Commercial Banking, Collections, and Bankruptcy

Dist. Ct. erred in granting defendant's motion for summary judgment in action to recover $200,000 "break-up" fee under contract where plaintiff alleged that defendant acted in bad faith in terminating negotiations for sale of defendant's business prior to end of exclusive negotiating period set forth in parties' agreement. While defendant continued to negotiate beyond deadline set forth in agreement for consummating sale of business, entry of summary judgment was not proper where record also contained evidence from defendant's owner indicating that he did not want to go through with proposed sale, as well as owner's insistence on additional demands designed to preclude any possibility of closing proposed sale.

Bankruptcy Ct. did not err in granting debtor's motion to enforce automatic stay and to hold creditor-utility company in contempt for attempting (while stay was in force) to collect on $1.3 million in unpaid utility bills by sending delinquency notices and reporting delinquencies to City as part of first steps to obtain lien on debtor's property. Automatic stay provisions generally prohibit acts to either create liens or collect on claim during bankruptcy proceedings, and creditor's actions did not fall within any exception to stay provisions under section 546(b) of Bankruptcy Code. Moreover, Ct. found that creditor had not acquired any pre-petition interest in debtor's property by merely sending debtor utility bills and providing utility services, and that creditor's action in sending utility bill was not sufficiently akin to generating tax assessment or creating tax lien so as to qualify as exception to stay provisions.

Dist. Ct. did not err in granting defendant's motion for summary judgment in common law fraud action alleging that defendant made misrepresentations during negotiations that led plaintiff to contract for sale of infant formula with third-party Chinese entity (which in turn was purchasing said formula on behalf of fourth-party), where Dist. Ct. found that plaintiff's lawsuit was barred under Wisc. law by economic-loss doctrine. Plaintiff cannot sue in tort where plaintiff has contract with defendant and where contract law provides adequate remedy for type of injury alleged, and record otherwise showed that plaintiff unilaterally sent formula to third-party that was different than what was in contract. Moreover, even if defendant had made fraudulent misrepresentation as to whether fourth-party would accept shipment of proper formula, plaintiff had failed to negotiate contract that would have included steps to protect itself against range of risks of nonpayment from third-party.

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.