In re Parrott Broadcasting Ltd. Partnership
492 B.R. 35
Bankr. D. Idaho2013Background
- Kani Communications, Inc. (Kani) and Hilo Broadcasting, LLC entered into a Lease Agreement for a radio tower site in Hawaii with Baker as Kani's president; the Lease prohibited assignment.
- Parrott Broadcasting, LP (Debtor) later acquired KHBC assets including the Tower from Hilo via an Asset Purchase Agreement that provided Debtor would assume and accept the Lease, despite the non-assignment clause.
- A Post-Closing Agreement allowed Debtor to access the Tower while Hilo retained the Lease in its name, and Debtor agreed to reimburse Hilo for rent due under the Lease.
- Debtor filed Chapter 11 in 2010, converted to Chapter 7 in 2011; Kani filed a claim for postpetition rent and late charges arising from January 2010 to February 2011 (amended POC No. 26-3 filed Oct. 12, 2012).
- Trustee objected to the amended POC, arguing (1) Baker cannot appear pro se for a corporate creditor, (2) Debtor is not a party to the Lease so Kani cannot recover from Debtor, and (3) the Lease assignment to Debtor was invalid, affecting Kani’s rights.
- Court resolves Trustee’s objection in favor of Trustee on multiple grounds: Kani is the proper creditor and must be represented by counsel; Debtor has no direct privity to Kani under the Lease; and under 365(d)(4) postpetition rent is not recoverable absent assumption of the Lease.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can Baker represent Kani in the objection? | Kani is the creditor; counsel is required for corporate entities. | Baker pro se claims to represent Kani; corporate representation rule favors dismissal. | Baker cannot represent Kani; corporation must be represented by counsel. |
| Is Debtor liable to Kani under the Lease despite non-assignment? | APA/Post-Closing Agreement made Debtor assume the Lease and pay rent to Hilo for Kani; privity may exist. | Non-assignment clause preserved; Debtor not in privity with Kani; liability uncertain. | Debtor not directly liable to Kani under the Lease; no privity through assignment. |
| Does the APA and Post-Closing Agreement affect Kani's rights? | APA contemplated assignment; post-closing arrangement did not transfer Kani’s rights to Debtor. | Post-Closing Agmt. insulated Kani from the APA; Debtor’s obligations unresolved. | Post-Closing Agmt. effectively insulated Kani from Debtor; no direct liability through APA. |
| Are post-petition rents/late charges recoverable against Debtor? | If Debtor assumed the Lease, post-petition rents could be administrative expenses. | Lease was not timely assumed; post-petition rent is unrecoverable in absence of assumption. | Post-petition rent and late charges are impermissible absent lease assumption. |
| Is Kani entitled to any claim given non-assignment and lack of privity? | Kani could seek rent under Lease and assign/assume; Debtor’s bankruptcy complicates recovery. | No privity and no postpetition entitlement; claim should be disallowed. | Claim disallowed; Kani cannot recover against Debtor absent proper privity and assumption. |
Key Cases Cited
- Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194 (1993) (corporate representation requires licensed counsel in federal courts)
- Licht v. American West Airlines, 40 F.3d 1058 (9th Cir. 1994) (corporations must appear through counsel in federal courts)
- In re Schweizer, 354 B.R. 272 (Bankr. D. Idaho 2006) (burden-shifting framework for proof of claim objections)
- In re Pugh, 157 B.R. 898 (9th Cir. BAP 1993) (procedural burden on creditor after prima facie validity)
- In re Thomas, 387 B.R. 808 (D. Colo. 2008) (courts scrutinize pro se assignments to ensure compliance with representation rules)
- In re Onecast Media, Inc., 439 F.3d 558 (9th Cir. 2006) (lease treatment under 365 and timing of assumption/rejection)
- Food Pantry, Ltd. v. Waikiki Business Plaza, Inc., 575 P.2d 869 (Haw. 1978) (Hawaii non-assignment clause enforcement in lease)