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In re DH4, Inc.

2007 WL 3283781 (2007)

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In re DH4, Inc.

United States Bankruptcy Court for the Southern District of Florida
2007 WL 3283781 (2007)

Facts

DH4, Inc. (debtor) operated a sports bar and restaurant in a shopping center on premises leased from 12th Street Associates, d/b/a Crosstown Plaza (Crosstown). DH4’s lease with Crosstown provided that if DH4 assigned the lease, DH4 would be liable to Crosstown for any violation of the lease by the assignee. In June 2005, DH4 filed for bankruptcy and sought the bankruptcy court’s approval for DH4 to assume and assign the lease to SK West Palm Beach, L.L.C. (SK) under 11 U.S.C. § 365. Crosstown objected to the assignment. The bankruptcy court granted DH4’s motion after concluding that SK had provided adequate assurance of future performance and that SK’s proposed use of the leased premises would not alter the tenant mix in the shopping center. The bankruptcy court also ordered SK to post additional security with Crosstown. On August 12, 2005, DH4 assigned the lease to SK. SK accepted the assignment, assumed DH4’s obligations, and agreed to completely perform under the lease. However, in February 2007, SK defaulted on rent payments. Crosstown subsequently filed an amended proof of claim in DH4’s bankruptcy action seeking $84,351.72 from the bankruptcy estate for rental arrearages and other expenses related to SK’s default. DH4 objected to Crosstown’s claim.

Rule of Law

Issue

Holding and Reasoning (Hyman, C.J.)

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