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City of Jamestown v. James Cable Partners, L.P. (In re James Cable Partners)

United States Court of Appeals for the Eleventh Circuit

August 3, 1994, Decided

No. 93-8898.

Opinion

 [*535]  PER CURIAM

On this appeal we address the question of whether a cable television franchise agreement between a debtor and non-debtor may be assumed by that debtor as debtor in possession over the non-debtor's objection under 11 U.S.C. § 365(c)(1). We conclude that such an assumption is permissible.

I. BACKGROUND

In March of 1977, the City of Jamestown, Tennessee (the "City"), granted Clarence R. Harding the exclusive right to erect, maintain, and operate a cable television system within its municipal limits (the "cable franchise agreement"). That grant was enacted into law as City Ordinance No. I 3-1-77 (the  [*536]  "Ordinance"). Section 12 of the Ordinance states:

The rights and privileges herein granted shall not be assignable nor transferable in any bankruptcy proceedings,  [**2]  trusteeship, receivership or by operation of any law, and in the event of such assignment or transfer, this grant shall terminate forthwith, nor shall said company sell, lease, assign, or otherwise alienate this grant or any privilege hereunder without the prior approval of the Board of Mayor and Aldermen.

Jamestown, Tenn., Ordinance I § 12 (Mar. 1, 1977). The City subsequently approved the assignment of the cable franchise agreement to Mountain Cablevision, Ltd., and later to Paradigm Communications, Inc. Ultimately, the City approved the assignment of the cable franchise agreement to James Cable Partners, L.P. ("James Cable"). James Cable paid the City $ 1.5 million for the cable franchise. 2 In addition, James Cable expended approximately $ 500,000 on improvements to the cable system. 3 

In June of 1991, James Cable filed a petition under Chapter 11 of the Bankruptcy Code. Thereafter, James Cable [**3]  filed a Plan of Reorganization in which James Cable as debtor in possession sought to assume the cable franchise agreement from itself as debtor. The City objected to the proposed assumption, arguing that 11 U.S.C. § 365(c)(1) prohibits James Cable as debtor in possession from assuming the cable franchise agreement without the City's consent. (Ex.1 at 352). The bankruptcy judge treated the City's objection as an objection to the assumption of the cable franchise agreement as opposed to a general objection to James Cable's Reorganization Plan. (Ex.1 at 359). The bankruptcy judge confirmed James Cable's Reorganization Plan, but reserved ruling on the City's objection. (Ex.1 at 366). After a hearing, the bankruptcy judge overruled the City's objection and permitted James Cable as debtor in possession to assume the cable franchise agreement. (Ex.1 at 444, 445). 4 The City appealed to the district court. The district court affirmed the bankruptcy judge's order, concluding that § 365(c)(1) of the Bankruptcy Code does not prohibit the assumption of any executory contract by a debtor in possession from the debtor itself. In re James Cable Partners, L.P., 154 Bankr. 813, 816 (M.D.Ga.1993). [**4]  This appeal follows.

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27 F.3d 534 *; 1994 U.S. App. LEXIS 19790 **; 31 Collier Bankr. Cas. 2d (MB) 1104; 25 Bankr. Ct. Dec. 1499; 8 Fla. L. Weekly Fed. C 456

In re JAMES CABLE PARTNERS, L.P., Debtor. The CITY OF JAMESTOWN, TENNESSEE, Plaintiff-Appellant, v. JAMES CABLE PARTNERS, L.P., Defendant-Appellee.

Subsequent History:  [**1]  As Amended. Suggestion for Rehearing En Banc Denied October 7, 1994, Reported at: 1994 U.S. App. LEXIS 33064.

Prior History: Appeal from the United States District Court for the Middle District of Georgia. (Nos. 93-CV-32-4-MAC, 91-52221). Wilbur D. Owens, Jr., District Judge.

Disposition: AFFIRMED.

CORE TERMS

Cable, cable franchise, debtor in possession, applicable law, lease, executory contract, accepting, Ordinance, prohibits, district court, bankruptcy judge, excuses, assign, entity

Bankruptcy Law, Judicial Review, Standards of Review, De Novo Standard of Review, Civil Procedure, Appeals, De Novo Review, Procedural Matters, General Overview, Business & Corporate Compliance, Contracts Law, Standards of Performance, Creditors & Debtors, Communications Law, Regulated Practices, Franchises, Agreements, Types of Contracts, Executory Contracts, Governments, Legislation, Interpretation, Contracts Law, Lease Agreements, Administrative Powers, Executory Contracts & Unexpired Leases, Powers to Assume & Reject, Reorganizations, Debtors in Possession, Duties, Powers & Rights, Real Property Law, Bankruptcy, Leases, Unassumable Contracts, Assignments, Existing Defaults