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assumed or rejected because they arose out of an integrated transaction for the purchase of a business. Applying state (Texas) law, the bankruptcy court found that the contracts were severable and accordingly allowed the debtors to reject two leases and assume four others. Presumably, the court severed the cross-default provisions in the assumed leases from the contracts being assumed.
In a case arising out of the K-Mart bankruptcy, K-Mart entered into a master sublease agreement for a number of cafeteria locations involving several landlords. The bankruptcy court found that the sublease agreements were severable given Michigan law and the intentions of the parties, so that the debtor/sublessee could assume or reject each individual location.
If the issues depend upon state law and the intentions of the parties, trial may be required. In a Florida case, the court was confronted with a number of leases and other agreements between the parties. The debtor claimed the obligations or contracts were independent, and the non-debtor argued they were integrated, arising out of one transaction, even though not all of the relevant documents contained cross-default provisions. Judge Paskay looked at the question as a matter of state law and the intent of the parties and required a trial.
3.8 Financial Accommodations and Loan Commitments.
A debtor can not assume a financial accommodation, debt financing or loan commitment contract under § 365(c)(2). Courts must determine whether a contract falls within this provision.
A dealer of consumer lawn and garden equipment entered into separate agreements - a dealer agreement, a credit agreement, a leasing agreement, a finance agreement and a sign agreement. Debtor agreed that the credit, leasing and finance agreements were non-assumable under
