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In re Pioneer Ford Sales

United States Court of Appeals for the First Circuit
729 F.2d 27 (1984)


Pioneer Ford Sales, Inc. (Pioneer) was a Rhode Island franchisee of the Ford Motor Company (Ford) (defendant). After Pioneer entered into bankruptcy proceedings, its largest secured creditor, Fleet National Bank (Fleet) (plaintiff), sought the assignment of Pioneer’s franchise to a nearby Toyota dealer, Toyota Village, Inc. The assignment would result in a payment by Toyota Village to Pioneer of approximately $85,000, whereas, without assignment, Pioneer would only receive $45,000 to $55,000 in a sale of parts to Ford. Over Ford’s objection, the bankruptcy court approved assignment, concluding that there was “adequate assurance” of Toyota Village’s future performance as a franchisee of Ford. The court based that conclusion on findings that Toyota Village was an established dealership with a proven track record, it was located close to Pioneer, it would pay Pioneer’s existing $15,000 debt to Ford, and its owner claimed to be willing and able to meet the terms of the franchise agreement. Other evidence showed that Toyota Village had far less working capital than customarily required of Ford’s franchisees and that the dealer’s sales had been anemic despite strong sales of Japanese automobiles generally. The district court affirmed the bankruptcy court’s decision. Ford appealed.

Rule of Law


Holding and Reasoning (Breyer, J.)

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