St. Christopher's Inc.
24-22373
Bankr. S.D.N.Y.May 5, 2025Background
- Debtors: St. Christopher’s, Inc. and The McQuade Foundation (McQuade) are in Subchapter V Chapter 11; McQuade owns ~22.085 acres in New Windsor, NY.
- McQuade entered a Purchase and Sale Agreement (PSA) dated Feb. 14, 2025 to sell the New Windsor Real Estate to 621 Blooming Grove LLC for $9,000,000 (Deposit $900,000).
- Debtors moved (Apr. 3, 2025) for Court approval of a private sale under §§ 105, 363, 365; Sale Hearing occurred Apr. 24, 2025; Sale Order entered May 5, 2025.
- Sale approved "free and clear" of liens, claims and interests except: (i) DASNY Bonds (Bond Documents) remain secured on sale proceeds; and (ii) the Greenburgh‑North Castle (GNC) nonresidential lease, which is to be assumed and assigned to Purchaser.
- The Residential Lease between McQuade (landlord) and St. Christopher’s (tenant) was approved for rejection effective at closing.
- Court found adequate notice and marketing, that the PSA was the highest/best offer, Purchaser is a good‑faith buyer under §363(m), and ordered immediate, final relief (no stay).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the private sale under § 363 is permissible and should be approved | Debtors: extensive marketing produced highest/best offer; sale preserves/maximizes estate value; complies with Asset Sale Guidelines and Bankruptcy Rules | Objectors: (where raised) sale process or notice allegedly deficient or collusive | Court approved sale under §§ 105, 363, 365; found marketing sufficient, non‑collusive, highest/best and in Debtors’ business judgment to approve. |
| Whether the sale may be made "free and clear" under § 363(f) | Debtors: each interest meets one or more §363(f) standards; consenting or adequately protected parties; proceeds will secure DASNY Bonds | Objectors: (where raised) claimed interests should survive or limit free‑and‑clear transfer | Court held transfer free and clear except for DASNY Bonds and the GNC Lease; objections overruled; liens/claims (if any) attach to proceeds. |
| Assumption and assignment of the GNC Lease and rejection of the Residential Lease under § 365 | Debtors: meet §365(b)/(f) requirements to assume/assign GNC Lease to Purchaser; Residential Lease is burdensome and may be rejected to deliver property vacant | Tenants or other parties: potential cure, occupancy rights, or objections to assumption/rejection timing | Court authorized assumption and assignment of the GNC Lease to Purchaser (with accrued/unbilled charges to be assumed); Residential Lease deemed rejected effective at closing. |
| Purchaser protections: good‑faith purchaser status and successor liability | Debtors: Purchaser negotiated at arm’s length, not an insider; protections of §363(m) apply; no successor liability should attach | Objectors: (where raised) alleged continuity or de facto merger or successor liability concerns | Court found Purchaser a good‑faith buyer under §363(m), no continuity/insider status; ordered no successor liability and enjoined claims against Purchaser. |
Key Cases Cited
- In re Balco Equities Ltd., 323 B.R. 85 (Bankr. S.D.N.Y. 2005) (deference to debtor's business judgment in rejecting executory contracts absent bad faith)
- In re G Survivor Corp., 171 B.R. 755 (Bankr. S.D.N.Y. 1994) (same principle regarding rejection of executory contracts)