Ground Round Inc. v. Abboud, No. 06-9002 (3/30/07) Ground Round is a chain of restaurants. In 1977 they leased some property in Pennsylvania from Howard Johnson (the semi-defunct chain of restaurants) to use a restaurant. They then got a liquor license, and extended the lease. Then Ground Round filed for bankruptcy, and “rejected” the lease under 11 U.S.C. § 365, but claimed the right to retain the liquor license. So, “the partnership” began an adversary proceeding, seeking specific performance of the lease, and return of the liquor license. But, here is where it gets interesting: What is a liquor license?
Is it a “personal privilege” under [old] state law, and not a “property”? If it is property, it goes into the estate. If it is something personal in nature, on the other hand, it is possible to use specific performance to move it around. Since the approval for the Pennsylvania government is required to move it, it could be argued that it is not property. But the First points out that, “The fact that agency or other third-party approval is required for a transfer does not take the interest outside section 541's language or its policy; broadcast licenses and condominiums are common examples.” The First looks at Pennsylvania law, and determines that the old law applies (it eschews retroactive application), figuring that “…applying the amendment would undermine reasonable expectations.” Therefore – I think -- the license wasn’t property subject to a lease.
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