Background

• Debtor PBBPC, Inc. filed Chapter 11 on July 16, 2009 with only five employees.
• Sale approved to OPK Biotech, LLC, free and clear of liens and encumbrances under §363(f); OPK not a successor and not liable for Debtor’s pre-sale debts.
• Sale notices were served to Massachusetts DUA and the Commonwealth; OPK closed the sale September 9, 2009 and began Massachusetts operations October 1, 2009.
• Pre-sale, Debtor had laid off most employees, giving rise to a high unemployment experience rate of 12.27%.
• DUA asserted OPK as successor employer under Massachusetts law and continued to apply 12.27% contribution rate for 2011; OPK sought to enforce the Sale Order to bind the DUA and preclude successor liability.
• Bankruptcy court held the Debtor’s experience rate is an “interest” under §363(f) and the Sale Order could be enforced free and clear; later, OPK and DUA stipulated assignment of a 2.83% rate through 2011 and a refund of overpayments; the Order on appeal affirmed the prior rulings.

Issues

Key Cases Cited

• In re Leckie Smokeless Coal Co., 99 F.3d 573 (4th Cir.1996) (broad interpretation of 'interests' under §363(f) to include successor liability)
• Trans World Airlines, Inc., 322 F.3d 283 (3d Cir.2003) (rights under employee programs can qualify as 'interests')
• Indiana State Police Pension Trust v. Chrysler LLC (In re Chrysler LLC), 576 F.3d 108 (2d Cir.2009) (expansive reading of 'any interest' to permit sale free and clear to preserve jobs and fund liabilities)
• Wolverine Radio Co., Inc., 930 F.2d 1132 (6th Cir.1991) (restrictive view; rejected for this case's context)
• Precision Indus., Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537 (7th Cir.2003) (supports broad interpretation of 'any interest')