National Environmental Waste Corp. v. City of Riverside

Debtor National Environmental Waste Corporation (“Newco”) appeals the district court’s affirmance of the bankruptcy court’s retroactive annulment of the automatic stay. Because of the unusual circumstances of this case, we conclude that the bankruptcy court did not abuse its discretion in granting retroactive relief from the stay.

I. BACKGROUND

Newco has provided waste hauling services in a portion of the City of Riverside (“City”) since 1972. Since 1991, the City has been divided into five areas for purposes of solid waste handling services, retaining four different solid waste enterprises to service those areas. In 1991, Newco entered into a contract with the City to provide waste handling services. It was an “evergreen” contract, meaning it was automatically renewed from year to year, subject to the City’s right to cancel without cause upon eight years’ notice. The City’s contracts with the other three solid waste enterprises were also evergreen contracts.

On March 11, 1993, the City’s Utility Services/Land Use/ Energy Development Committee, at the request of the Riverside City Council, reviewed the four evergreen contracts. The Committee concluded that the eight-year notice…