In Re Energy Conversion Devices, Inc.

483 B.R. 119 (2012)

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In Re Energy Conversion Devices, Inc.

United States District Court for the Eastern District of Michigan, Southern Division
483 B.R. 119 (2012)

  • Written by Philip Glass, JD

Facts

The Pegasus Group (Pegasus) (creditor) asserted a claim against Chapter 11 debtors United Solar Ovonic (USO) and Energy Conversion Devices, Inc. (ECD) (debtors) for breach of a commercial-property lease. This breach claim, encompassing allegations of failure to pay rent and breach of maintenance and repair duties, emerged from the lease’s postpetition termination by ECD and USO. The trustee appointed to manage the estates of ECD and USO maintained that 11 U.S.C. § 502(b)(6), which established a formula for determining the amount of disallowed damages in a lease-termination claim, capped both the rent and physical-damage claims. The trustee alleged that this resulted in total exclusion of the physical-damage-claim amount. Pegasus insisted that § 502(b)(6) did not cap, let alone exclude, the physical-damages claim, as the purported failure to maintain and repair was collateral to the lease’s termination. The bankruptcy court heard both sides’ arguments.

Rule of Law

Issue

Holding and Reasoning (Tucker, J.)

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