In re Gunter Hotel Associates

Gunter Hotel Associates (Gunter) (debtor) had a license agreement with Carlson Hospitality Group Inc. (Carlson) that allowed Gunter to operate Gunter’s hotel as a Radisson hotel. Under the agreement, Carlson allowed Gunter to use Radisson’s reservation system and included Gunter’s hotel in Carlson’s advertising materials, among other things. Gunter filed for Chapter 11 bankruptcy and proposed a reorganization plan that included a clause allowing the bankruptcy court to retain post-confirmation jurisdiction over matters relating to the plan. The bankruptcy court ordered Gunter to affirm or reject all executory contracts, including the license agreement, before the plan-confirmation hearing. Gunter filed a motion to reject the Carlson license agreement but sought to postpone the rejection until 60 days after plan confirmation. Gunter also sought to keep receiving referrals under Radisson’s reservation system if callers asked for Gunter’s hotel. Gunter asserted that it was negotiating with other hotel chains but could not enter an agreement with another chain until after plan confirmation. A national affiliation was crucial to the success of Gunter’s hotel, and extending the Carlson license agreement gave Gunter the best chance of entering a new license agreement while preserving goodwill built under Radisson’s name. Carlton opposed Gunter’s motion, arguing that Gunter could not impose conditions on the license rejection and that extending the rejection time would violate the court’s order requiring assumption or rejection prior to the confirmation hearing.