In re: Auto Master Express, Inc.

Opinion

IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: CASE NO. 18- 01464 (ESL) 3 AUTO MASTER EXPRESS, INC. CHAPTER 11 4 Debtor 5

7 This case is before the court upon the Motion for Reconsideration of Order (Docket No. 8 237) filed by Swasky Petroleum, Corp., (“Swasky”) of the Order entered on January 13, 2021 9 granting the motion Requesting Entry of Order to Transfer Certain properties Pursuant to 11 10 U.S.C. §363 (Docket No. 230) (Docket No. 239) and the Joint Motion in Reply to Swasky 11 Petroleum Corp.’s at Dockets 238, 239 and 240 filed by Auto Master Express, Inc. (hereinafter 12 referred to as “Auto Master” or “Debtor”) and secured creditor Route 65, Inc. (hereinafter referred 13 to as “Route 65” or “Creditor”) (Docket No. 245). Replies by Swasky and the Debtor and Route 14 65 ensued (Docket Nos. 251 and 257). For the reasons stated herein, Swasky’s motion for 15 reconsideration is granted. 16 Jurisdiction 17 The Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core 18 proceeding pursuant to 28 U.S.C. §§157(b)(1) and (b)(2). Venue of this proceeding is proper under 19 28 U.S.C. §§1408 and 1409. 20 Procedural Background 21 The Debtor filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code on 22 March 19, 2018. The Debtor included in its Schedule G- Executory Contracts and Unexpired 23 Leases, a mini market lease with Swasky that expires on March 17, 2023. The Debtor listed 24 Swasky’s address as: PO Box 3261; Valle Arriba Heights; Carolina, PR 00984 (Docket No. 1, 25 pg. 23). On December 26, 2018, the Debtor filed its Disclosure Statement and Plan of 26 Reorganization by which the Debtor assumed the two (2) unexpired leases (Docket Nos. 79 & 27 80), which include the Swasky Petroleum Corp. Mini Market Lease. Thereafter on March 11, 1 2019, the Debtor filed its First Amended Disclosure Statement and First Amended Plan of 2 Reorganization in which the Debtor also assumed the two (2) unexpired leases (Docket Nos. 113 3 &114). 4 On July 1, 2020, Route 65 filed three (3) transfers of claims other than for security for 5 proof of claims numbers 12, 13 and 14 in which Banco Popular de Puerto Rico was the transferor 6 and Route 65 was the transferee (Docket Nos. 182, 183, & 184). Proof of claims numbers 12, 13 7 and 14 are based on three (3) commercial mortgage loans which are secured by two real estate 8 properties. The Debtor is the title holder of the first real estate property and José R. Rios Polo and 9 Blanca Quiles Carrasquillo, are the title holders of the second real estate property.1 On October 10 2, 2020, the Debtor and Route 65 filed a Joint Stipulation Regarding Treatment of Claims 12, 13 11 and 14 which included as part of its terms and conditions that in full payment of Route 65’s claims 12 nos. 12, 13 and 14 the Debtor would transfer free and clear of all liens the commercial property 13 to Route 65 through a Deed in Lieu in favor of Route 65. Another of the provisions of the 14 Stipulation included that Route 65 will rent a space of the commercial property to Express Repair 15 Service, Inc. (ERSI) to be used as a service area. The monthly rental will be a total of $1,200, 16 payable at the beginning of the month, for a term of 6 years. The term will be renewable for 17 another 6 years, if ERSI is not in default with the terms and conditions of the lease, for a monthly 18 rent amount to be negotiated at that time. Further terms and conditions will be negotiated between 19 Route 65 and ERSI and set in writing (Docket No. 202). On October 2, 2020, the Debtor filed a 20 Motion to Shorten Time to seven (7) days to file objections to the Joint Stipulation (Docket No. 21 203). On October 2, 2020, the Debtor filed a Notice and Certificate of Service informing that a 22 true and exact copy of the Joint Stipulation filed under docket entry no. 202 and the Motion to 23 Shorten Time filed under docket entry no. 203 had been sent by regular mail to the parties in the 24 annexed mailing list (Docket No. 205). On October 3, 2020, the Debtor filed a Notice and 25 1 José R. Rios Polo and Blanca Quiles Carrasquillo are the president and secretary of the debtor corporation. They are 26 the codebtors of the BPPR loan which was transferred to Route 65. The Statement of Financial Affairs does not disclose their proprietary interest in the debtor corporation, if any. The disclosure statements filed by the debtor 27 corporation do not disclose their proprietary interest in the same, if any, and do not identify them as equity interest holders. 1 Certificate of Service informing that a true and exact copy of the Joint Stipulation filed under 2 docket entry no. 202 and the Motion to Shorten Time filed under docket entry no. 203 had been 3 sent by regular mail to Swasky Petroleum Corp. through its Resident Agent Mr. Muhanad Hassan 4 Hilmi to the following mailing address: PO Box 3261 Valle Arriba Heights Carolina, PR 00985. 5 (Docket No. 206). On October 6, 2020, the Motion to Shorten Time was granted (Docket No. 6 208). 7 On October 9, 2020, the Debtor filed its Second Amended Plan of Reorganization and its 8 Second Amended Disclosure Statement (Docket Nos. 212 & 213). In the Second Amended 9 Disclosure Statement and Second Amended Plan of Reorganization, the Debtor disclosed that it 10 will reject the two (2) unexpired leases with Swasky and with Express Repair Service Inc. 11 On October 13, 2020, the Court approved the Joint Stipulation (Docket No. 214). Pursuant 12 to the Certificates of Service, Swasky was not sent a notification of the Order approving the Joint 13 Stipulation (Docket Nos. 217 & 218). 14 On October 20, 2020, the Debtor filed a Certificate of Service disclosing the recipients 15 that were sent a copy of the Second Amended Disclosure Statement and the Second Amended 16 Plan of Reorganization via first class mail (Docket No. 220). Swasky was not included in the 17 mailing list or in the certified mail receipts that were attached to the Certificate of Service. 18 On October 15, 2020, the court rendered an Order and Notice informing the parties that a 19 hearing would be held on December 8, 2020 to consider the Second Amended Small Business 20 Disclosure Statement and the Second Amended Small Business Plan of Reorganization (Docket 21 No. 216). According to the Certificate of Service (Docket No. 219) notice of the Order and Notice 22 (Docket No. 216) was sent by the Bankruptcy Noticing Center on October 17, 2020 via first class 23 mail to the following address: 24 Swaski Petroleum Corp. 25 Resident Agent Muhanad Hassan Hilmi 26 PO Box 3261 Valle Arriba Height Carolina, PR 00984-3261. 27 1 On December 8, 2020, a confirmation hearing was held in which the court approved the 2 Second Amended Small Business Disclosure Statement and the Second Amended Small Business 3 Plan dated October 9, 2020 (Docket No. 226). The Order Approving Disclosure Statement and 4 Confirming Plan was entered on December 8, 2020 (Docket No. 227). According to the 5 Certificate of Service (Docket No. 228 & 229) notice of the Minutes and the Order Approving 6 Disclosure Statement and Confirming Plan (Docket Nos. 226 & 227) were sent by the Bankruptcy 7 Noticing Center on December 10, 2020 via first class mail to the following address: 8 Swaski Petroleum Corp. 9 Resident Agent Muhanad Hassan Hilmi 10 PO Box 3261 Valle Arriba Height Carolina, PR 00984-3261 11

12 On December 22, 2020, the Debtor and Route 65 filed a Joint Motion Requesting Entry 13 of Order to Transfer Certain Properties Pursuant to 11 U.S.C. §363 free and clear of all claims, 14 liens, and interests, including, without limitation any liens and encumbrances that may have been 15 assessed and/or registered in the Municipal Revenue Collection Center (“CRIM”), the Puerto 16 Rico Treasury Department, and the Registry of the Property of Puerto Rico, as Debtor submits 17 that at least one of the requirements of Section 363(f) of the Bankruptcy Code if not more, are 18 met since upon information and belief, Route 65 is the only entity that holds liens over the 19 Property (Docket No. 230). The Joint Motion further states that, “… any entity holding claims 20 and/or other interests on the Property or the relief to be granted by the Order approving this 21 Motion will receive notice of the instant motion (the “Sale Motion”). Accordingly, all parties in 22 interest will be given sufficient opportunity to object to the relief requested herein. To that extent, 23 however, any such entity that does not object to the Sale Motion shall be deemed to have 24 consented to the relief sought herein” (Docket No. 230, pg. 5). On December 23, 2020, Route 65 25 filed a Certificate of Service informing that a printed copy of the Joint Motion Requesting Entry 26 of Order to Transfer Certain Properties Pursuant to 11 U.S.C. §363 (Docket No. 230) was sent 27 via first class mail on December 22, 2020 to non-CM/ECF participants as per the master address 1 list (Docket No. 232). Route 65 attached copy of the envelopes that were sent to the non-CM/ECF 2 participants with their respective printed address. The printed address on the envelope for Swasky 3 was the following: 4 Swaski Petroleum Corp. 5 Resident Agent Muhanad Hassan Hilmi 6 PO Box 3261 Valle Arriba Height Carolina, PR 00984-3261 7 The third line of the address which included the words, “Valle Arriba Height” were 8 handwritten on the envelope (Docket No. 232-1, pg. 13) 9 10 Thereafter, on January 13, 2021, the Court granted the Joint Motion Requesting Entry of 11 Order to Transfer Certain Properties Pursuant to 11 U.S.C. §363 (Docket No. 237). The Order 12 of the Court by which it granted the Joint Sale Motion included the following language regarding 13 notice to interested parties: “[n]otice of all pleadings was provided by the Debtor to all creditors 14 and parties in interest including: (i) all entities, parties, or persons that, or that are known to, hold 15 or have asserted any lien, claim, action, mortgage, attachment, encumbrance or interest in or upon 16 or related to the Property or against the Debtor and/or its estate collectively, the “Interests”); (ii) 17 18 all federal, state and local regulatory or taxing authorities or recording offices which have 19 reasonably known interest; (iii) all parties to any and all contracts, if any, with the Debtor, and 20 (iv) all creditors of this estate listed in the creditor matrix. As evidenced by the record of this case, 21 the same was good, sufficient and appropriate.” (Docket No. 237, pg. 2). Swasky was not included 22 as a recipient of the Order granting motion to sell property free and clear of liens pursuant to the 23 Certificate of Service. (Docket No. 241). 24 On January 15, 2021, Swasky filed an Objection to the Joint Motion Filed at Docket No. 25 26 230 and in Request of Order (Docket No. 238). On said date Swasky also filed a Motion for 27 Reconsideration of Order (Docket No. 237) (Docket No. 239). On January 15, 2021, Swasky filed a Motion Submitting Exhibit related to Docket No. 239 (Docket No. 240). The exhibit is the 1 2 registered deed of the lease contract between the Debtor and Swasky Petroleum Corporation. 3 On January 25, 2021, the Debtor filed a Motion Requesting Additional Time to Reply to 4 Swasky Petroleum Corp.’s Motions at Dockets 238, 239 and 240 and said extension was granted 5 on January 26, 2021 (Docket Nos. 242 & 243). On February 1, 2021, the Debtor and Route 65 6 filed a Joint Motion in Reply to Swasky Petroleum, Corp.’s Motions at Dockets 238, 239 and 240 7 (Docket No. 245). 8 On February 1, 2021, Swasky filed a Motion Requesting Leave to File Reply (Docket No. 9 10 245) and the same was granted on February 2, 2021 (Docket Nos. 246 & 247). On February 12, 11 2021, the Debtor filed a notice of change of address by which it stated that the mailing address of 12 Swasky was undeliverable (Docket No. 249). This form is signed by the Debtor or the Debtor’s 13 attorney and next to the signature the date of February 12, 2021 is typed. The form discloses that 14 the reason that it was undeliverable was that it was not deliverable as addressed. The form lists 15 the “Undeliverable Mailing Address” as: 16 Swaski Petroleum Corp. 17 Resident Agent Muhanad Hassan Hilmi 18 PO Box 3261 Valle Arriba Heights 19 Carolina, PR 00984-3261

20 The form lists the “Updated Mailing Address” as:

21 Swaski Petroleum Corp. 22 Resident Agent Muhanad Hassan Hilmi PO Box 3261 23 Valle Arriba Heights Carolina, PR 00985 24 On February 22, 2021, Swasky filed its Reply to Response to Opposition (Docket No. 245) 25 (Docket No. 251). On February 22, 2021, Swasky filed a motion requesting Leave to File 26 Language Spanish Documents and Request for an Extension of Time to File Translations and the 27 1 same was granted on February 23, 2021 (Docket Nos. 252 & 253). On March 15, 2021, Swasky 2 filed a Motion Submitting English Language Translation of Documents Filed in Spanish (Docket 3 No. 255). Subsequently, on April 19, 2021, the Debtor and Route 65 filed a Joint Motion in Reply 4 to Swasky Petroleum, Corp.’s Motion at Docket 251 (Docket No. 257). 5 6 Position of the Parties 7 Swasky 8 Swasky discloses in its Motion for Reconsideration of Order at Docket No. 237 (Docket 9 No. 239) that, “[t]he appearing party was served a copy of this request via regular mail.” Swasky 10 requests reconsideration of the Order based on the following arguments: (i) the Court granted the 11 Joint Sale Motion on January 13, 2021, two (2) days before the deadline provided by Fed. R. 12 Bankr. P. 9006 for the appearing party to file its opposition; (ii) it was not notified to its office 13 address of record. Instead, the communications and filings related to this issue apparently were 14 sent to a PO Box address located with zip code 00984. Its zip code is 00985. The Debtor through 15 its February 12, 2021 filing admits that the mail sent to Swasky was undeliverable and corrects 16 the zip code. “Thus, it was impossible for Swasky to timely oppose a plan transferring the property 17 that it is legally leasing, when in reality it was never notified of this; and (iii) under local non- 18 bankruptcy law, a property lease issued through a public deed that was presented and registered 19 at the Puerto Rico Property Registry would survive even in the event that said property was 20 transferred to a third party. For purposes of non-bankruptcy law, the date of that registration is 21 the date that the public deed was presented at the Registry for the first time. See 30 L.P.R.A. 22 §6034. As a result, for purposes of this case the date of registration of the lease in controversy is 23 August 13, 2014, which was the day that public deed was originally presented. A subsequent 24 transfer of a real property through this bankruptcy proceeding cannot extinguish the validity of 25 the lease, since it would be prohibited by the state law referenced in the motion in opposition and 26 the motion for reconsideration, which would be in contravention to 11 U.S.C. §363(f) (Docket 27 Nos. 239 & 251). 1 The Debtor and Route 65 2 The Debtor and Route 65 contend that: (i) Swasky had been informed that its lease would 3 be rejected since at least the filing of the Amended Plan and Disclosure Statement October 9, 4 2020, Dockets 212 and 213, which were notified to the Master Address list and specifically to 5 Swasky; (ii) due notice of all those filings was given to Swasky. Swasky did not file a notice of 6 appearance to object to the stipulation reached between Debtor and secured Creditor, Route 65. 7 Swasky had due notice of the stipulation since at least October 2, 2020; (iii) all the filings made 8 related to the Joint Stipulation were clear in stating that the transfer of the property would be made 9 “free and clear of all liens, encumbrances, claims and interests;” (iv) Swasky had notice of the 10 Stipulation for 140 days and did not object the same. The Stipulation was authorized since 11 October 13, 2020, and it was also included in the Second Amended Plan and the Second Amended 12 Disclosure Statement, which were approved and confirmed on December 8th, 2020; (v) Swasky 13 did not object the second amended disclosure statement and the second amended plan of 14 reorganization nor did it request reconsideration of the confirmation of the plan; (vi) Swasky’s 15 Lease was rejected through the Confirmed Plan. The Debtor chose to reject the executory contract 16 it had with Swasky pursuant to 11 U.S.C. §365(d)(2). Swasky did not make an appearance at any 17 time to object said rejection; (vii) Swasky was under advisement of the rejection and the sale of 18 the property to the Mortgage Holder, Route 65. In fact, Swasky had due notice of the filing of the 19 Bankruptcy since May 4, 2018; (viii) Route 65 is the holder of the two mortgage notes that are 20 registered before Swasky’s Lease at the Property Registry and also has a judgment in its favor for 21 the foreclosure of its mortgage notes. The commercial property serves as collateral for creditor 22 Route 65 secured claims, which is the largest secured creditor in this case; (ix) the Property has 23 no equity and the stipulation and deed in lieu of foreclosure will alleviate the estate in as much as 24 it will reduce the amounts due by Debtor, eliminating Route 65’s claims and CRIM’s secured 25 claim No. 2 in the amount of $30,575; (x) the effect of the Order of Sale free and clear of all liens, 26 would be the same through the Bankruptcy Court as if the Debtor and Route 65 would request 27 jointly lift of stay to allow Route 65 to execute its Judgment for foreclosure; (xi) the Debtor 1 submits that at least one of the requirements of 11 U.S.C. §363(f) if not more, are met since upon 2 information and belief, Route 65 is the only entity that holds registered preferential liens over the 3 Property; and (xii) the transfer is in the best interest of the bankruptcy estate (Docket Nos. 245 & 4 257). 5 Legal Standard for a Motion for Reconsideration 6 A motion for reconsideration of an order or judgment is not recognized by the Federal 7 Rules of Civil Procedure. In re Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999) aff'd, 8 2001 WL 958803 (1st Cir. 2001) (citing Van Skiver v. United States, 952 F. 2d 1241, 1243 (10th 9 Cir. 1991)). Federal courts treat such a motion as either a motion to alter or amend judgment 10 under Fed. R. Civ. P. 59(e) or a motion for relief of judgment under Fed. R. Civ. P. 60(b). “These 11 two rules are distinct; they serve different purposes and produce different consequences. Which 12 rule applies depends essentially on the time a motion is served. If a motion is served within 13 fourteen (14) days of the rendition of judgment, the motion ordinarily will fall under Rule 59(e). 14 If the motion is served after that time, it falls under Rule 60(b). Id. 15 In the instant case, Swasky's motion for reconsideration was filed within fourteen (14) 16 days from the date that the dismissal order entered. Therefore, the motion will be treated as one 17 under Fed. R. Civ. P. 59(e) made applicable here through Fed. R. Bankr. P. 9023. 18 Fed. R. Civ. P. 59(e) authorizes the filing of a written motion to alter or amend a judgment 19 after its entry. The motion must demonstrate the “reason why the court should reconsider its prior 20 decision” and “must set forth facts or law of a strongly convincing nature” to induce the court to 21 reverse its earlier decision. Pabon Rodriguez, 233 B.R. at 218 (citations omitted). The movant 22 “must either clearly establish a manifest error of law or must present newly discovered evidence.” 23 Id. See also; BBVA v. Vazquez (In re Vazquez), 471 B.R. 752, 760 (B.A.P. 1st Cir. 2012), citing 24 Aybar v. Crispin–Reyes, 118 F.3d 10, 16 (1st Cir. 1997). The party cannot use a Rule 59(e) 25 motion to cure its own procedural failures or to introduce new evidence or advance arguments 26 that could and should have been presented originally to the court. Id. Generally, when a party is 27 made aware that a particular issue will be relevant to its case but fails to produce readily available 1 evidence pertaining to that issue, the party may not introduce that evidence to support a Rule 2 59(e) motion. Id. Neither can the party use this motion to raise novel legal theories that it had the 3 ability to address in first instance. Id. The federal courts have consistently stated that a motion for 4 reconsideration of a previous order is an extraordinary remedy that must be used sparingly 5 because of interest in finality and conservation of scarce judicial resources. Id. In practice, Fed. 6 R. Civ. P. 59(e) motions are typically denied because of the narrow purposes for which they are 7 intended. Id. 8 Discussion 9 The first issue that Swasky brings forth in its Motion for Reconsideration is the lack of 10 due process given that it filed its objection to the Joint Motion Requesting Entry of Order to 11 Transfer Certain Properties Pursuant to 11 U.S.C. §363 within the objection time allotted under 12 Fed. R. Bankr. P. 9006(f)2 for those parties that were served a copy of the motion via regular mail. 13 Swasky filed its objection to the Joint Motion Requesting Transfer of Certain Properties on 14 January 15, 2021, that is twenty-four (24) days from December 22, 2020 which was the date that 15 motion was filed, and within the period it has to object with the additional three (3) days. The 16 court admits that it improvidently entered the Order granting the Joint Motion Requesting 17 Transfer of Certain Properties two (2) days before the objection period lapsed for those parties 18 that had been served by regular mail. The court is cognizant that Swasky admits in its motion for 19 consideration that it was served a copy of this request via regular mail, despite the fact that the 20 Joint Motion Requesting Entry of Order to Transfer Certain Properties was mailed to the address 21 with the wrong zip code; that is 00984 instead of 00985. Notwithstanding, Swasky filed its 22 objection timely. 23 The court notes that on February 12, 2021, the Debtor filed a notice of change address 24 regarding Swasky’s mailing address that discloses that the mailing address with the zip code 25

26 2 Fed. R. Bankr. P. 9006(f) provides: “[w]hen there is a right or requirement to act or undertake some proceedings within a prescribed period after being served and that service is by mail or under Rule 5(b)(2)(D) (leaving with the 27 clerk) of (F) (other means consented to) F.R. Civ. P., three days are added after the prescribed period would otherwise expire under Rule 9006(a)” Fed. R. Bankr. P. 9006(f). 1 00984 was undeliverable and the updated mailing address has the zip code 00985 which is the 2 only change in the mailing address. The form discloses that the reason that it was undeliverable 3 was that it was not deliverable as addressed (Docket No. 249). The court has not been placed in 4 a position to determine whether the Debtor received one or more notifications as to Swasky 5 having an undeliverable mailing address given that the Debtor used the mailing address with the 6 zip code 00984 for various motions, and orders.3 7 The Debtor listed Swasky’s address as: PO Box 3261; Valle Arriba Heights; Carolina, PR 8 00984 in its Chapter 11 bankruptcy petition (Docket No. 1, pg. 23). On October 3, 2020, the 9 Debtor filed a Notice and Certificate of Service informing that a true and exact copy of the Joint 10 Stipulation filed under docket entry no. 202 and the Motion to Shorten Time filed under docket 11 entry no. 203 had been sent by regular mail to Swasky Petroleum Corp. through its Resident 12 Agent Mr. Muhanad Hassan Hilmi to the following mailing address: PO Box 3261 Valle Arriba 13 Heights Carolina, PR 00985. On October 13, 2020, the Court approved the Joint Stipulation 14 (Docket No. 214). However, pursuant to the Certificate of Service, Swasky was not sent a 15 notification of the Order approving the Joint Stipulation (Docket Nos. 217 & 218). 16 On October 20, 2020, the Debtor filed a Certificate of Service disclosing the recipients 17 that were sent a copy of the Second Amended Disclosure Statement and the Second Amended 18 Plan of Reorganization via first class mail (Docket No. 220). In this Second Amended Disclosure 19 Statement and Second Amended Plan, the Debtor discloses that it will reject Swasky’s lease for 20 the first time. The court notes that the Debtor in the prior two disclosure statements and plans of 21 reorganizations had assumed the lease with Swasky. However, Swasky was not included in the 22 mailing list or in the certified mail receipts that were attached to the Certificate of Service. 23 On October 15, 2020, the court entered an Order and Notice informing the parties that a 24 hearing would be held on December 8, 2020 to consider the Second Amended Small Business 25 Disclosure Statement and the Second Amended Small Business Plan of Reorganization (Docket 26

27 3 The court notes that in addition to the incorrect zip code the Debtor also incorrectly spelled Swasky by addressing the correspondence to “Swaski.” 1 No. 216). According to the Certificate of Service, notice of the Order and Notice (Docket No. 2 216) the Bankruptcy Noticing Center on October 17, 2020 sent Swasky the notice of the 3 confirmation hearing via first class mail to the address with the 00984-3261 zip code. (Docket 4 No. 219). 5 Thereafter, on December 10, 2020 the Bankruptcy Noticing Center sent Swasky the 6 Minutes and the Order Approving Disclosure Statement and Confirming Plan that was entered 7 on December 8, 2020 via first class mail to Swasky’s address with the 00984-3261 zip code 8 (Docket Nos. 228 & 229). 9 The court finds that the only motion (document/order/notice) that was mailed to Swasky 10 to its correct zip code, namely 00985, was the Joint Stipulation Regarding Treatment of Claims 11 12, 13 and 14 and the Motion to Shorten Time. Moreover, on February 12, 2021, the Debtor filed 12 a notice of change of address by which it stated that Swasky’s mailing address with the 00984- 13 3216 zip code was undeliverable (Docket No. 249). 14 The court also finds, contrary to the Debtor and Route 65’s assertion, that Swasky was not 15 informed that its lease would be rejected because Swasky was not mailed a copy via First Class 16 Mail of the Second Amended Disclosure Statement and the Second Amended Plan of 17 Reorganization (Docket No. 220). The court concludes that the Joint Stipulation Regarding 18 Treatment of Claims 12, 13 and 14 and the Motion to Shorten Time were sent to Swasky’s correct 19 address. The Joint Stipulation does not include as part of its terms that the lease with Swasky will 20 be rejected. The language included in the Joint Stipulation that the transfer of the property No. 21 2,901 to Route 65 would be made “free and clear of all liens” does not equate or constitute a lease 22 rejection pursuant to 11 U.S.C. §365(d)(2). The Joint Stipulation further stated that, “[t]his 23 stipulation shall bind the parties and their respective successors, privies and assigns.” Docket No. 24 202, pg. 4, par. 8). The court concludes that the Joint Stipulation was sent via regular mail and 25 therefore is not in conformity with Fed. R. Bankr. P. 6006(a) and Fed. R. Bankr. P. 9014. Fed. R. 26 Bankr. P. 6006(a) states, “[a] proceeding to assume, reject, or assign an executory contract or 27 unexpired lease, other than as part of a plan, is governed by Rule 9014.” Fed. R. Bankr. P. 6006(a). 1 Fed. R. Bankr. P. 9014(b) provides in pertinent part, “[t]he motion shall be served in the manner 2 provided for service of a summons and complaint by Rule 7004 and within the time determined 3 under 9006(d). Any written response to the motion shall be served within the time determined 4 under Rule 9006(d). Any paper served after the motion shall be served in the manner provided by 5 Rule 5(b) F.R. Civ. P.” Fed. R. Bankr. P. 9014(b). 6 The constitutional right to due process in bankruptcy requires notice reasonably 7 calculated, under all the circumstances, to apprise interested parties of actions that may affect 8 their interests and afford them an opportunity to present their objections. United student Aid 9 Funds, Inc. v. Espinosa, 130 S.Ct. 1367, 1378 (2010). The fact that a party in interest is generally 10 aware of a pending bankruptcy proceeding does not by itself impose a burden on such party to 11 take specific action and does not relieve the debtor from giving reasonable and actual notice. In 12 re Arch Wireless, Inc., 534 F.3d 76, 83 (1st Cir. 2008). Reasonable notice to parties in interest 13 embodies a basic principle of justice, that an affected party must be given notice and an 14 opportunity to be heard before its rights are affected. In re Pick & Save, Inc, 478 B.R. 110, 118 15 (Bankr. P. R. 2012). Due notice is a critical factor in the context of determining whether an order 16 or judgment should be set aside. Parties whose interests are affected are entitled to receive 17 adequate and reasonable notice. Due notice is an elementary and fundamental requirement of due 18 process constitutional right. In re MMH Automotive Group, LLC, 385 B.R. 349, 357 – 358 19 (Bankr. S.D. Fla. 2008). The due notice requirement is particularly critical in bankruptcy as the 20 rules of construction authorize an act without an actual hearing after appropriate notice under the 21 particular circumstances and no objection is filed. 11 U.S.C. § 102. Thus, lack of due notice is 22 grounds for the setting aside of the order subject of the motion for reconsideration. 23 For the reasons stated herein, the court finds that Swasky was not properly notified that 24 the Debtor was rejecting its lease, thus Swasky was not able to object to the Second Amended 25 Disclosure Statement and Second Amended Plan of Reorganization whereby the Debtor rejected 26 its lease. Moreover, Swasky timely filed its objection to the December 22, 2020 Joint Motion 27 Requesting Entry of Order to Transfer Certain Properties Pursuant to 11 U.S.C. §363. The court 1 || concludes that Swasky did not employ its motion for reconsideration to cure its own procedural 2 || failures or to introduce new evidence or advance arguments that should have been presented 3 || originally to the court, but rather to establish a lack of due process in the lease rejection that stems 4 || from a lack of notice to Swasky by the Debtor. 5 The Debtor submits that at least one of the requirements of 11 U.S.C. §363(f) if not more, 6 met since upon information and belief, Route 65 is the only entity that holds registered 7 || preferential liens over the Property. The court finds that the Debtor’s statement as to its 8 || compliance with 11 U.S.C. §363(f) is vague and imprecise. 9 Conclusion 10 In view of the foregoing, Swasky’s Motion for Reconsideration of Order (Docket No. 237) 11 of the Order entered on January 13, 2021 granting the motion Requesting Entry of Order to 12 || Transfer Certain properties Pursuant to 11 U.S.C. $363 (Docket No. 230) (Docket No. 239) is 13 || hereby granted. 15 In San Juan, Puerto Rico, this 20" day of May 2021. 16

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