Page:MOAC Mall Holdings v. Transform Holdco.pdf/7

Rh with petitioner MOAC Mall Holdings LLC, which leases spaces to tenants at the Minnesota Mall of America.

Notably, and as relevant here, §365 of the Code prohibits assignment of an unexpired lease to anyone without “adequate assurance of future performance by the assignee,” §365(f)(2)(B), and further establishes special adequate-assurance criteria related to “shopping center[s],” §365(b)(3), a term the parties agree describes the Mall of America. In that context, adequate assurance includes assurances that (1) the proposed assignee has a “similar … financial condition and operating performance” as the debtor “as of the time the debtor became the lessee under the lease,” and (2) the assignment will not “disrupt any tenant mix or balance in [the] shopping center.” §§§ [sic]365(b)(3)(A), (D).

Later in 2019, Transform designated the Mall of America lease for assignment to its wholly owned subsidiary, and MOAC objected on the ground that Sears had failed to provide the requisite adequate assurance of future performance by Transform. The Bankruptcy Court disagreed and approved the assignment to Transform, in a decision that, like the lower courts, we will call the “Assignment Order.”

Here is where §363(m) entered the picture. MOAC feared that, if it appealed the Assignment Order, Transform might argue that §363(m)’s restrictions limited or barred the appeal. Looking to §363(m)’s safe harbor for certain orders that are “stayed pending appeal,” MOAC sought to forestall any such argument by asking for a stay of the Assignment Order. The Bankruptcy Court denied MOAC’s request for a stay. The court reasoned that an appeal of the Assignment Order did not qualify as an appeal of an authorization described in §363(m), and it emphasized that Transform had explicitly represented that it would not invoke §363(m)