In Re Sun Runner Marine, Inc., D/B/A Sun Runner Yachts, Debtor. Transamerica Commercial Finance Corporation v. Citibank, N.A.

Transamerica Commercial Finance Corporation (“Transamerica”) appeals a decision by the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) holding that a flooring agreement between Transamerica and Chapter 11 bankruptcy debtor Sun Runner Marine, Inc. (“Sun Runner”) is nonassuma-ble under section 365 of the Bankruptcy Code, 11 U.S.C. § 365 (1988). This decision reversed a ruling by the bankruptcy court that the flooring agreement was assumable.

We have jurisdiction under 28 U.S.C. § 158 (d). We vacate that portion of the BAP opinion which determined the agreement was not an executory contract, and hence nonassumable under section 365, but affirm the BAP on its alternate ground of decision that the agreement is a financial accommodation contract and as such is no-nassumable under Bankruptcy Code § 365(c)(2).

FACTS AND PROCEEDINGS

Sun Runner manufactured boats. It had a flooring agreement with Transamerica by which Transamerica would lend money to retail boat dealers so they could buy boats from Sun Runner and resell them to customers. Once Transamerica agreed to finance a particular dealer, Sun Runner would deliver a boat to the dealer and Transamerica would pay Sun Runner the…