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When is a use restriction in a shopping center lease unenforceable notwithstanding § 365(b)(3)(C)? In the view of the lower courts in TrakAuto Corp., when the use restriction prohibits a debtor's assignment in violation of § 365(f)(l). Yet, what is the authority to ignore the specific shopping center provisions of §365(b)(3) in favor of general anti-assignment provisions of § 365(f)(l)? In the Fourth Circuit's view, there is no basis to do so, rather where two statutes address an issue, the more specific statute generally controls over the more general. So, while § 365(f)(l) is authority to invalidate an anti-assignment clause, it is not a basis to eviscerate the specific protections of a shopping center landlord under § 365(b)(3). The mere fact that assignment will result in greater proceeds for the estate than honoring a specific provision of the Bankruptcy Code is not a basis to ignore the statute.
Section 365(f)(1) invalidates certain anti-assignment provisions in executory contracts. Provisions that prohibit, restrict or condition the assignment are unenforceable unless saved under another provision of § 365. Debtors see this provision as a basis to challenge a broad array of restrictions. The debtor in Crow had parking and management rights which would terminate if it no longer owned a property. It sold the property and assigned rights under the agreement to a non-debtor in a transaction approved by the bankruptcy court under § 365. Since the restriction reduced the value of the debtor's ownership interest in the property, the Ninth Circuit agreed with the bankruptcy court that the restriction was a prohibited anti-assignment clause under § 365(f), although it was not explicitly denominated or structured as an anti-assignment provision.
