Anytime Fitness v. Thornhill Brothers, No. 22-30757 (5th Cir. 2023)
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Appellee attempted to use an “inversion table” located at an Anytime Fitness franchise. The equipment allegedly failed, and Appellee suffered neuromuscular injuries. Appellee filed a personal injury suit in Louisiana court against the franchise owner, Thornhill Brothers Fitness, LLC (“Thornhill”). An amended complaint named an additional defendant, franchisor Anytime Fitness, LLC (“Anytime”). Thornhill agreed to assign all rights it had “against Anytime Fitness LLC” to the Appellees, including any rights arising from “the indemnity agreement contained in the Franchise Agreement” between Thornhill and its franchise parent, Anytime. Anytime then protested in the bankruptcy court. The bankruptcy court vacated its prior order and allowed Anytime a hearing. But in July 2022, the bankruptcy court entered a new order ratifying the actions it took originally. Anytime appealed that July 2022 order and the district court affirmed. At issue on appeal is whether 11 U.S.C. Section 365(f) or any other portion of Title 11, authorizes a bankruptcy court’s approval of a debtor’s partial assignment of an executory contract.
The Fifth Circuit wrote that it does not and reversed the bankruptcy court’s contrary order and remanded. The court explained that it does not construe any other provision of the Code to permit circumvention of the court’s interpretation of Section 365(f). It’s true that the Code contains various catch-all provisions. But those catch-alls do not create substantive powers not committed to the bankruptcy court by some other section. The court wrote that since the bankruptcy court order at issue here does not satisfy Section 365, it does not matter whether it satisfied Jackson Brewing.
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