In re Cook and Sons Mining, Inc.
United States District Court for the Eastern District of Kentucky
2005 WL 2386238 (2005)
Cook and Sons Mining, Inc. (Cook) (plaintiff) filed a chapter 11 bankruptcy petition in August 2003. Cook was in the coal business. Cook entered a post-petition contract with Santee Cooper to sell Santee Cooper 60,000 tons of coal per month, at $35 per ton, for one year. Cook did not seek approval from the bankruptcy court for the contract. The contract was consistent with Cook’s previous contracts. Cook shipped coal for three months, beginning in January 2004, but never met the tonnage goal. Cook then became administratively insolvent in April 2004. Santee Cooper filed a motion with the bankruptcy court, asking for an administrative priority claim for over $10 million for damages Santee Cooper incurred due to Cook’s breach of the post-petition contract. Cook responded by filing a motion to avoid the contract under 11 U.S.C. § 549(b), arguing that the contract was outside the ordinary course of business as required for validity under 11 U.S.C. § 363. The bankruptcy court concluded that Cook could avoid the contract from July 2004 to December 2004, but not for January 2004 to June 2004. The bankruptcy court granted Santee Cooper’s claim of approximately $5 million. Both Cook and Santee Cooper appealed the bankruptcy court’s order.
Rule of Law
Holding and Reasoning (Caldwell, J.)
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