Sims

Ferrari North America (FNA) appeals the order of the Bankruptcy Appellate Panel (the BAP) approving the assumption of a dealership franchise by the trustee in bankruptcy (the Trustee) and the assignment and sale by the Trustee of the franchise to an entity called Symbolic Motor Car Company, Inc. (Symbolic). FNA’s appeal is moot if Symbolic is a purchaser in good faith. Holding that Symbolic is not, we reverse the order of assignment and sale, vacate the order approving assumption of the franchise, and remand.

FACTS AND PROCEEDINGS

R.B.B., Inc., dba Ferrari of Los Gatos, operated a dealership selling and servicing Ferraris in Los Gatos, California. R.B.B. was licensed by FNA under various agreements here collectively designated as the Franchise. On August 10, 1994, FNA sent R.B.B. formal notice of non-renewal of the Franchise on account of a variety of defaults by the dealership. A week later, on August 17, 1994, R.B.B. filed a petition in Chapter 11.

R.B.B. continued to operate the dealership as debtor in possession. One year later, in August 1995, on motion of the creditors’ committee, the bankruptcy court appointed Charles Sims as the Trustee. For over the next two years the…