In Re Hawkeye Entertainment

“Under 11 U.S.C. § 365(b)(1), a debtor-in-possession may assume a lease only if it cures the default (or provides adequate assurances that it will), provides compensation for any actual pecuniary loss resulting from the default (or provides adequate assurances that it will) and provides adequate assurances of future performance under the lease.”

Smart Capital Investments leased out a portion of one of its buildings to Hawkeye Entertainment, LLC in Los Angeles, CA. The lease was under-market. Smart Capital attempted to terminate the lease claiming that Hawkeye had breached the lease agreement. Hawkeye filed a motion to assume the lease under 11 U.S.C. § 365(b)(1) and the bankruptcy court granted the motion. Smart Capital appealed this decision. Smart Capital argued that the bankruptcy court erred by not requiring Hawkeye to provide “adequate assurances of future performance under the lease.” 11 U.S.C. § 365. “Under 11 U.S.C. § 365(b)(1), a debtor-in-possession may assume a lease only if it cures the default (or provides adequate assurances that it will), provides compensation for any actual pecuniary loss resulting from the default (or provides adequate assurances that it will) and provides adequate assurances of future performance under the lease.” The Court found that the bankruptcy court erred by not finding that § 365(b)(1) was triggered, so the Court had to determine whether this was a reversible error. The Court found it was not a reversible error because while Smart Capital had a right to seek “adequate assurances of future performance under the lease” from Hawkeye, Hawkeye had already made promises to follow the agreement and Smart Capital failed to explain what additional assurances were required. AFFIRMED.