In Re Moreggia & Sons, Inc. City of San Francisco Market Corporation v. Edward M. Walsh, Trustee American Poultry Company, Creditor

The City of San Francisco Market Corporation (the Market Corporation) appeals a bankruptcy court’s order, (which the district court affirmed), granting creditor’s (American Poultry) and Trustee’s Motions to Sell Lease, and denying lessor Market Corporation’s Motion for Reconsideration of an order extending the time to assume or reject the Lease. The Market Corporation argues that, since the Trustee failed to assume the “Lease” within the 60-day statutory period set by 11 U.S.C. § 365 (d)(4)(Supp. IV 1986), the Lease was automatically rejected and the property should be surrendered by the Trustee. The Market Corporation further argues that the operation of Section 365 cannot be waived or, if it can be waived, no waiver occurred. Finally, it argues that conversion of the case from Chapter 11 to Chapter 7 does not commence a new 60-day period for assumption or rejection of the lease. We hold that the property interest embodied in the Lease Agreement is not subject to the operation of section 365(d)(4) and affirm.

BACKGROUND

The Market Corporation was incorporated in 1961, primarily to provide financial assistance to the City of San Francisco and to help relocate businesses which…