In Re: Airspect Air, Inc., Chapter 11 Bankruptcy Proceeding, Case No. 96-50540; City of Akron v. Airspect Air, Inc., United States District Court, Northern District of Ohio, Case No. 5:96CV2276.

Report & Recommendation of Federal Magistrate Judge

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In mid-1996 an Operator at the Akron Fulton Int’l Airport filed a Chapter 11 Bankruptcy Case. The Owner of the Airport retained S&A as special bankruptcy counsel. The filing was on the eve of trial in a State Court Case, and the Operator removed the State Court Case to the bankruptcy court. In the State Court Case, the Airport Owner had sued the Operator for breach of lease for failure to pay fuel flowage fees, etc. and wanted to evict the Operator. The Operator counter sued the Owner asserting breach of alleged implied and oral agreements and promissory estoppel. The Operator claimed $10ML against the Owner in present and future damages. The Operator had 25 years left on a ground lease upon which he built a $1.5ML aviation facility and he paid his monthly rent current. The bankruptcy court was to hear and determine the Bankruptcy Case and State Court Case.

In a Chapter 11 bankruptcy case a commercial tenant has to decide whether or not to keep the lease or reject it. If the tenant desires to keep the lease, the Bankruptcy Code requires that certain documents be filed within 90 days after filing the bankruptcy. The Operator failed to do so, and S&A filed a motion to terminate the lease requesting the Operator to immediately surrender the facility to the Owner thereby forfeiting all of the improvements to the Owner.

The Bankruptcy Court denied the motion and S&A appealed to the U.S. District Court. A reversal of the Bankruptcy Court was obtained based upon points of law and the Owner was granted immediate possession of the facility, thereby forfeiting the improvements and terminating substantially all of the $10ML future damages. The Owner and Operator then settled their differences, but the results obtained by S&A put the Owner in a leverage position to negotiate the terms.

Areas of Law: Real Estate Law, Bankruptcy Law & Procedure, Federal Law & Procedure, Federal Appeals, Litigation, Evidence, Expert Retention, Aviation Rules, Airport Funding & Construct

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Reference Info:Decision | Federal, 6th Circuit, Ohio | United States


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Eric Skidmore, Skidmore & Associates, L.P.A. | Attorney Advertising

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