In Re: Sears Holdings Corporation

Nature of the document

This document asks the parties to submit additional briefing. It does not state a final ruling or disposition.

Background

MOAC Mall Holdings LLC appealed an order involving the assumption and assignment of a shopping-center lease. The opinion says MOAC challenged the conclusion that Transform Holdco LLC had demonstrated adequate assurance of performance and therefore qualified to receive an assignment under Section 365(b)(3) of the Bankruptcy Code.

Judge McMahon explained that her earlier order vacated both the assumption of the lease by Sears Holdings Corporation and the assignment to Transform. She said MOAC had not argued that the assumption itself was invalid and that the earlier opinion addressed only the validity of the assignment. She also noted that the Second Circuit affirmed the conclusion that Transform had not demonstrated adequate assurance of performance, but did not address the assumption issue.

Question presented

Judge McMahon stated that the earlier order was the law of the case, but that a district court ordinarily may correct its own legal errors before final judgment. She asked whether, if she concluded that vacating the assumption had been a mistake, she had authority to correct the order’s decretal paragraph. She also identified potential arguments about whether the parties had forfeited or waived their positions by not raising the issue earlier.

Status

The court requested answers by the close of business on the Wednesday following April 22, 2024, and said it hoped to issue an opinion by May 2. The text provided does not show the court deciding whether it had authority to change the earlier order.