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In re OLD COLD, LLC

United States Bankruptcy Appellate Panel of the First Circuit

June 18, 2019

OLD COLD, LLC, Debtor.
v.
SCHLEICHER & STEBBINS HOTELS, L.L.C., and OLD COLD, LLC, Appellees. MISSION PRODUCT HOLDINGS, INC., Appellant,

          Appeal from the United States Bankruptcy Court for the District of New Hampshire (Hon. Christopher J. Panos, U.S. Bankruptcy Judge)

          Robert J. Keach, Esq., and Lindsay Z. Milne, Esq., on brief for Appellant.

          Christopher M. Candon, Esq., on brief for Appellee, Schleicher & Stebbins Hotels, L.L.C.

          No brief filed by Appellee, Old Cold, LLC.

          Before Lamoutte, Godoy, and Finkle, United States Bankruptcy Appellate Panel Judges.

          Lamoutte, U.S. Bankruptcy Appellate Panel Judge.

         Mission Product Holdings, Inc. ("Mission"), an unsuccessful bidder for the debtor's assets and a party to one of the debtor's rejected executory contracts, appeals from the bankruptcy court's order granting the motion for relief from the automatic stay (the "Stay Relief Order") filed by creditor, Schleicher & Stebbins Hotels, LLC ("S&S"). In the motion, S&S, the pre- and post-petition secured lender to the debtor and the successful purchaser of the majority of the debtor's assets in a § 363 sale, sought relief from the automatic stay under § 362(d)(2) "to pursue its rights and remedies as a holder of a valid, perfected, first-priority security interest" in all of the debtor's remaining assets."[1] Mission opposed the motion, arguing that: (1) the bankruptcy court was divested of jurisdiction to consider it given the pendency of a petition for writ of certiorari before the U.S. Supreme Court (the "Supreme Court") relating to Mission's purported post-rejection rights under a license agreement pursuant to § 365(n);[2] and (2) S&S was not entitled to stay relief because, as part of its winning bid for the debtor's assets, S&S waived its lien on certain assets excluded from the sale which remained in the bankruptcy estate. Rejecting both arguments, the bankruptcy court granted S&S's request for relief from stay.

         For the reasons set forth below, we AFFIRM.

         INTRODUCTION[3]

         Prior to the bankruptcy filing, Old Cold, LLC, formerly known as Tempnology, LLC (the "Debtor"), made specialized products-such as towels, socks, headbands, and other accessories-designed to remain at low temperatures even when used during exercise. S&S, an investment holding company, owned a majority interest in the Debtor and was the Debtor's pre-petition lender.

         Three years before the petition date, the Debtor and Mission entered into an agreement, whereby the Debtor granted Mission a non-exclusive license to use the Debtor's intellectual property as well as certain exclusive product distribution rights. In the three years that followed, the Debtor experienced "multi-million dollar losses," which it blamed on the agreement with Mission. Eventually, Mission's relationship with the Debtor soured and, in 2014, Mission exercised its contractual right to terminate the license agreement.

         The parties' contentious relationship spawned several strands of litigation in the Debtor's bankruptcy case. One related to the Debtor's rejection of the license agreement and Mission's assertion of post-rejection rights under that agreement pursuant to § 365(n). Another related to the Debtor's 2015 sale to S&S of primarily all its assets-with the exception of cash, inventory, and accounts receivable-which the bankruptcy court approved over the objection of Mission, who was the unsuccessful bidder for those assets. Disagreeing with the outcomes in those contested matters, Mission appealed to both the Panel and the First Circuit and, with respect to its alleged post-rejection rights under the license agreement, to the Supreme Court. None of the appeals have been successful (with the exception of the single issue addressed by the Supreme Court, as discussed later). Despite the finality of the bankruptcy court's order approving the sale, Mission remains dissatisfied with the Debtor's sale of its assets to S&S. When S&S requested relief from the automatic stay to exercise its rights as the holder of a security interest in the assets remaining in the bankruptcy estate, Mission objected, asserting for the first time that S&S had waived its lien on those assets as part of the § 363 sale, although no such waiver was expressed in the sale order or the asset purchase agreement. Mission also argued that the bankruptcy court was divested of jurisdiction to consider the stay relief motion because stay relief would "impermissibly interfere" with the § 365(n) rights Mission was asserting in its petition to the Supreme Court. The bankruptcy court, finding no evidence in the extensive record that S&S had waived its lien, rejected both arguments and granted S&S relief from stay. Mission appealed. Although it sought a stay pending appeal from both the bankruptcy court and the Panel, neither court granted the request. Thereafter, the Debtor distributed the remaining estate asset-approximately $500, 000 in cash-to S&S.

         As an understanding of the course of proceedings before the bankruptcy court is relevant to the merits of this appeal, we begin with a detailed discussion of the relevant pre- and post-petition events.

         BACKGROUND

         I. Pre-Petition Events

         In 2012, the Debtor and Mission entered into a Co-Marketing and Distribution Agreement (the "Mission Agreement"), which granted Mission a non-exclusive, perpetual license to use the Debtor's intellectual property and an exclusive distributorship for certain manufactured products of the Debtor.

         In the spring of 2013, the Debtor obtained a line of credit from People's United Bank ("People's") pursuant to a note in the original principal amount of $350, 000 (the "LOC Note"). To secure its obligations under the LOC Note, the Debtor granted to People's a security interest in all of the Debtor's assets and executed a UCC financing statement which was filed with the New Hampshire Secretary of State.

         The Debtor also borrowed money from S&S. In August 2013, the Debtor executed a term note of up to $6, 000, 000 (the "Term Note"), and S&S loaned millions of dollars to the Debtor under the Term Note on an unsecured basis. Then, in July 2014, S&S purchased the LOC Note, along with People's "first position security interest in the Debtor's assets." S&S increased the loan limit from $350, 000 to $4, 000, 000, and rolled some of its unsecured debt into the secured LOC loan. Another UCC financing statement, assigning to S&S all of People's rights and interests under the original UCC financing statement, was filed with the New Hampshire Secretary of State. (All of these documents are collectively referred to as the "Loan Documents").

         On June 30, 2014, Mission exercised its contractual right to terminate the Mission Agreement without cause, triggering a two-year wind-down period during which time the Mission Agreement remained in full force. The Debtor responded by seeking to terminate the Mission Agreement for cause, claiming a breach by Mission. As a result of the dispute, the parties entered into a two-phase arbitration with each party claiming breach by the other. The arbitrator found that the Debtor's attempted termination for cause was improper, potentially entitling Mission to damages for the Debtor's failure to abide by the Mission Agreement leading up to arbitration. The hearing to determine the amount of these damages was stayed by the Debtor's bankruptcy filing.

         II. The Bankruptcy Proceedings[4]

         A. The Bankruptcy Filing

         The Debtor filed a chapter 11 petition on September 1, 2015. On the petition date, S&S formally became a stalking horse bidder by signing an agreement to purchase the Debtor's assets for $6.95 million, composed almost entirely of forgiven pre-petition debt owed by the Debtor to S&S.[5]

         On its bankruptcy schedules, the Debtor listed S&S as its only secured creditor with a claim in the amount of $5, 550, 000 for pre-petition "advances" made by S&S. Additionally, the Debtor listed Mission as an unsecured creditor with a contingent, unliquidated, disputed claim in the amount of $0, and identified the Mission Agreement as one of its executory contracts.

         The Debtor also filed a number of motions at the outset of the case, including: (1) a motion seeking authority to obtain post-petition debtor-in-possession financing from S&S and to use S&S's cash collateral (the "DIP Financing Motion"); (2) a motion to establish procedures for the sale of substantially all of its assets (the "Sale Motion"); and (3) a motion to reject executory contracts, including the Mission Agreement (the "Rejection Motion"). Mission filed a single objection to all three motions, and extensive litigation between the parties ensued.

         B. The DIP Financing Motion

         Three days after the bankruptcy filing, the bankruptcy court issued an order (the "First Interim DIP Order") granting the DIP Financing Motion on an interim basis and authorizing the Debtor to borrow up to $500, 000 from S&S (the "DIP Facility"). The First Interim DIP Order acknowledged that S&S's pre-petition liens on the Debtor's assets were "valid, binding, enforceable, and perfected first-priority liens . . . ." Thereafter, the bankruptcy court entered additional orders approving the DIP Facility on an interim basis on the same or similar terms and conditions as set forth in the First Interim DIP Order.

         In December 2015, after a hearing, the bankruptcy court entered a final order approving the DIP Facility (as amended, the "Final DIP Order"), authorizing the Debtor "to incur debt" of up to $1, 450, 000 secured by "first priority perfected liens . . . on property of the Debtor's estate . . . ." (the "DIP Liens"). The Final DIP Order indicated that the Debtor's pre-petition debt to S&S was approximately $5, 500, 000 under the LOC Note and that S&S would have "replacement security interests and liens in the Collateral . . . with the same validity as existed on the petition date . . . ." It further provided:

This Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of the DIP Liens and the Pre-Petition Replacement Liens (collectively, the "Liens") without the necessity of filing or recording any financing statement or other instrument or document which may otherwise be required . . . to validate or perfect the Liens or to entitle [S&S] to the priorities granted herein. The Interim and Final DIP Orders set November 12, 2015 (pre-petition lending period) and December 31, 2015 (post-petition lending period), as the deadlines for any objections or challenges regarding "the validity, extent, perfection or priority of the security interests and liens of [S&S]" or "the validity, allowability, priority, status or amount" of the debt owed to S&S (the "Challenge Periods"). No party commenced a contested matter or adversary proceeding raising an objection or challenge to S&S's secured claim or liens before the Challenge Periods expired.

         C. Motion to Reject the Mission Agreement

         As noted above, the Debtor also filed at the outset of the case the Rejection Motion, seeking to reject certain executory contracts, including the Mission Agreement. Mission objected arguing, among other things, that even if the Mission Agreement was an executory contract subject to rejection, Mission retained both its intellectual property license and its exclusive distribution rights under § 365(n).[6] After a hearing, the bankruptcy court entered an order granting the Debtor's motion to reject the Mission Agreement under § 365(a) "subject to [Mission's] election to preserve its rights under [ ] § 365(n)." The Debtor then filed a motion seeking a determination of the scope of Mission's post-rejection rights under § 365(n) (the "365(n) Motion").

         After a hearing in November 2015, the bankruptcy court entered an order (the "365(n) Order") concluding that Mission's post-rejection rights under § 365(n) were limited to the non-exclusive intellectual property license and that its exclusive distribution rights and trademark license did not survive rejection. See In re Tempnology, LLC, 541 B.R. 1, 6-7 (Bankr. D.N.H. 2015). Mission appealed, and the Panel affirmed in part and reversed in part. See In re Tempnology, LLC, 559 B.R. at 825 (reversing the 365(n) Order as to the bankruptcy court's ruling that Mission's trademark rights terminated upon rejection, and affirming as to all other aspects of the 365(n) Order). Mission then appealed to the First Circuit, which affirmed the bankruptcy court's decision. See In re Tempnology, LLC, 879 F.3d at 405.[7]

         In June 2018, Mission filed a petition for a writ of certiorari with the Supreme Court (the "Petition") with respect to the 365(n) Order. In October 2018, after the bankruptcy court issued the Stay Relief Order at issue in this appeal, the Supreme Court granted the Petition as to the following question (the "365(n) Question"): "Whether, under § 365 of the Bankruptcy Code, a debtor-licensor's 'rejection' of a license agreement-which 'constitutes a breach of such contract,' 11 U.S.C. § 365(g)-terminates rights of the licensee that would survive the licensor's breach under applicable nonbankruptcy law." See Mission Prod. Holdings, Inc. v. Tempnology, LLC, 139 S.Ct. 397 (2018). In a decision issued on May 20, 2019 (the "Supreme Court Decision"), the Supreme Court ruled as follows:

[W]e hold that under [§] 365(n), a debtor's rejection of an executory contract in bankruptcy has the same effect as a breach outside of bankruptcy. Such an act cannot rescind rights that the contract previously granted. Here, that construction of [§] 365 means that the debtor-licensor's rejection cannot revoke the trademark license.

We accordingly reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.

Mission Prod. Holdings, Inc. v. Tempnology, LLC, 139 S.Ct. 1652, 1666 (2019).[8]

         D. Motion to Sell the Debtor's Assets

         Mission also objected to the Sale Motion, in which the Debtor sought to establish procedures for the sale of substantially all of its assets free and clear of liens, claims, encumbrances, and other interests. As grounds, Mission argued: (1) its election under § 365(n) precluded the Debtor from selling its assets free and clear of Mission's rights; (2) the proposed sale was to an insider; (3) S&S should not be permitted to credit bid its purported claim; and (4) the bankruptcy court should "recharacterize" S&S's pre-petition debt as equity.

         1. Appointment of Examiner

         Because the stalking horse bidder-S&S-was an insider of the Debtor, both the U.S. Trustee and Mission sought the appointment of an independent examiner to evaluate the proposed sale and bidding procedures. After a hearing, the bankruptcy court authorized the appointment of Michael Askenaizer as examiner (the "Examiner") "to investigate the terms of the proposed sale of substantially all the assets of the Debtor."

         In an interim report dated September 30, 2015, the Examiner recommended that S&S's credit bid of pre-petition debt "be reduced by $2 million to reflect the conversion of unsecured debt owed to S&S [ ] by the Debtor to secured debt, without any new value flowing to the Debtor." He further stated, however, that he did "not see a basis for limiting [S&S's] ability to credit bid post-petition loans it has or will make to the Debtor."

         2. The Sale Procedures Order

         The bankruptcy court considered the Sale Motion at a hearing on October 2, 2015. In light of the concern raised in the Examiner's interim report and echoed by the court at the hearing about S&S's pre-petition credit bid, S&S agreed to lower its stalking horse bid from approximately $7 million to just over $1 million, consisting of a credit bid of $750, 000 in post-petition debt and the assumption of about $300, 000 in pre-petition liabilities. After the hearing, the bankruptcy court entered an order (the "Sale Procedures Order"), approving procedures for the sale of the Debtor's assets and S&S as the stalking horse bidder. The court also authorized S&S to credit bid "up to and including the post-petition amounts loaned to the Debtor under [the DIP Facility]" and "an additional $5, 650, 000 (the amount of [S&S]'s claim listed on the Debtor's Schedule D . . .) on the Assets."

         3. The Auction and Mission's Amended Objection to Sale Motion

         On November 5, 2015, the Debtor conducted an auction (the "Auction") in accordance with the Sale Procedures Order, which culminated in S&S's winning bid. The First Circuit, in its decision affirming the court's approval of the asset sale, described the proceedings as follows:

[O]n November 5, [2015, ] Debtor's counsel held an auction for Debtor's assets, at which S&S and Mission were the only bidders. The bid procedures allowed negotiations to be conducted off the record. Although S&S had revised its stalking horse bid to exclude forgiven pre-petition debt, its first bid at auction- for a total of $1.4 million-included such a credit bid. Mission then asserted that S&S had no right to credit bid pre-petition debt, and announced that it would bid under protest for the remainder of the auction. The next opportunity to bid went to Mission. To beat S&S's proposal, Mission increased the value of its previous bid, to the apparent confusion of some present, by agreeing to leave in the estate $200, 000 in cash, thus increasing the total value of its bid to $1.5 million. Bidding continued to proceed in this fashion: S&S increased its bid using credit, and Mission agreed to leave additional assets in the estate, including Debtor's finished goods inventory and accounts receivable. Given Mission's bidding structure, Debtor then revalued its accounts receivable and inventory to reflect their liquidation value as opposed to their book value. This revaluation reduced the bidding value of the accounts receivable by twenty percent, to $80, 000, and the bidding value of the inventory by ninety percent, to $120, 000. Mission's counsel, after being informed that Debtor would recalculate the inventory value, responded that "[a]s long as it's apples to apples, I don't care." Mission's counsel did not object to the new figures after Debtor announced them.

The parties then broke for lunch. Back on the record, Debtor's counsel informed those present that, after a negotiation between Debtor's counsel and S&S off the record, S&S intended to adopt Mission's bid structure by leaving assets in the estate. In its next bid, S&S credit bid only its post-petition debt, assumed all pre-petition liabilities other than rejection damages and disputed liabilities, assumed post-petition accounts payable, and left in the estate all accounts receivable, inventory, and cash. In subsequent bidding, S&S increased its bid by credit bidding pre-petition debt, and Mission increased its bid with cash. Mission soon ceased to bid and declined to be designated the backup bidder, ending the auction. S&S's winning bid, for a total value of $2.7 million, consisted of forgiven pre-petition debt, forgiven post-petition debt, the assumption of post-petition accounts payable, the assumption of certain pre-petition unsecured debt, and cash, inventory, and accounts receivable left in the estate. For this consideration, S&S acquired "all of [Debtor's] assets, properties and businesses," excluding, among other things, the assets left in the estate.

879 F.3d at 380-81 (emphasis added).

         The exclusion of "cash, inventory, and accounts receivable" (the "Excluded Assets") from S&S's winning bid is central to the issues raised by Mission in its opposition to S&S's motion for relief from stay and in this appeal. Mission's primary argument is that by excluding cash, inventory, and accounts receivable from the asset sale as part of its winning bid, S&S agreed to either: (1) purchase the Excluded Assets from the Debtor free and clear of S&S's liens and then "recontribute" the now-unencumbered assets back to the Debtor's estate as part of its consideration (Mission's so-called "recontributed assets" theory); or (2) waive its lien on the Excluded Assets (Mission's "lien waiver" theory).

         Following the Auction, Mission amended its objection to the Sale Motion arguing, among other things, that S&S's bid was "miscalculated" and "inferior" to the Mission bid, and that the Auction was conducted in bad faith. In its response to Mission's amended objection, the Debtor stated, among other things, that S&S's winning bid "leaves behind $600, 000 of its own cash . . . [but] such cash remains subject to the [S&S] liens as proceeds of the sale of its collateral." (emphasis added). The Debtor also acknowledged that "disputed unsecured claims and holders of interests will not be receiving any distributions under the sale," because the Excluded Assets "will have to be liquidated [and] a liquidating plan will distribute those assets (or proceeds thereof) to [S&S] . . . ." (emphasis added).

         The Examiner, who was present at the Auction, filed a report after the Auction in which he concluded that the estate, Mission, and all other creditors would receive better treatment through the proposed sale to S&S than through any other alternative, including liquidation. He also acknowledged that S&S would retain a lien on the Excluded Assets after the sale, stating: "The structure of the bid means that immediately after closing there [will be] substantial assets left for creditors the largest of which is inventory . . . . [T]he S&S security interest reaches all of those assets." (emphasis added). Mission did not dispute the post-Auction assertions by the Debtor and the Examiner that the Excluded Assets would remain subject to S&S's lien after the asset sale.

         4. The Sale Order

         On December 18, 2015, after a two-day evidentiary hearing, the bankruptcy court entered an order approving the sale of the Debtor's assets to S&S (the "Sale Order") as set forth in the Asset Purchase Agreement (the "APA") between the parties. Later that day, S&S and Debtor consummated the sale.

         The Sale Order provided, in relevant part:

[S&S]'s offer for the assets ("Assets") to be sold, as embodied in [the APA], annexed hereto as Exhibit 1, is the highest or best offer for the Assets under the circumstances of this case and is hereby approved.

[The APA] is hereby approved pursuant to section 363(b) of the Bankruptcy Code and the Debtor is authorized to consummate and perform all of its obligations under [the APA] and to execute such other documents and take such other actions as are necessary or appropriate to effectuate [the APA].

Pursuant to [§] 363(f) of the Bankruptcy Code, the Assets are being sold and transferred free and clear of all liens[, ] claims, interests, and encumbrances (collectively[, ] [t]he "Liens") except as otherwise provided in [the APA], with any and all such Liens to attach to proceeds of such sale with the same validity, priority, force, and effect such Liens had on the Assets immediately prior to the sale and subject to the rights, claims, defenses, and objections, if any, of the Debtor and all interested parties with respect to any such asserted Liens, provided, however, the sale of the Assets shall not be free and clear of claims Mission . . . may have pursuant to 11 U.S.C. § 365(n) as determined by a final non-appealable order by a court of competent jurisdiction.

         The APA provided that S&S was purchasing all of the Debtor's assets (the "Acquired Assets"), except for certain "Excluded Assets" (consisting of cash, inventory, and accounts receivable), which would remain part of the bankruptcy estate. The "purchase price" for the Acquired Assets was $1, 900, 000, which included "$1, 193, 000 of the [Debtor]'s outstanding obligations to [S&S] pursuant to the Secured Loans, compris[ed] of $443, 000 of [S&S]'s prepetition secured debt and $750, 000 of [S&S]'s postpetition secured debt" and certain "Assumed Liabilities."

         In the decision accompanying the Sale Order, the bankruptcy court considered and rejected all of Mission's objections to the sale. See In re Tempnology, LLC, 542 B.R. 50, 68-72 (Bankr. D.N.H. 2015). In rejecting Mission's challenge to S&S's pre-petition credit bid of $443, 000, the bankruptcy court ruled:

The Court is also unpersuaded that S&S's secured claim is subject to a bona fide dispute. On Schedule D, the Debtor listed S&S as holding a secured claim in the amount of $5, 550, 000. Although S&S has not filed a proof of claim, "[a] proof of claim or interest is deemed filed under section 501 of this title for any claim or interest that appears in the schedules filed under section 521(a)(1) or 1106(a)(2)" that is not "scheduled as disputed, contingent, or unliquidated." 11 U.S.C. § 1111(a). Despite Mission's persistent refrain that S&S's secured claim is invalid, Mission never filed an objection to the claim. Instead, Mission challenged S&S's ability to credit bid the claim in the Auction based on objections that have never been asserted. For this reason, the Court cannot find that the validity of S&S's secured claim is sufficiently in dispute to warrant a limitation of its bidding rights.

Id. at 69. The bankruptcy court also rejected Mission's argument that cause existed to recharacterize the Debtor's pre-petition debt as equity, stating: "Mission has failed to sustain its burden of showing that S&S's debt should be recharacterized in any amount, for any purpose." Id. at 70.

         Neither the Sale Order, nor the APA, contained any provision expressly releasing or waiving S&S's liens on the Excluded Assets. The Sale Order clearly provided that the Acquired Assets were being sold free and clear of liens with liens to attach to the proceeds, and that the Excluded Assets, which included cash, accounts receivable, and inventory, remained assets of the estate. Neither the Sale Order, nor the APA, provided or required that S&S was releasing its liens on the Excluded Assets. In the decision accompanying the Sale Order, the bankruptcy court, in assessing the value of S&S's bid, recited that the Excluded Assets were being "left in the estate" with no discussion of any release of the S&S lien on those assets or waiver of its secured claim. Id. at 71.

         Mission appealed the Sale Order to the Panel, and the Panel affirmed. See In re Old Cold, LLC, 558 B.R. at 521. The parties then filed cross-appeals to the First Circuit, which also affirmed the Sale Order. See In re Old Cold, LLC, 879 F.3d at 388-89 (concluding that S&S was a good faith purchaser entitled to the protection of § 363(m), rendering Mission's remaining challenges to the Sale Order statutorily moot).[9] Mission sought a rehearing en banc with the First Circuit, which was denied.[10]

         E. Mission's Proof of Claim and the Debtor's Objection

         Less than two weeks after the Auction, Mission filed a proof of claim (the "Claim"), asserting an unsecured claim in the amount of $4, 160, 000.[11] The Debtor objected to the Claim, arguing: (1) the Claim was "facially deficient" because it did not provide sufficient details or a legal basis to support it; (2) the Mission Agreement expressly barred the types of claims asserted by Mission; and (3) the Claim was barred under the principal of "anticipatory repudiation."

         In May 2018, the bankruptcy court entered an order approving an agreement among S&S, the Debtor, and Mission to stay the Debtor's objection to Mission's Claim.[12] At this time, there has been no final determination as to the Debtor's objection to Mission's Claim.

         F. The Inventory Sale

         In February 2016, while the appeal of the Sale Order was pending before the Panel, the Debtor filed a motion (the "Motion to Sell Inventory") seeking approval to sell certain inventory (part of the Excluded Assets) to S&S free and clear of all liens, "with any such liens attaching to the proceeds of the sale." The Debtor noted that the sale would be subject to § 363(f)(2)-which authorizes a sale of property free and clear of liens if the lienholder consents-and maintained that "S&S, who asserts a secured interest in the inventory and any proceeds thereof, has consented to the sale and liquidation of the inventory . . . ."

         Mission challenged the inventory sale, arguing that: (1) the Debtor was seeking to sell the inventory to S&S at a discounted price; and (2) the proposed sale was contrary to the terms of the APA and the Sale Order and evidenced "collusion" between the Debtor and S&S. Mission did not dispute the Debtor's assertions that the inventory and its proceeds were subject to S&S's lien. After a hearing in March 2016, the bankruptcy court approved the inventory sale to S&S (the "Inventory Sale Order"). The Inventory Sale Order did not explicitly address S&S's liens. Mission did not appeal the Inventory Sale Order.

         G. The Debtor's Motions to Extend the Exclusivity Period

         Between December 2015 and October 2016, the Debtor filed four motions to extend the exclusivity period for filing a chapter 11 plan, indicating its intent to seek approval of a plan of liquidation. The bankruptcy court granted those requests. The Debtor's exclusive period to file a chapter 11 plan expired on March 1, 2017. The Debtor has not filed a disclosure statement or a chapter 11 plan.

         H. February 26, 2018 Case Management Conference

         On February 26, 2018, the bankruptcy court held a case management conference.[13]During the conference, there was a discussion concerning S&S's secured claim and its liens on the remaining assets of the bankruptcy estate. The bankruptcy court and the Debtor's counsel- Christopher Desiderio-engaged in the following exchange regarding the extent of the S&S claim:

THE COURT: So as far as you're concerned, S&S has an allowed-essentially an allowed secured claim with respect to the proceeds of the inventory sale, which are the only remaining assets of the estate?
MR. DESIDERIO: That's right. Yes, Your Honor.
THE COURT: And is that disputed here today?
MR. DESIDERIO: Not by anyone in this courtroom, I don't ...

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