Commercial Banking, Collections, and Bankruptcy

Bankruptcy Ct. did not err in denying debtors' motion to approve proposed bid procedures that sought to sell all of their encumbered assets free and clear of all liens through auction via use of "stalking horse offer" without allowing secured lenders ability to bid their credit at said auction. Under 11 USC section 1129(b)(2)(A)(iii), instant secured lenders must be given credit-bidding rights. Ct. rejected debtors' contention that their proposed plan satisfied "indubitable equivalent" requirements set forth for plan approval under 11 USC 1129(b)(2)(A)(iii), where, according to debtors, auction itself established market price for company assets, and where instant lenders would receive proceeds of sale.

Dist. Ct. erred in granting motion for summary judgment by defendant-national Girl Scout organization, in action under Wisc. Fair-Dealership law by plaintiff-local Girl Scout council seeking to enjoin defendant from dissolving plaintiff's council and awarding plaintiff's territory to other councils under circumstances where defendant argued that reassignment of plaintiff's territory was done to accomplish greater racial and ethnic diversity within each surviving council. Record lacked any connection between promotion of diversity and instant proposed realignment/reduction in number of councils. Moreover, while reduction of councils for financial reasons might satisfy good cause requirement for dissolution of franchises set forth in Wisc. statute, defendant had abandoned financial considerations as justification for proposed elimination of plaintiff's council.

Dist. Ct. did not err in finding that defendant breached software licensing contract calling for plaintiff to provide software and training services to defendant where record showed that defendant had failed to make required monthly payments, even though software had begun to malfunction. Defendant had failed to provide plaintiff with 90-days' written notice of material malfunction in software as required by contract prior to withholding of payments, and defendant could not otherwise rely on 90-day, no-questions-asked guarantee that was contained in prior proposal to void contract where said guarantee was not contained in actual, signed contract. However, remand was required to re-calculate damages where Dist. Ct. awarded plaintiff damages covering lifetime of three-year contract and should have cut off damage award on date that defendant had unilaterally stopped operation of software due to plaintiff's withholding of payments.

Dist. Ct. did not err in granting defendant's motion for summary judgment in plaintiffs' action alleging that defendant breached two contracts calling for plaintiffs to run defendant's business and for plaintiffs' purchases of 4% and 2% of defendant's business, where defendant terminated plaintiffs after deadline for plaintiffs' purchase of their portions of defendant's business had expired. Terms of contract allowed defendant to terminate plaintiffs for cause if plaintiffs had failed to purchase portions of defendant's business by date set forth in contract, and Dist. Ct. properly rejected plaintiffs' claim that their obligation to purchase business was excused by defendant's failure to fulfill its promise to use best efforts to reach agreement on third, buy-sell contract, where: (1) best-efforts clause required that defendant only engage in good-faith exchange of proposals for third contract; and (2) best-efforts clause did not mandate that defendant accept plaintiffs' final offer with respect to third contract.

Dist. Ct. did not err in granting defendant's motion for summary judgment in RICO action alleging that defendant's use of heavy-handed tactics to force plaintiff to accept buy-out of his interest in joint venture at greatly below market value price amounted to extortion. Record showed that defendant had right to terminate joint venture upon payment of fees and costs, and plaintiff's claim that defendant's offer was too low did not amount to extortion where plaintiff was free to reject offer and sue for breach of contract.