; provided that, in the case of an unexpired lease of non-residential real
property, such determination shall be prior to the expiration of the applicable deadline to assume
or reject unexpired leases under section 365(d)(4) of the Bankruptcy Code. See Bidding Procedures
Order at ¶ 24.
9. On August 12, 2024, the Debtors commenced an auction (the “Auction”) for the sale
of the Debtors’ Ventilation Assets. See Docket No. 371. The Auction for the Debtors’ Ventilation
Assets formally ended on August 14, 2024, and Zoll Medical Corp. (“Zoll”) was selected as the
Successful Bidder. See Docket No. 388. On August 20, 2024, Trudell Medical Limited (“Trudell”)
was selected as the Successful Bidder for the Debtors’ Respiratory Diagnostic Assets (together with
Zoll, the “Purchasers”). See Docket No. 400. The sale of the Debtors’ Ventilation Assets to Zoll and
sale of the Debtors’ Respiratory Diagnostics Assets to Trudell (collectively, the “Sale Transactions”)
concluded the sale of substantially all of the Debtors’ assets pursuant to the Bidding Procedures Order.
10. On September 4, 2024, the Court entered an order approving the sale of the Debtors’
Ventilation Assets to Zoll [Docket No. 496] (the “Zoll Sale Order”) and the sale of the Debtors’
Respiratory Diagnostics Assets to Trudell [Docket No. 497] (the “Trudell Sale Order,” and
collectively with the Zoll Sale Order, the “Sale Orders”). As part of closing each of the sale
transactions, the Debtors’ advisors are working through various consummation issues, including
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 5 of 11
negotiation and finalization of certain transition services agreements, making determinations
regarding contract designation decisions, and receiving certain regulatory approvals. The Debtors
currently anticipate that, at the earliest, the sale transaction with Zoll may be in a position to close in
early October, with the sale transaction with Trudell happening later in October or in November.
The Unexpired Leases
11. One or more of the Debtors are, or may be, party to certain Unexpired Leases of
nonresidential real property that are subject to potential assumption, assumption and assignment
or rejection under section 365 of the Bankruptcy Code. While the Debtors, Purchasers, and their
advisors have been diligently evaluating the Unexpired Leases since the Petition Date, the Debtors
and the Purchasers have not yet completed their analysis or made final determinations as to which
of their Unexpired Leases they will assume (and assign) or reject. As such, the Debtors seek a 90-
day extension of the period (i.e., through and including January 6, 2024) to continue to evaluate
the Unexpired Leases. An extension of the 365(d)(4) Deadline is necessary to preserve the
Debtors’ ability to assume and assign the Unexpired Leases in accordance with the contract
designation process provided for in the asset purchase agreements, which will in turn maximize
value for the Debtors, their estates and other parties in interest, as well as facilitate the Debtors’
performance under and compliance with the TSAs.
12. Following the closing of the Sale Transactions, the Debtors will be required to
provide certain transition services to Zoll and Trudell, during which certain of the Debtors’
operations will wind down as provided for in the Debtors’ Joint Chapter 11 Plan of Vyaire
Medical, Inc. and Its Debtor Affiliates [Docket No. 518] (as may be amended, supplemented or
modified from time to time). Certain of the Debtors’ Unexpired Leases may be necessary during
5
Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 6 of 11
this transition period to ensure a smooth transition until such time as the Debtors are able to make
a final determination as to the disposition of the Unexpired Leases.
13. The Debtors’ decision to assume or reject any particular Unexpired Lease depends
on a number of different factors, including, but not limited to, an assessment as to whether
assumption or rejection of such Unexpired Lease is consistent with the Purchaser’s acquired assets
and exercise of their contract designation rights. The Debtors, the Purchasers, and their advisors
will continue to analyze the Unexpired Leases that the Debtors may choose to assume, assume and
assign or reject prior to the 365(d)(4) Deadline, but believe that a determination on the disposition
of the Unexpired Leases at this time would be premature given the transition period and Zoll and
Trudell’s contract designation rights.
14. Accordingly, the Debtors seek an extension of the 365(d)(4) Deadline by an
additional 90 days through and including January 6, 2025.
Basis for Relief
15. Section 365(d)(4) of the Bankruptcy Code provides that an unexpired lease of
nonresidential real property under which a debtor is the lessee shall be deemed rejected if the
debtor does not assume or reject such unexpired lease within 120 days after the petition date or
before plan confirmation, whichever is earlier. A bankruptcy court may extend the period for 90
days on the motion of the debtor or lessor for cause. See 11 U.S.C. § 365(d)(4)(B). “Cause,” as
used in section 365(d)(4), is not defined by the Bankruptcy Code. Among other things, courts
consider the following non-exhaustive factors in evaluating whether “cause” exists for purposes
of section 365(d)(4) of the Bankruptcy Code:
(a) whether the lease is an important asset of the estate such that the decision
to assume or reject would be central to any plan;
(b) whether the case is complex and involves large numbers of leases;
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 7 of 11
(c) whether the debtor has had insufficient time to intelligently appraise each
lease’s value to a plan; or
(d) the existence of any other facts indicating the lack of a reasonable time to
decide whether to assume or reject.
In re Wedtech Corp., 72 B.R. 464, 471-72 (Bankr. S.D.N.Y. 1987); see also S. St. Seaport L.P. v.
Burger Boys Inc. (In re Burger Boys Inc.), 94 F.3d 755, 761 (2d Cir. 1996) (considering the
complexity of the debtor’s case, the number of leases the debtor must evaluate and the need for
judicial determination of whether a lease exists); Legacy, Ltd. v. Channel Home Ctrs., Inc. (In re
Channel Home Ctrs., Inc.), 989 F.2d 682, 689 (3d Cir. 1993) (“[I]t is permissible for a bankruptcy
court to consider a particular debtor’s need for more time in order to analyze leases in light of the
plan it is formulating.”).
16. Courts in this district have recognized the benefits of granting additional time for a
debtor to assume or reject leases of nonresidential real property under section 365(d)(4) of the
Bankruptcy Code. See, e.g., Channel Home Ctrs., 989 F.2d at 687-88; In re GST Telecom Inc.,
2001 WL 686971 (D. Del. June 8, 2001); In re Rickel Home Ctrs., 1997 WL 538785 (D. Del. Aug. 13,
1997). As the Third Circuit has stated, “nothing prevents a bankruptcy court from granting an
extension because a particular debtor needs additional time to determine whether the assumption or
rejection of particular leases is called for by the plan . . . it is attempting to develop.” Channel Home
Ctrs., Inc., 989 F.2d at 689; see also Coleman Oil Co. v. Circle K Corp. (In re Circle K Corp.), 127
F.3d 904, 909 n.5 (9th Cir. 1997), cert. denied, 522 U.S. 1148 (1998) (noting that bankruptcy courts
often grant debtors’ requests for extensions).
17. Here, the factors courts analyze in deciding whether “cause” exists under section
365(d)(4) of the Bankruptcy Code weigh in favor of granting the Debtors’ request for a 90-day
extension in this case. First, pending the Debtors’ decision to assume (and assign) or reject the
Unexpired Leases, the Debtors intend to perform in a timely fashion all of their undisputed
7
Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 8 of 11
obligations arising from and after the Petition Date to the extent required by section 365(d)(3) of
the Bankruptcy Code or orders of the Court. As such, the Debtors’ requested extension of time to
assume (and assign) or reject the Unexpired Leases will not prejudice or otherwise affect the
substantive rights of the lessors under the Unexpired Leases. See, e.g., In re Victoria Station Inc.,
875 F.2d 1380, 1386 (9th Cir. 1989) (“[A]n order extending the time for a debtor to assume or
reject a lease merely preserves the status quo.”); In re Bon Ton Rest. & Pastry Shop, Inc., 52 B.R.
850, 855 (Bankr. N.D. Ill. 1985) (concluding that a lessor who received continuing monthly rent
payments was not prejudiced by an extension of the section 365(d)(4) deadline).
18. Second, the Unexpired Leases are an important part of the Debtors’ business, are
valuable to the Debtors’ estates, central to the Debtors’ chapter 11 cases, and subject to the
purchasers’ contract designation rights under the applicable asset purchase agreement. A key part
of the Debtors’ restructuring is consummation of the Sale Transactions. As such, the Debtors and
Zoll and Trudell, respectively, will enter into TSAs to ensure a smooth transition following the
closing of the sales. Certain of the Debtors’ Unexpired Leases are essential to the Debtors’
operations during the transition period. Further, each purchaser bargained for certain contract
designation rights that include the possibility of assuming and assigning contracts and leases to
purchasers, so it is imperative that the Debtors be able to assume and assign agreements in
accordance with the Bankruptcy Code. Under the currently anticipated timing, it is not likely that
the Trudell sale transaction will close prior to the current lease rejection deadline, and it is not clear
if the Zoll sale transaction will either.
19. Third, the Debtors have diligently pursued their chapter 11 strategy in an efficient
and timely manner. The Debtors have focused on, among other things, stabilizing their ordinary
course operations and executing their marketing and sale process postpetition. Given the Debtors’
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 9 of 11
pressing operational initiatives, including, but not limited to, consummating the Sale Transactions,
the Debtors have not had the opportunity to fully to assess and review the assumption and rejection
options with respect to the Unexpired Leases.
20. The 90-day extension requested herein is also consistent with the extensions granted
by courts in this district under similar circumstances. See, e.g., In re Express, Inc., No. 24-10831
(KBO) (Bankr. D. Del. Aug. 19, 2024) (extending the deadline to assume or reject unexpired leases
of nonresidential real property by 90 days); In re Mist Holdings, Inc., No. 24-10245 (JTD) (Bankr.
D. Del. May 28, 2024) (same); In re MVK FarmCo LLC, No. 23-11721 (LSS) (Bankr. D. Del. Feb.
6, 2024) (same); In re Yellow Corporation, No. 23-11069 (CTG) (Bankr. D. Del. Nov. 13, 2023)
(same); In re PGX Holdings, Inc. No. 23-10718 (CTG) (Bankr. D. Del. Sept. 13, 2023) (same).
Similar relief is warranted in these chapter 11 cases.
Reservation of Rights
21. Nothing contained in this motion or any order granting the relief requested in this
motion, and no action taken by the Debtors pursuant to the relief requested or granted (including
any payment made in accordance with any such order), is intended as or shall be construed or
deemed to be: (a) an admission as to the amount of, basis for, priority or validity of any claim
against the Debtors under the Bankruptcy Code or other applicable nonbankruptcy law; (b) a waiver
of the Debtors’ or any other party in interest’s rights to dispute any claim on any grounds; (c) a
promise or requirement to pay any particular claim; (d) an implication, admission or finding that
any particular claim is an administrative expense claim, other priority claim or otherwise of a type
specified or defined in this motion or any order granting the relief requested by this motion; (e) a
request or authorization to assume, adopt or reject any agreement, contract or lease pursuant to
section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority, enforceability or
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 10 of 11
perfection of any lien on, security interest in or other encumbrance on property of the Debtors’
estates; or (g) a waiver or limitation of any claims, causes of action or other rights of the Debtors
or any other party in interest against any person or entity under the Bankruptcy Code or any other
applicable law.
No Prior Request
22. No prior request for the relief sought in this motion has been made to this or any
other court.
Notice
23. The Debtors will provide notice of this motion to: (a) the United States Trustee for
the District of Delaware; (b) counsel to the Committee; (c) counsel to the 1L Ad Hoc Group; (d) the
agent of the DIP Facility and counsel thereto; (e) the agent of the First Lien Credit Agreement and
counsel thereto; (f) the Second Lien Credit Agreement Agent and counsel thereto; (g) the agent of
the First Lien Notes and counsel thereto; (h) counterparties to the Unexpired Leases; and (i) any
party that has requested notice pursuant to Bankruptcy Rule 2002. The Debtors submit that, in
light of the nature of the relief requested, no other or further notice need be given.
[Remainder of Page Intentionally Left Blank]
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Case 24-11217-BLS Doc 522 Filed 09/11/24 Page 11 of 11
WHEREFORE, the Debtors respectfully request entry of the Proposed Order, substantially
in the form attached hereto as Exhibit A, (a) granting the relief requested herein and (b) granting
such other relief as the Court deems appropriate under the circumstances.
Dated: September 11, 2024
Wilmington, Delaware
/s/ Patrick J. Reilley
COLE SCHOTZ P.C. KIRKLAND & ELLIS LLP
Patrick J. Reilley, Esq. (No. 4451) KIRKLAND & ELLIS INTERNATIONAL LLP
500 Delaware Avenue, Suite 1410 Joshua A. Sussberg, P.C. (admitted pro hac vice)
Wilmington, Delaware 19801 601 Lexington Ave
Telephone: (302) 652-3131 New York, New York 10022
Facsimile: (302) 652-3117 Telephone: (212) 446-4800
Email: preilley@coleschotz.com Facsimile: (212) 446-4900
Email: joshua.sussberg@kirkland.com
- and -
- and -
Michael D. Sirota, Esq. (admitted pro hac vice)
Warren A. Usatine, Esq (admitted pro hac vice) Spencer A. Winters, P.C. (admitted pro hac vice)
Court Plaza North, 25 Main Street Yusuf U. Salloum (admitted pro hac vice))
Hackensack, New Jersey 07601 333 West Wolf Point Plaza
Telephone: (201) 489-3000 Chicago, Illinois 60654
Facsimile: (201) 489-1536 Telephone: (312) 862-2000
Email: msirota@coleschotz.com Facsimile: (312) 862-2200
wusatine@coleschotz.com Email: spencer.winters@kirkland.com
yusuf.salloum@kirkland.com
Co-Counsel to the Debtors Co-Counsel to the Debtors
and Debtors in Possession and Debtors in Possession
11
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