Paradigm Air Carriers, Inc. v. Texas Rangers Baseball Partners (In re Texas Rangers Baseball Partners)

Citations: 521 B.R. 134; 2014 Bankr. LEXIS 4336Docket: Bankruptcy No. 10-43400-DML-11; Adversary No. 11-04017-SGJ

Court: United States Bankruptcy Court, N.D. Texas; October 10, 2014; Us Bankruptcy; United States Bankruptcy Court

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The court issued a Memorandum Opinion and Order granting Paradigm's second motion for summary judgment against TRBP concerning a fraudulent transfer counterclaim. The case arises from the Chapter 11 bankruptcy of Texas Rangers Baseball Partners (TRBP), involving a Boeing 757 aircraft previously utilized by the Texas Rangers and the Dallas Stars. After the acquisition of the Rangers by Rangers Baseball Express LLC during bankruptcy, the new owner decided not to use the aircraft post-2010 season, which surprised Paradigm, the aircraft's lessor. Paradigm believed prior agreements would be honored and that the new owner would continue using the aircraft through the 2017 season. Following the sale, Paradigm filed a claim for $29.385 million in damages and initiated an adversary proceeding citing multiple breach of contract claims against TRBP, alongside seeking declaratory relief.

The court had previously issued a July 2013 Memorandum Opinion, which narrowed the issues at hand by ruling on earlier cross motions for summary judgment related to breach of contract claims and a motion to dismiss concerning TRBP's fraudulent transfer counterclaim against Paradigm and HSG Sports Group, LLC. The initial summary judgment motions focused on two breach of contract claims where Paradigm alleged TRBP violated obligations under two agreements requiring payments through 2017, specifically referencing a 2007 Aircraft Charter Agreement.

The document outlines key legal agreements involving Paradigm, HSG, and TRBP, focusing on the 2007 Charter Agreement and the Shared Charter Services Agreement (SCSA) executed on May 23, 2010. The SCSA was consented to by Paradigm and involved obligations for TRBP to make aircraft charter payments until 2017. A subsequent document, the First Amendment to the SCSA, executed on August 12, 2010, without Paradigm's consent, attempted to terminate these obligations. The timing of this amendment is significant as it was shortly after TRBP's bankruptcy plan was confirmed.

In the July 2013 Memorandum Opinion, the court ruled that Paradigm did not have a breach of contract claim against TRBP for the 2007 Charter Agreement, granting summary judgment to TRBP on that count. However, it found Paradigm to be a third-party beneficiary of the SCSA and determined that TRBP breached its obligations under this agreement by executing the amendment without Paradigm's consent. The court invalidated the amendment and confirmed that TRBP had failed to make required payments since fall 2010, granting summary judgment to Paradigm on this count and allowing for further proceedings to assess damages.

Additionally, the ruling addressed TRBP's Rule 12(b)(6) Motion related to a third-party complaint against HSG and a counterclaim against Paradigm. TRBP aimed to avoid the SCSA as a fraudulent transfer, arguing that it was executed with the intent to defraud its creditors. TRBP contended that if the SCSA was upheld as valid, it could still be avoided under the Bankruptcy Code due to the alleged fraudulent intent.

Paradigm and HSG filed a Rule 12(b)(6) Motion to dismiss TRBP's Avoidance Complaint, arguing that TRBP lacked constitutional standing to pursue avoidance actions since it had paid unsecured creditors in full under its chapter 11 plan, rendering any avoidance action without benefit to the estate. They also contended that TRBP’s Counterclaim did not adequately allege the elements of “actual fraud” under 11 U.S.C. § 548(a)(1)(A) or meet the particularity requirements of Fed. R. Civ. P. 9(b) as incorporated by Fed. R. Bankr. P. 7009. The court denied this motion in July 2013, affirming TRBP’s standing and the sufficiency of its pleading under the Bankruptcy Code.

Subsequently, Paradigm sought summary judgment on TRBP’s Counterclaim. Paradigm argued that TRBP’s Disclosure Statement failed to preserve its standing, a global settlement agreement eliminated TRBP’s standing for avoidance actions, and that Paradigm was a good-faith beneficiary under § 548(c) of the Bankruptcy Code. Additionally, they claimed TRBP was estopped from avoiding the settlement agreement after ratifying it, that TRBP's unclean hands barred its claim, and that executing the settlement agreement released any avoidance claims against Paradigm.

The court granted Paradigm's Second Motion for Summary Judgment regarding TRBP’s Counterclaim, stating that the Counterclaim was precluded by equitable estoppel and other doctrines, including the "contract assumption defense." The court concluded that TRBP was legally barred from pursuing the Counterclaim due to its circumvention of the Bankruptcy Code’s requirements.

Failure to provide adequate notice to Paradigm regarding TRBP’s intentions under the SCSA hindered Paradigm's ability to safeguard its interests in the related bankruptcy case. The bankruptcy court asserts jurisdiction over this Adversary Proceeding under 28 U.S.C. 1334(b), with core authority to issue final judgments, as supported by 28 U.S.C. 157 and the Northern District of Texas's Standing Order of Reference. Despite the Supreme Court's ruling in Stern v. Marshall, which deemed certain counterclaims unconstitutional, the court believes it has the constitutional authority to adjudicate the Counterclaim due to Paradigm's proof of claim and the intertwined nature of the claims. The court cites Katchen v. Landy and Langenkamp v. Culp to support its authority in avoidance actions against claimants. Should the court be deemed to lack constitutional authority, it will submit the ruling for de novo review by the District Court. Venue is established in this district per 28 U.S.C. 1409(a) because TRBP's chapter 11 case was filed here. 

Key parties include TRBP, a Texas general partnership and subsidiary of the Rangers Equity Entities, and Paradigm Air Carriers, Inc., which has provided air charter services to the Rangers and the Stars since 2003 under separate written contracts.

TRBP and Dallas Stars, LP entered into separate agreements for charter services, requiring Paradigm to transport the Rangers and Stars to away games using a Boeing 727. Paradigm managed communications, invoicing, and payments directly with both teams under these agreements. In early 2007, Hicks and Wikert initiated a plan to acquire a Boeing 757 to replace the 727, financing the acquisition through a new long-term charter services agreement with HSG, which would supersede the 2003 Agreements. They organized Southwest SportsJet, LLC (SWSJ) to own the Aircraft and secured a loan from Park Cities Bank to finance the purchase. The Aircraft would be leased to PAC, which had the necessary FAA operating permit, through its subsidiary, SAO. Cash flow from the new HSG charter services agreement would cover the loan, reserves, operational expenses, and profit margin.

In February 2007, Wikert instructed Ireland to establish SWSJ, and contact Hicks for his 50% ownership stake. SWSJ was formed on February 9, 2007, with Wikert holding all membership interests initially. On March 6, 2007, Ireland circulated documents related to SWSJ’s organization, draft agreements, and pro forma financials to Shilts, who confirmed Hicks would utilize Hicks SportsJet LLC to hold his interest. Ireland later requested executed documents from Hicks on March 9, 2007, which were provided by Darden. The loan from Park Cities was finalized, allowing SWSJ to acquire the Aircraft, followed by the Aircraft Lease Agreement between SWSJ and Paradigm on March 30, 2007.

The execution of the new charter services agreement was pending until Hicks received assurance that profits exceeding those in the pro forma financials would be shared between him and Wikert. Upon confirmation from Wikert, Hicks authorized proceeding with the 2007 Charter Agreement, which was signed on June 21, 2007. Under this agreement, Paradigm was to provide air travel for the Rangers and Stars to away games through 2017. It was confirmed that this agreement did not alter Paradigm's existing relationships with TRBP and Dallas Stars, LP, which continued to coordinate directly and make payments to Paradigm, while HSG handled the payments and reimbursements under an oral arrangement. TRBP and the Stars had acknowledged an agreement with HSG for reimbursement of expenses based on usage of charter services.

By late 2009, TRBP faced bankruptcy and plans to sell the Rangers were underway. Discussions began regarding the inclusion of the Aircraft and the 2007 Charter Agreement in the sale. On January 23, 2010, an Asset Purchase Agreement was made between HSG, TRBP, and others, addressing post-closing access to charter services, which initially posed issues for HSG and Hicks regarding the terms of the 2007 Charter Agreement. Subsequently, drafts of a new agreement titled "Non-Exclusive Aircraft Charter Agreement" were circulated, documenting the reimbursement obligations of TRBP to HSG, which later evolved into the “Shared Charter Services Agreement.”

An employee of TRBP conveyed the need to document an oral arrangement regarding the Rangers' use of a plane to ensure uninterrupted use post-filing. On May 7, 2010, Weil Gotshal, representing Hicks, HSG, and TRBP in a sale to Baseball Express, indicated that the "Sellers" anticipated Baseball Express would assume HSG's obligations under the 2007 Charter Agreement. On May 23, 2010, TRBP entered into an Asset Purchase Agreement (APA) with Baseball Express for the sale of the Rangers. To ensure continuity of transportation for the Rangers, HSG and TRBP executed a Shared Charter Services Agreement (SCSA) on the same date, allowing HSG to provide aircraft charter services under the 2007 Charter Agreement to TRBP and any subsequent purchasers. Prior to executing the SCSA, TRBP and HSG sought Paradigm’s written consent as required by Section 20 of the 2007 Charter Agreement, which stipulated that any lease or assignment required prior written consent. To document this consent, TRBP's and HSG's counsel prepared a "Consent to Shared Charter Services Agreement." On May 20, 2010, drafts of the SCSA and the consent were sent to Paradigm, which had not previously been informed about the SCSA's negotiation or TRBP’s planned asset sale. Paradigm's president expressed uncertainty about providing the necessary consent due to a lack of notice, and TRBP's CFO later reassured Paradigm that the agreement would not alter their economic arrangements.

On May 20, 2010, Ireland received emails from TRBP and its counsel explaining that the purpose of Agreement #2, the Shared Charter Services Agreement (SCSA), was to formalize TRBP's existing oral contractual payment obligations and facilitate their assumption by the buyer of the Texas Rangers baseball team. Ireland found this rationale reasonable. Later that day, Ireland provided comments on the draft SCSA, addressing various sections including the aircraft model and compliance with federal leasing regulations, while emphasizing HSG's ongoing liability under the original Aircraft Agreement unless released by Paradigm.

On May 21, 2010, following discussions about revisions to ensure compliance, TRBP’s counsel questioned the necessity of Paradigm’s consent for the agreement. However, Baseball Express' counsel asserted that Paradigm's consent was required as per the original agreement with HSG. Ultimately, TRBP's counsel revised the drafts to reflect Ireland’s comments. Section 5.1 of the final SCSA outlined multiple termination scenarios, including the completion of the sale of the Rangers, assignment of the Aircraft Agreement to Baseball Express with Paradigm's consent, or termination due to defaults by Paradigm. This section highlighted the conditional nature of the SCSA's duration, emphasizing its dependence on several factors including the status of the Aircraft Agreement and any defaults by Paradigm.

The SCSA (Shared Charter Services Agreement) is designed to align with the term of the 2007 Charter Agreement, extending through 2017 in the absence of specific circumstances. Key provisions within the SCSA outline the rights and obligations of the parties involved. HSG is obligated to uphold its responsibilities under the Aircraft Agreement, ensuring the continued provision of charter services from Paradigm for the Rangers, as detailed in Section 1.1. This includes using commercially reasonable efforts to manage insurance requirements set by Paradigm.

Section 3 of the SCSA specifies that TRBP (the party responsible for costs) will cover expenses related to the Rangers' use of the Aircraft but will not be liable for costs associated with the Stars’ usage. TRBP is also responsible for paying rent to Paradigm as per the schedule in Exhibit D, with payment methods outlined in Exhibit C.

Section 6.3 establishes that the SCSA constitutes the entire agreement regarding its subject matter, superseding all prior agreements. Amendments or waivers must be made in writing and specifically referenced.

The Paradigm Consent clarifies that HSG remains fully liable for all obligations under the Aircraft Charter Agreement, including rent payments, and does not establish any rights between Paradigm and TRBP. Furthermore, the SCSA is subordinate to the Aircraft Charter Agreement. Paradigm executed the Consent on May 23, 2010, with HSG as the sole signatory, and following the execution of the SCSA by TRBP and HSG, TRBP commenced direct payments to Paradigm for charter services rendered to the Rangers during mid-2010.

TRBP filed for Chapter 11 bankruptcy on May 24, 2010, the day after executing Agreement #2, the SCSA, and the Paradigm Consent. Alongside the bankruptcy filing, TRBP submitted a "prepackaged" Chapter 11 plan, asserting that no claims were impaired and thus a disclosure statement was unnecessary. However, a proposed disclosure statement was still filed. During the initial hearings, which Paradigm representatives did not attend, creditors opposed the prepackaged plan and the Asset Purchase Agreement (APA), referring to certain transactions executed shortly before the bankruptcy as “midnight transactions.” 

On June 15, 2010, the bankruptcy court addressed pre-confirmation matters, including class impairment and creditor notification. TRBP made amendments to the plan and disclosure statement in response to concerns raised, resulting in the First Amended Plan and the Amended Disclosure Statement. The court preliminarily determined that most classes under the plan were unimpaired and lacked voting rights, except possibly the lenders and the Rangers Equity Entities. Consequently, TRBP was only required to serve the Amended Disclosure Statement to these specific classes, while other creditors would receive a Non-Voting Notice regarding their status.

On June 21, 2010, the bankruptcy court issued an order approving the disclosure statement, outlining procedures for soliciting acceptance of the prepackaged plan, scheduling a confirmation hearing, and establishing notice and objection protocols. The Amended Disclosure Statement indicated that the SCSA would be assumed and assigned to Baseball Express or another purchaser under the APA. It also included a waiver of avoidance actions, indicating that the Debtor would waive rights to prosecute or recover actions under various sections of the Bankruptcy Code, aligning with the First Amended Plan's provisions.

Effective as of the Effective Date, the Debtor waives the right to pursue or recover on any avoidance actions under specific sections of the Bankruptcy Code, settling such claims for fair value. On June 21, 2010, TRBP served the Amended Disclosure Statement to certain creditors, excluding Paradigm, as a prerequisite for plan confirmation. Paradigm received a “Notice of Non-Voting Status” indicating that its claims against the Debtor were not impaired, and a “Confirmation Hearing Notice” asserting that all claims were unimpaired and would recover 100%. The Confirmation Hearing Notice also indicated that HSG Assigned Contracts, including Agreement 2 (the SCSA), would be assumed and assigned to the purchaser on the Plan's Effective Date. This information aligned with prior communications between TRBP and Ireland regarding the SCSA.

Following the approval of the Amended Disclosure Statement, the case dynamics shifted significantly. An independent Chief Restructuring Officer (CRO) was appointed due to involuntary bankruptcy cases against the Rangers Equity Entities, which then influenced plan negotiations in the TRBP bankruptcy. On June 25, 2010, TRBP filed its Second Amended Plan, which continued the waiver of chapter 5 avoidance actions. Due to challenges regarding the pre-petition sale agreement with Baseball Express, the court mandated an auction of TRBP’s assets, issuing a Bidding Procedures Order that outlined the auction process and included an amended Asset Purchase Agreement (APA) contingent upon an amendment to Agreement 2 (the SCSA) for its automatic termination following the 2010 MLB season. By July 12, 2010, TRBP was aware that the eventual winning bidder would acquire the Rangers under terms that required the termination of the SCSA after the season.

Paradigm did not receive notice of the Bid Procedures Order or the First Amendment to the Asset Purchase Agreement (APA). Instead, it was only informed about an Order Resetting Hearing related to the confirmation of the Second Amended Plan, which was set for August 4, 2010. Importantly, Paradigm was not notified that TRBP intended to terminate Agreement #2 (SCSA) after the 2010 season. On July 30, 2010, TRBP filed a third amended plan that unexpectedly removed the provision for waiving Chapter 5 causes of action, and this plan was not served on Paradigm according to an Affidavit of Mailing filed on August 3, 2010. 

Before the auction for the Rangers on August 4, 2010, the CFO of the Dallas Stars inquired if any changes had occurred, referencing Paradigm's belief that it would continue leasing charter services. TRBP's CFO responded that nothing had changed yet, which contradicted statements in the First Amendment to the APA and the Bid Procedures Order. The auction concluded with Baseball Express as the winning bidder, and on August 5, 2010, TRBP filed its Fourth Amended Plan, which retained Chapter 5 causes of action in section 13.5. This section allowed TRBP to retain and enforce claims against any person, including those arising under Chapter 5 of the Bankruptcy Code. Any settlement or compromise of these claims required consent from the First Lien Administrative Agent or approval from the Bankruptcy Court. However, TRBP and its estate would not retain any claims, rights, or causes of action beyond those specified.

Payments related to Assumed General Unsecured Claims, including those held by current or former employees or players of TRBP and the Texas Rangers, are addressed, alongside claims against individuals like Kellie Fischer and Nolan Ryan, as well as other TRBP employees who may transition to the Purchaser post-Effective Date. The document references "Schedule 13.5," which was intended to list Retained Causes of Action but was left blank in the Plan, indicating it was to be filed later. On August 5, 2010, TRBP and Baseball Express executed the "Second Amendment to Asset Purchase Agreement" (Second Amendment to APA), which amended the APA without significantly altering the conditions related to the SCSA’s termination or TRBP's payment obligations to Paradigm.

During a bankruptcy court hearing on the same day, the court reviewed modifications made to the plan since the filing of the First Amended Plan, particularly regarding retained causes of action and required notices. The court expressed confusion about the evolution of these issues and the adequacy of notice given to creditors, particularly concerning claims that would not be retained against certain employees and players. The court sought clarity on the difference between retaining claims and the actual pursuit of those claims, with Mr. Sosland confirming that retained claims would potentially include those listed on the forthcoming Schedule 13.5. The court also confirmed that all creditors were deemed unimpaired and that only the Chief Restructuring Officer voted on the plan.

Mr. Sosland, representing Equity, clarified that the references to misleading creditors were not applicable in this case. A critical point of contention was the inaccuracy regarding the first drafts of the plan, which suggested that they retained causes of action against the estate. In reality, the initial drafts waived those claims, while later drafts, which were not provided to Paradigm, indicated that causes of action would be preserved. The final Plan did not include a Schedule 13.5 detailing these retained causes of action prior to confirmation.

At the confirmation hearing, the focus was on a new rider that excluded certain claims against specific parties, including employees. On the same day, the court issued an Order Confirming the Plan of Reorganization for Texas Rangers Baseball Partners under Chapter 11 of the Bankruptcy Code. Subsequently, on August 10, 2010, the Debtor filed a Notice regarding the Second Amendment to the Asset Purchase Agreement (APA), which amended the APA without significantly altering the termination requirements.

On August 12, 2010, the Confirmed Plan became effective, detailing that the APA would be consummated and that TRBP would assume and assign executory contracts and unexpired leases associated with the sale, unless labeled as Excluded Contracts. The Confirmation Order authorized these assumptions and assignments under sections 365 and 1123(b) of the Bankruptcy Code, applying to all related agreements regardless of whether they were listed on any schedule. Counterparties failing to object to the assumptions and assignments were deemed to have consented. The SCSA was identified as an executory contract subject to these provisions and was not excluded from being assigned to Baseball Express.

On August 12, 2010, seven days after confirmation and the Plan Effective Date, HSG and TRBP executed a First Amendment to their Shared Charter Services Agreement (SCSA). This amendment limited HSG's obligation to provide charter services to TRBP solely for the Texas Rangers' 2010 MLB season, while also capping TRBP's payment responsibilities. The amendment specifically stipulated that the SCSA would terminate after the last game of the Rangers' 2010 season, including any postseason games, without any penalties for TRBP. TRBP was required to make specific monthly lease payments directly to Paradigm Air Operators, LLC, for aircraft use, including payments of $635,000 due on September 1, 2010, $615,000 on October 1, and another $615,000 on November 1, 2010. Notably, TRBP remained responsible for these payments despite any assignment of the Agreement.

Additionally, the amendment confirmed that all other terms of the original SCSA remained intact. On the morning of the amendment's execution, Paradigm’s President realized he lacked a fully executed copy of the original SCSA and sought it from TRBP’s counsel. Later that day, TRBP's counsel provided the executed copies of both the original SCSA and the amendment, but after reviewing the amendment, Paradigm's President asserted that Paradigm had not consented to any amendments. TRBP’s counsel responded by claiming that the amendment aligned with bankruptcy court rulings but did not clarify which rulings or the reasoning behind the amendment's drafting without Paradigm's consent. Despite these disputes, TRBP proceeded to make payments under the original SCSA in September and October 2010.

On August 23, 2010, the court issued findings of fact and conclusions of law related to the Confirmation Order, introducing Schedule 13.5, which listed "Retained Causes of Action," including those concerning the Midnight Transfers, which involved allegations of fraudulent transfer and breach of fiduciary duty. Notably, Paradigm was not specifically named in Schedule 13.5. Subsequently, on October 12, 2010, the court released Amended Findings of Fact and Conclusions of Law, reaffirming the significance of the Asset Purchase Agreement and related transactions as vital to the Plan. The Amended Conclusions asserted that the Asset Purchase Agreement was fair, reasonable, and not intended to defraud creditors. 

Following the notification of Agreement #3 and the SCSA amendment, Paradigm filed Claim No. 57 on August 23, 2010, for alleged contractual breaches under the 2007 Charter Agreement and the SCSA. Paradigm initiated an Adversary Proceeding by filing an Original Complaint on February 2, 2011, which included the Proof of Claim and sought state law remedies for breach of contract and declaratory judgment. The Proof of Claim was consolidated into this proceeding. Paradigm later submitted a First Amended Complaint, and both parties filed competing summary judgment motions on March 18, 2011. During a hearing on April 11, 2011, TRBP argued it bore no contractual liability to Paradigm due to the SCSA's assignment to Baseball Express. The presiding judge inquired about joining Baseball Express as a necessary party, to which TRBP's counsel responded that they would wait until after the motions were resolved. The judge dismissed Paradigm’s Count Three, related to an alter ego claim, but held the remaining counts for further consideration.

On May 16, 2011, Judge Lynn indicated that Baseball Express and HSG were necessary parties under Federal Rule of Civil Procedure 19(b)(1)(B) and (2) and requested Paradigm to join them in the proceedings. Paradigm responded on May 27, 2011, asserting that neither entity qualified as a "Required Party" under Rule 19 and sought to brief the issue. On June 9, 2011, Judge Lynn issued an order allowing Baseball Express and HSG to intervene under Rule 24 but stated they were not required to be impleaded under Rule 19. Baseball Express subsequently filed a Notice of Intervention on June 30, 2011, leading to numerous counterclaims and procedural motions that delayed the case for about a year. 

On May 12, 2012, after Judge Lynn recused himself, the case was transferred, and a Stipulated Judgment was reached, dismissing Baseball Express from the proceeding and affirming it had no liability for rental obligations under the Aircraft Agreements. On May 24, 2012, TRBP filed a Third-Party Complaint against HSG and a Counterclaim against Paradigm, arguing that if a certain agreement was found invalid, it could void obligations as an actual fraudulent transfer under section 548(a)(1)(A) of the Bankruptcy Code. Paradigm, along with HSG, moved to dismiss the Counterclaim, while cross-motions for summary judgment were filed by TRBP and Paradigm. The court issued a Memorandum Opinion on July 10, 2013, ruling that Paradigm did not have a breach of contract claim against TRBP concerning the 2007 Charter Agreement but was a third-party beneficiary of another agreement.

SCSA identified TRBP as having breached its obligations to Paradigm under the Agreement, specifically regarding the Amendment to the SCSA executed without Paradigm’s consent. The court invalidated this Amendment and found further breaches by TRBP, particularly the failure to make required payments to Paradigm since fall 2010. Additionally, the court determined that further proceedings were needed to assess Paradigm's allowable claim due to TRBP's breach of Agreement #2.

In relation to Paradigm's and HSG's Rule 12(b)(6) Motion concerning the Avoidance Complaint, the court's July 2013 Memorandum Opinion concluded that TRBP had constitutional standing and adequately pled elements of section 548(a)(1)(A) of the Bankruptcy Code, allowing TRBP to pursue fraudulent transfer claims against Paradigm and HSG. On March 14, 2014, Paradigm filed a Second Motion for Summary Judgment to dismiss TRBP’s Counterclaim, which aimed to eliminate the Avoidance Complaint and enable Paradigm to recover on its breach of contract claim.

In August 2011, TRBP and the Plan Administrator initiated a lawsuit against Hicks and Ballpark Real Estate in Dallas County, coinciding with JP Morgan Chase Bank’s lawsuit in bankruptcy court against TRBP and HSG Holdings. After a petition to withdraw the reference, both cases were consolidated. Seventeen months later, on January 7, 2013, an HSG Settlement Agreement was executed, releasing all claims by TRBP against HSG and related parties pertaining to the bankruptcy case or ownership of HSG. HSG was dismissed from the Adversary Proceeding on January 17, 2014, leaving Paradigm as the sole counter-defendant concerning the Avoidance Complaint.

Summary judgment can be granted when the evidence shows no genuine material fact issue exists, entitling the movant to judgment as a matter of law. A genuine issue is present if reasonable evidence could lead a fact finder to favor the non-movant, and the court must view evidence favorably to the non-moving party, resolving factual controversies only when actual contradictions exist in the submitted evidence.

A movant must initially meet its burden in a legal proceeding, prompting the non-movant to produce specific evidence demonstrating a genuine issue of fact. The non-movant cannot rely solely on vague allegations or pleadings but must present concrete facts to contest a motion for summary judgment. Summary judgment is appropriate if the non-movant does not sufficiently establish an essential element of their case.

In this context, TRBP has filed an Avoidance Complaint/Counterclaim to avoid Agreement #2, known as the Shared Charter Services Agreement (SCSA), as an actual fraudulent transfer under section 548(a)(1)(A) of the Bankruptcy Code. TRBP alleges that the SCSA is an obligation incurred within two years prior to filing the petition, made with the intent to hinder, delay, or defraud TRBP’s lenders.

To succeed, TRBP must prove four elements: 1) the existence of an obligation; 2) that it was incurred within two years of the bankruptcy filing; 3) it was either voluntary or involuntary; and 4) it was incurred with fraudulent intent towards creditors. The Avoidance Action asserts that when TRBP executed the SCSA, it was already indebted to the lenders for at least $75 million, and the agreement was intended to obstruct the lenders' rights by executing transactions just before bankruptcy. 

TRBP claims that the SCSA was unnecessary for the sale to Baseball Express, as HSG could have directly engaged without TRBP's involvement. The agreement was viewed as a means to prioritize HSG’s obligations over the lenders’ claims, leading to unnecessary litigation that further obstructed the lenders’ collection efforts. Additionally, it emphasizes that both TRBP and HSG, under Hicks’s control, had the intent to defraud the lenders, as evidenced by their actions surrounding the agreement.

Obligations incurred by TRBP benefited HSG and Hicks, insiders at the time of the transaction, with TRBP and HSG sharing officers and lacking arms-length negotiations regarding the Shared Charter Services Agreement (SCSA). The terms of the Paradigm-HSG Charter Agreement (2007 Charter Agreement) were above market, and these terms were effectively transferred to TRBP through the SCSA, despite Baseball Express agreeing to a short-term sublease. A prior multi-year agreement for air charter services between HSG and TRBP was unenforceable, making a direct agreement unnecessary for the Baseball Express sale. HSG was insolvent during the transaction and, having control over TRBP, aimed to limit liabilities by imposing long-term obligations on TRBP, which could be satisfied through the sale proceeds. The transaction occurred shortly before TRBP's bankruptcy filing, following the acceleration of indebtedness under Credit Agreements and HSG's failure to obtain necessary Lender approval for the sale. Hicks, as a direct or indirect owner of SW Sports Jet, stood to benefit from the arrangement. The court previously found that TRBP sufficiently pled elements under section 548(a)(1)(A) of the Bankruptcy Code. Paradigm has since moved for summary judgment on the Avoidance Complaint/Counterclaim, arguing that: 1) TRBP’s Amended Disclosure Statement compromised its standing, judicially estopping it from pursuing section 548 actions; 2) the Counterclaim is barred by Paradigm’s good-faith beneficiary status under section 548(c); 3) TRBP is estopped from avoiding the SCSA after ratifying it and accepting its benefits; and 4) TRBP’s unclean hands prevent it from seeking avoidance of the Agreement.

The court addresses several key arguments regarding Paradigm's defenses against TRBP’s Counterclaim. Firstly, regarding items (2), (3), and (4), the court determines that Paradigm's defenses lack merit as a matter of law, leading to the denial of Paradigm’s request for summary judgment on these points. For item (5), while the court acknowledges that Paradigm's defense related to the HSG Settlement Agreement could potentially defeat the Counterclaim at trial, there are unresolved factual issues regarding the actual release terms and TRBP's intent, making summary judgment inappropriate.

On the standing and judicial estoppel argument (item 1), the court finds these defenses do not apply, yet notes that equitable estoppel and the contract assumption defense prevent TRBP from asserting the Counterclaim. 

In analyzing item (2), the court finds that Paradigm's reliance on section 548(c) of the Bankruptcy Code as a defense is not valid due to disputed facts about whether Paradigm provided value to TRBP in exchange for its obligations under Agreement 2 (the SCSA). Specifically, TRBP may have gained no benefit from Paradigm, as it previously had an informal agreement with HSG for aircraft use, which the SCSA formalized without Paradigm contributing additional value. HSG was required to acknowledge that the SCSA did not alter its obligations to Paradigm under the prior agreement.

The 2007 Charter Agreement is central to the dispute, with Paradigm contending it provided charter services to TRBP, yet evidence suggests Paradigm merely fulfilled its existing obligations to HSG under the same agreement. There are unresolved factual disputes regarding the value Paradigm provided, despite its use of the Aircraft for six months, for which it was compensated by TRBP. Consequently, Paradigm's defense under section 548(c) is ineffective as a matter of law, necessitating a trial to assess the credibility of conflicting evidence.

Paradigm further argues that TRBP's postpetition acceptance of charter services constitutes ratification of Agreement #2, thereby estopping TRBP from pursuing its Counterclaim. However, the court finds that the cited cases do not substantiate Paradigm's defense. Generally, a debtor cannot implicitly assume an executory contract without following the required procedures under section 365(b) and Bankruptcy Rule 6006, including providing notice to interested parties. Paradigm's assertion that TRBP's postpetition actions imply an assumption of the agreement is legally unsound, with disputed facts about whether TRBP's conduct amounted to ratification.

Additionally, Paradigm's "unclean hands" defense, which argues that TRBP's alleged misconduct prevents it from asserting the Counterclaim, is also deemed unsuccessful as a matter of law. Summary judgment is denied for all defenses presented by Paradigm.

Paradigm contends that TRBP has acted in bad faith by secretly planning to terminate the SCSA and unlawfully doing so without Paradigm's consent, while also attempting to bypass proper procedures under section 365 of the Bankruptcy Code. However, the court finds that Paradigm's unclean hands defense lacks supporting case law, as no precedent exists indicating that a debtor-in-possession’s postpetition conduct can invoke this defense against a fraudulent transfer claim under section 548. Additionally, the court points out that an unclean hands defense would involve complex factual determinations needing live witness testimonies, thus denying Paradigm's summary judgment on this defense.

Regarding Paradigm's claim that TRBP's counterclaim is barred due to a release under the HSG Settlement Agreement, the court clarifies that Paradigm was neither a signatory nor involved in the agreement. Paradigm argues it qualifies as a released affiliate of Hicks, claiming a chain of control through Hicks SportsJet and SW SportsJet. The court, applying Texas law, states that to be classified as an affiliate, Paradigm must demonstrate it is controlled by or under common control with Hicks. The undisputed facts do not establish such a relationship, leading the court to conclude that Paradigm does not qualify as an "affiliate of Hicks" under the terms of the HSG Settlement Agreement.

The court has determined that even if Paradigm qualifies as an “affiliate of Hicks,” a factual dispute exists regarding whether the language of the Release covers the claims in the Adversary Proceeding, including the Counterclaim, particularly concerning Agreement #2 (the SCSA). The Texas Supreme Court stipulates that for a release to be effective, the claim must be mentioned in the releasing document, though it does not need to be described in detail. The court will evaluate the parties' intentions at the time of the release, considering the entire document and its context.

In this case, the HSG Settlement Agreement does not mention the Adversary Proceeding, the Counterclaim, Agreement #2, Paradigm, or the Aircraft. Additionally, a pleading by TRBP indicates that several parties, including TRBP and HSG, entered into a Settlement Agreement that included mutual releases. HSG claims that TRBP released its third-party claim against it through this Settlement Agreement, a position TRBP disputes. The relevance of the Avoidance Claim is tied to the claims by the Paradigm Parties against TRBP under the SCSA, which the court has determined are obligations incurred for the Paradigm Parties' benefit.

TRBP seeks to dismiss HSG from the Adversary Proceeding but wishes to ensure that this dismissal does not affect the Avoidance Claim against the Paradigm Parties. Paradigm objected to language in TRBP's request that would clarify this point, and the court ultimately did not include it in the dismissal order. Thus, while TRBP argues that the HSG Settlement Agreement does not release claims related to the SCSA, it simultaneously seeks to dismiss HSG based on what it interprets as a release in that Agreement. The conflicting facts lead to uncertainty regarding the Release's intended scope, particularly whether it includes the Counterclaim's language “actions arising out of the Bankruptcy Case.” The court concludes that this is a factual issue requiring resolution at trial, rendering summary judgment inappropriate at this stage.

Paradigm contends that TRBP’s Amended Disclosure Statement, approved by the court, waived all causes of action, including avoidance actions, thus judicially estopping TRBP from pursuing section 548 avoidance actions. Judicial estoppel aims to prevent parties from taking inconsistent positions across proceedings and requires three conditions: 1) clear inconsistency in the party's positions, 2) acceptance of the previous position by the court, and 3) the inconsistency must not be inadvertent. Paradigm argues that TRBP initially declared a waiver of Chapter 5 avoidance actions but later attempted to retain them without proper notice. Additionally, Paradigm points out that TRBP indicated it would assume Agreement #2 but then sought to amend it without adequate notice. 

Before addressing Paradigm's judicial estoppel claims, the court must determine if TRBP has standing to assert the Counterclaim based on the retention language in its Confirmed Plan. Typically, upon confirmation of a Chapter 11 plan, a debtor loses its status as a debtor-in-possession and may lose standing to pursue estate claims. However, section 1123(b)(3) of the Bankruptcy Code allows a debtor to retain standing by reserving claims in the reorganization plan. The plan can enable the debtor or an appointed representative to pursue claims post-confirmation, as long as those claims were reserved; otherwise, they may be lost.

The Fifth Circuit's ruling in United Operating LLC mandates that a reorganization plan must include a "specific and unequivocal" reservation of claims for the debtor to maintain standing to pursue those claims after bankruptcy. General reservations like “any and all claims” do not suffice; the reservation must clearly inform creditors about the claims the debtor intends to pursue post-confirmation. This clarity enables creditors to assess whether the plan adequately resolves issues before voting on it. Without precise retention language, creditors cannot make informed decisions regarding their potential benefits and liabilities.

Additionally, bankruptcy courts may review both the disclosure statement and the plan to evaluate the specificity of the retention language. While the Fifth Circuit emphasizes standing, the underlying theme relates to the concept of notice, suggesting that the matter leans more towards judicial estoppel.

In the case at hand, there was a conflict between the Amended Disclosure Statement, approved on June 21, 2010, and the Confirmed Plan, modified multiple times and confirmed on August 5, 2010, regarding the retention of potential Chapter 5 actions. The Amended Disclosure Statement indicated a waiver of rights to prosecute avoidance or recovery actions under various sections of the Bankruptcy Code. This waiver was consistent with the first amended plan. However, the Confirmed Plan ultimately removed this waiver, explicitly retaining all claims, including those under Chapter 5, which were later to be detailed in Schedule 13.5 of the Confirmed Plan. Notably, Schedule 13.5 was not attached at the time of confirmation but was filed later on August 23, 2010, alongside amended findings and conclusions.

"Causes of action" related to TRBP's transactions, specifically the Midnight Transfers or Eve of Filing Transactions, include allegations of constructive and intentional fraudulent transfers and breaches of fiduciary duty. The court finds that the Confirmed Plan contained sufficient language for TRBP to retain standing to assert a Counterclaim, despite Schedule 13.5 being filed 18 days post-confirmation. The Fifth Circuit clarifies that individual identification of parties is not necessary to maintain standing; merely indicating that a lawsuit "might" be filed suffices. However, the Amended Disclosure Statement did not contain the requisite language to preserve post-confirmation chapter 5 causes of action and instead waived the Debtor’s rights in this regard.

While Section 1125 of the Bankruptcy Code mandates that creditors receive "adequate information" to make informed decisions about a chapter 11 plan, the court notes that the absence of specific retention language in the plan can hinder creditors' ability to evaluate their benefits and liabilities. The specific language is designed to inform creditors eligible to vote on the plan. In this case, all classes under the plan were deemed unimpaired, meaning they were to be paid in full and lacked voting rights, except possibly for claims by the Lenders and the Rangers Equity Entities. Unimpaired creditors are assumed to have accepted the plan without solicitation.

The court determines that whether the Confirmed Plan retained chapter 5 causes of action is largely irrelevant to Paradigm, as it was not a voting creditor and was previously identified as a third-party beneficiary of an executory contract. Thus, even if Paradigm had a claim against TRBP at the time of confirmation, it remained an unimpaired creditor without voting rights.

A Fifth Circuit decision, National Benevolent Association, suggests that standing and disclosure of causes of action in a reorganization plan may be relevant not only to voting creditors but also to other parties in interest. In this case, a reorganized debtor sued its law firm for malpractice linked to pre-bankruptcy conduct. The law firm contended that the reorganization plan only reserved claims related to its bankruptcy representation, while the debtor claimed it covered both pre- and post-bankruptcy actions. The court found that the plan did not explicitly reserve the right to pursue claims arising from pre-bankruptcy misconduct, allowing the law firm to raise standing despite not being a voting creditor and being the plan's drafter.

This situation raises questions about whether the "specific and unequivocal" standard applies solely to voting creditors or to all parties-in-interest. Although the Fifth Circuit has not definitively addressed this, the case at hand focuses on judicial estoppel rather than standing. The confirmed plan clearly retained chapter 5 avoidance actions, but the Amended Disclosure Statement and its approval order did not, leading to inconsistency. Paradigm contends this inconsistency creates a judicial estoppel issue, as it reflects contradictory representations made to the court. Ultimately, the court is reluctant to apply judicial estoppel, emphasizing its role in preventing misleading behavior in legal proceedings.

Judicial estoppel in bankruptcy typically applies when a debtor fails to disclose a potential cause of action and subsequently attempts to assert it post-confirmation. This case differs as it involves plan modifications after the disclosure statement approval but before confirmation. The bankruptcy court must evaluate these modifications under Bankruptcy Code section 1127 and Bankruptcy Rule 3019 to determine if new notice and voting are necessary, especially if there is an adverse change affecting non-consenting creditors. 

In this instance, the court found that TRBP was not barred by judicial estoppel from asserting the Counterclaim due to modifications made between the Amended Disclosure Statement and the Confirmed Plan, which were made at the request of creditors and did not adversely affect voting creditors. Paradigm argued that TRBP should be estopped from asserting the Counterclaim based on its earlier representations regarding the assumption and assignment of the unamended SCSA, which TRBP later altered to an amended version. 

The court previously ruled that the amendment to the SCSA was invalid, resulting in TRBP breaching the agreement, of which Paradigm was a third-party beneficiary. Thus, Paradigm claimed breach of contract damages, while TRBP sought to avoid the SCSA as a fraudulent transfer. Although the court acknowledged Paradigm's argument, it concluded that TRBP was barred from pursuing the Counterclaim based on the failure to follow proper bankruptcy procedures regarding the executory contract.

The excerpt outlines the improper handling of an executory contract between TRBP and HSG, in which Paradigm was identified as a third-party beneficiary. TRBP failed to adhere to the necessary Bankruptcy Code protocols regarding the assumption or rejection of the contract. Under Section 365 of the Bankruptcy Code, a debtor-in-possession must either assume or reject an executory contract in full, fulfilling specific requirements such as curing defaults and providing assurance of future performance. Notice must also be given to all parties involved. TRBP attempted to selectively amend the contract, specifically shortening its duration, which contravenes established legal principles that require complete assumption of a contract's obligations and benefits. The Fifth Circuit's ruling in Nat’l Gypsum reinforces that a debtor cannot pick and choose parts of a contract to assume while rejecting the burdens. Furthermore, TRBP did not provide the necessary notice to Paradigm regarding its intentions to amend and assume the contract, which rendered its actions ineffective. The failure to adequately inform Paradigm prior to the confirmation process about the changes to the contract’s terms compromised the legitimacy of TRBP's purported assumption and assignment of the contract.

The Bankruptcy Code allows a debtor-in-possession to control the timing of decisions regarding the assumption or rejection of executory contracts, enabling the development of a viable reorganization plan. Non-debtor parties to these contracts must be adequately notified of the debtor's intent to assume the contract, including any proposed cure amounts. The Fifth Circuit, in Nat’l Gypsum, clarified that general notice is insufficient; specific notice of intent to assume, along with the cure amount, must be provided. If the non-debtor lacks actual knowledge of this intent, the debtor must prove that notice was delivered, or that court-ordered notice was given.

In Nat’l Gypsum, there was uncertainty about whether the non-debtor received notice regarding the assumption of a contract with a $0 cure amount, which prevented summary judgment. The court emphasized the importance of notifying interested parties and allowing them to respond regarding the debtor's intentions. If the notice provided by the debtor was inadequate, the confirmation order would not be res judicata concerning the cure amount, allowing the non-debtor to claim arrears.

Paradigm, as a third-party beneficiary, had the right to reasonable notice of TRBP's intentions about the Agreement and sufficient time to protect its interests. The lack of reasonable notice hindered Paradigm's ability to respond, which could have included filing a pleading to argue against TRBP's ability to modify and assume the Agreement without consent. Such a challenge could have compelled TRBP to either assume or reject the Agreement entirely, potentially affecting the availability of the Aircraft during the 2010 baseball season and raising questions about TRBP's business judgment in that decision. Paradigm could have pursued rejection damages and objected to the plan as well.

Paradigm was deprived of its ability to protect its interests due to inadequate notice from TRBP, which failed to adhere to the Bankruptcy Code's procedures for executory contracts. The court previously ruled that an amendment to the SCSA was invalid, creating ambiguity regarding the status of the original SCSA during the bankruptcy proceedings. The court identified two possible legal consequences: (1) the SCSA could be deemed to have "ridden through" the bankruptcy unaffected, binding TRBP without assumption or assignment under the chapter 11 plan, or (2) TRBP effectively rejected the SCSA due to its improper handling of the amendment, which implied termination shortly after confirmation. In either scenario, Paradigm would have a breach of contract claim against TRBP. 

The court has since reviewed additional evidence and concluded that TRBP should be bound by its stated intention to assume the SCSA in full. The principle of equitable estoppel applies, obligating TRBP to honor its notice regarding the SCSA. Furthermore, the court determined that the "ride through" concept is not applicable in this case, as TRBP is not an operating debtor, contradicting the Fifth Circuit's precedent that allows executory contracts to remain liabilities only if the debtor continues operations. The court expressed concern about treating the SCSA as effectively rejected.

Paradigm received only limited notice regarding TRBP's intentions about the Agreement, specifically through the Notice of Non-Voting Status and the Confirmation Hearing Notice, which indicated TRBP's full assumption and assignment of the Agreement. Paradigm, as a third-party beneficiary and primary performer in the contractual relationship, was entitled to reasonable notice of TRBP's actions, including any potential rejection of the Agreement. The absence of such notice deprived Paradigm of the opportunity to protect its interests, as it could have taken steps to mitigate losses, such as refusing to provide the Aircraft if TRBP intended to reject the contract.

The text indicates that, had Paradigm received proper notice, it could have exercised its legal rights in the bankruptcy court, potentially affecting the outcomes of any claims or objections it might have filed. Consequently, the appropriate interpretation under section 365 of the Bankruptcy Code is to treat the Agreement as having been de facto assumed by TRBP. The court suggests that TRBP is equitably estopped from arguing otherwise, as equitable estoppel prevents a party from benefiting from a contract while avoiding its obligations. 

The four elements of equitable estoppel are outlined: awareness of facts by the party to be estopped (TRBP), intent for their actions to be acted upon, lack of knowledge of the facts by the party asserting estoppel (Paradigm), and reasonable reliance by Paradigm on TRBP’s conduct to its detriment. The Supreme Court's interpretation requires that Paradigm's reliance on TRBP's conduct must have been reasonable, without a need for intent to deceive. Given the undisputed facts, equitable estoppel is applicable in this case.

Judicial estoppel does not apply in this case; instead, equitable estoppel is relevant due to multiple modifications of a plan after the disclosure statement's approval that affected the assumption and assignment of Agreement 2 and the SCSA. The critical issue was TRBP's failure to notify Paradigm about these changes, violating Bankruptcy Code section 365 and Bankruptcy Rule 6006, which deprived Paradigm of its rights to adequately protect itself. The court finds that all undisputed facts fulfill the four elements of equitable estoppel: TRBP was aware of the facts, intended its actions to be relied upon, Paradigm lacked knowledge of these facts, and Paradigm suffered substantial injury due to its reliance on TRBP's conduct. Consequently, under equitable estoppel, Agreement 2 and the SCSA are treated as assumed contracts per the confirmed plan.

Regarding TRBP's ability to bring a counterclaim while considering Agreement 2 and the SCSA as assumed, the court concludes that it cannot. Several courts have established that a debtor or trustee cannot pursue an avoidance action against a contract that has been assumed under section 365 of the Bankruptcy Code, a defense referred to as the "contract assumption defense." This principle is supported by the Seventh Circuit's decision in In re Superior Toy Mfg. Co., which held that allowing avoidance actions on assumed contracts would undermine section 365's purpose of ensuring that contracting parties are compensated before being compelled to continue performance under bankruptcy conditions. Although the Fifth Circuit has not yet addressed this defense, some courts within the Circuit have recognized its applicability, as seen in In re Jazzland, Inc., where a debtor's assumption of a licensing agreement precluded preference actions against the creditor.

An estate cannot be obligated to pay amounts due under an assumed contract while also recovering prepetition payments made under that contract. In *In re MMR Holding Corp.*, a debtor's attempt to recover prepetition payments for a subsequently assumed contract was denied, as those payments are not recoverable when the contract is assumed under section 365 of the Bankruptcy Code. The court emphasized that the estate cannot both incur obligations for all amounts due under an assumed contract and seek recovery for payments made prior to bankruptcy. Similarly, in *In re MPF Holding U.S. LLC*, the court ruled that the contract assumption defense barred a litigation trustee's preference action, affirming that once a contract is assumed, the trustee cannot pursue avoidance actions based on those payments.

The reasoning applied in these cases suggests that the contract assumption defense also applies to fraudulent transfer claims. In *In re Centrix Fin. LLC*, the court found that a trustee could not claim the estate did not receive reasonably equivalent value for payments made under an assumed contract, which was deemed valuable enough to warrant its assumption. The court ruled that the contract assumption defense barred the trustee's fraudulent transfer claim and all avoidance powers.

In the present case, where TRBP is deemed to have assumed Agreement 2, the court applies equitable estoppel. TRBP provided no indication to Paradigm that Agreement 2 was not assumed, leading Paradigm to act in reliance on that assumption. Therefore, the court concludes that the contract assumption defense applies, barring the Counterclaim, and grants Paradigm’s Second Motion for Summary Judgment.

A Summary Judgment Dismissing the Counterclaim will be entered immediately. Under the Fourth Amended Confirmed Plan related to the bankruptcy case, all remaining officers of TRBP were terminated, and Alan M. Jacobs was appointed as the Plan Administrator and Disbursing Agent. HSG, affiliated with Tom Hicks, was previously involved in an Adversary Proceeding due to TRBP's third-party complaint against it and a counterclaim against Paradigm for fraudulent transfer. HSG was dismissed from the Adversary Proceeding on January 14, 2014, following global settlements, but TRBP continues to pursue the fraudulent transfer claim against Paradigm, which is the subject of Paradigm's Second Motion for Summary Judgment. At a hearing on this motion, Paradigm's counsel acknowledged there were legitimate factual questions regarding TRBP’s standing in light of the HSG Settlement Agreement. The Memorandum Opinion and Order align with Federal Rules of Civil Procedure and Bankruptcy Procedure. The court can take judicial notice of all relevant documents filed in both the Adversary Proceeding and the related bankruptcy case. References are made to docket entries for both cases to clarify related pleadings and documents.

The document contains multiple declarations and exhibits related to various agreements, correspondence, and financial transactions between parties involved in a legal dispute. Key points include:

1. Declarations from Craig Ireland and James Wikert, detailing their involvement and the context of the agreements dated from 2003 onward.
2. Initial correspondence with Park Cities Bank, including emails dated February 9, 2007, between Wikert and Ireland, discussing financial matters.
3. Documents related to a $14.5 million promissory note from SWSJ to Park Cities Bank, including a Loan and Security Agreement and an Aircraft Bill of Sale.
4. Drafts of agreements and pro forma financial statements, emphasizing ongoing negotiations and unresolved sale issues, particularly concerning the May APA and the termination of a prior January APA.
5. Additional correspondence and emails from various parties regarding the SCSA (Standard Charter Service Agreement) and the Aircraft Lease Agreement, including communications about consent and drafts leading up to May 2010.
6. Inclusion of various exhibits, such as emails from Robert L. Sayles and others, reinforcing the timeline and the interactions regarding the agreements and financial arrangements.

Overall, the excerpt highlights the intricate details of legal documentation, agreements, and communications between the involved parties, underscoring the complexity of the case and the financial transactions at stake.

The document references various emails, exhibits, and court documents related to the Asset Purchase Agreement (APA) between TRBP and Baseball Express, highlighting key communications and consent agreements relevant to the SCSA (Second Amended Plan). Specific dates and document references include:

- An email from Ireland to Christensen dated May 20, 2010, regarding consent to the SCSA.
- A May 21, 2010, email between individuals named West and Gehl discussing Paradigm's consent.
- Numerous exhibits detailing the SCSA, including sections 1.1, 1.4, 3.1, 3.2, and 6.3 of the Agreement.
- References to various documents filed in the Bankruptcy Case, including affidavits of mailing, notices of non-voting status, and hearing transcripts from June and August 2010.
- The definition of the APA as outlined in the Confirmed Plan, including its amendments and the definition of "Purchaser" as Baseball Express, along with the definition of "Excluded Contract."

The summary encapsulates the essential elements of the agreements and procedural documents, emphasizing consent, definitions, and the timeline of communications.

The document references several key agreements and amendments relevant to a bankruptcy case. It highlights the confirmed plan, specifically sections 1.42 and 9.1(a), along with the Asset Purchase Agreement (APA), particularly the non-excluded affiliate contracts. Ireland asserts he was unaware of amendments to the APA, notably those incorporated into Agreement #3—the Amendment to the SCSA—until he received a draft on August 13, 2010. The SCSA, as amended, was set to terminate automatically after the Texas Rangers' final game of the 2010 MLB season on November 1, 2010. The APA, executed on May 24, 2010, superseded a previous oral lease agreement regarding aircraft use by TRBP. Amendments to the APA required TRBP to continue payments under the SCSA through November 2010. The document also notes various motions filed in the adversary proceeding, including a motion to dismiss and for summary judgment, as well as ongoing discussions regarding potential liability involving Express.

A typographical error is noted regarding Rule 19(b)(1)(B), which does not exist. Various court documents and orders from the Adversary Proceeding are referenced, including a letter from W. Snyder and several DE citations. The last date for timely filing an action under section 546(a) of the Bankruptcy Code is highlighted. The court's July 2013 Memorandum Opinion concluded that the Amendment to the SCSA was invalid, and Paradigm was recognized as a third-party beneficiary under Texas law for asserting breach of contract claims related to the SCSA. The HSG Settlement Agreement and related documents are mentioned, along with references to relevant case law and rules regarding summary judgment and fraudulent transfer claims. Paradigm's counsel indicated during oral arguments that they would not pursue the argument regarding TRBP’s standing in light of factual questions. The excerpt also notes provisions of the Bankruptcy Code relevant to fraudulent transfers and obligations incurred for value.

HSG is understood to remain fully liable for all obligations under the Aircraft Agreement until terminated, unless released by Paradigm. Quasi estoppel prevents a party from asserting a position that contradicts a previously accepted position to the disadvantage of another party. To establish a claim for quasi estoppel, a party must show that: (1) the defendant accepted a benefit from a transaction, (2) the defendant's current position is inconsistent with an earlier position in which it accepted that benefit, and (3) it would be unconscionable for the defendant to maintain its current position at the plaintiff's expense. Unlike equitable estoppel, quasi estoppel does not require evidence of misrepresentation or detrimental reliance. Paradigm has introduced arguments related to ratification and judicial estoppel for the first time in its reply, which are treated as separate defenses. The excerpt also details the requirements for assuming a contract under section 365 of the Bankruptcy Code, emphasizing that assumption cannot be implied and must be explicitly declared by the Debtor In Possession or Operating Trustee, with proper notice given to involved parties. Bankruptcy Rule 6006(a) mandates that motions for assuming or rejecting leases follow the procedures outlined in Bankruptcy Rule 9014, ensuring reasonable notice and an opportunity for hearing.

Proceeding to reject an unexpired lease outside of a plan is classified as a "contested matter," necessitating relief via motion, as established in *In re Child World, Inc.*, 147 B.R. 847, 852 (Bankr.S.D.N.Y. 1992). Assumption of a contract cannot be implied and requires specific court approval under Rule 6006. In *Powerburst Corp.*, a creditor's committee attempted to recover payments on illegal notes, but the court ruled these payments could not ratify the notes since they were void rather than voidable. Under Section 544(b), a bankruptcy trustee can avoid transfers if a "triggering" creditor could have pursued a fraudulent transfer claim pre-bankruptcy; however, Section 548 grants the trustee broader authority to avoid transfers without needing such a creditor. Thus, ratification and estoppel arguments related to banks and bondholders were deemed irrelevant under Section 548. Courts have noted that contracts valid until avoided can be subject to ratification and estoppel, but this principle was not applied to Section 548 claims in *Vallecito Gas, LLC*. In *Adelphia Recovery Trust*, the debtor's solicitation for court approval was found to invoke res judicata and judicial estoppel against Section 548 claims. The court also noted that defenses like in pari delicto, which applies to equitable claims, have been rejected in the context of Section 548 concerning prepetition conduct. Paradigm's "unclean hands" defense was compared to in pari delicto but considered even less tenable in a postpetition context due to court oversight. Regarding the definition of "affiliate," the court determined that the Texas Business Organizations Code's definition was more appropriate than that of the Bankruptcy Code, as the agreement in question specified it would be governed by state law.

In the case of Ctr. of E. Tex. v. Keszler, various precedents and statutory provisions are referenced, focusing on the standing of parties in bankruptcy proceedings and the retention of causes of action within a debtor's plan. Paradigm initially raised a standing defense against the Avoidance Complaint, claiming that TRBP lacked standing due to full payment to creditors, which the court dismissed as lacking merit based on Fifth Circuit authority. The current standing issue revolves around whether TRBP's Counterclaim was preserved in its plan for pursuit. Under 11 U.S.C. § 1123(b)(3), a plan can allow a debtor or trustee to retain and enforce claims, including avoidance powers, which may be transferred to a liquidating trust for the benefit of unsecured creditors. The reference to TRBP's third and fourth amended plans emphasizes that these versions were the first to formally retain causes of action, ultimately leading to the Confirmed Plan. Additionally, 11 U.S.C. § 1125 outlines requirements for soliciting acceptance or rejection of a plan, including the necessity for an approved disclosure statement containing adequate information to inform claim holders.

A hypothetical investor must be able to make an informed judgment regarding a reorganization plan. Case law emphasizes the necessity for a clear disclosure statement that outlines potential claims against prepetition shareholders, which helps creditors evaluate whether the plan addresses their concerns before voting. The Fifth Circuit has ruled that Reorganized Debtors may lack standing to pursue common law claims against certain defendants, such as secured creditors and court-appointed operators, who are not entitled to vote. Additionally, the debtor has an obligation to ensure that non-debtor parties are informed of its intent to assume contracts, typically through the delivery of the proposed reorganization plan or court-ordered notices. If an executory contract is not assumed or rejected, it remains binding on the debtor post-discharge, allowing claims from non-debtors to persist through bankruptcy proceedings.

Executory contracts cannot pass through bankruptcy unaffected if a liquidation plan is in place, as established in several cases, including Baylor Health Care Sys. v. Emp'rs Reinsurance Corp. and Taylor v. U.S. Treasury Dept. Equitable estoppel requires a representation that a party justifiably relied upon to their detriment, as noted in Johnson v. Seacor Marine Corp. While judicial estoppel does not prevent a counterclaim, equitable estoppel bars TRBP from asserting a specific agreement. The SCSA was not assumed under the Confirmed Plan and Confirmation Order, following precedent in Kimmelman v. Port Auth. of N.Y. N.J. Assumption of contracts precludes a trustee from bringing preference actions, as seen in In re Superior Toy Mfg. Co., where the assumption order divests the trustee of claims related to payments made under the contract. Courts may apply equitable estoppel to deny a debtor's attempt to escape obligations of assumed contracts, supported by cases like Seidle v. GATX Leasing Corp. and Lewis Indus. v. Barham Constr. Inc. A debtor may be estopped from claiming a breach of contract not raised at the assumption hearing, illustrated in Compton v. InOcean AS. Multiple cases, such as MMR Holding Corp. and Weinman v. Allison Payment Sys. LLC, affirm that the contract assumption defense can apply to a trustee’s avoidance actions, highlighting the mutual exclusivity of a trustee's assumption and avoidance powers.