As a result, in the unlikely event that BancGroup is held to be the owner of the REIT preferred securities, then it is obligated to “immediately cure” its deficit under the prepetition capital maintenance commitment as a condition to proceeding in chapter 11. See 11 U.S.C. § 365(o); FirstCorp., 973 F.2d at 247. BancGroup does not have sufficient assets other than the Case 2:10-cv-00198-MHT-DHW Document 127 Filed 09/22/11 Page 65 of 69 55 securities themselves to pay the cure amount, and therefore it would be required to redeliver the REIT preferred securities to the FDIC-Receiver to cure the deficit under that commitment.

Thus, it is clear that the Lease can be assumed or rejected by the Trustee pursuant to federal bankruptcy law. 26 To the extent that there is any conflict between New York state law and federal bankruptcy law, federal law controls regarding issues related to a trustee’s authority to assume and assign a lease under 11 U.S.C. § 365. “Inasmuch as the power of Congress under . . . the Constitution of the United State to establish uniform laws on the subject of bankruptcy is paramount and exclusive of any State laws which may be in actual conflict with the system provided by the Bankruptcy Act of Congress, it necessarily follows that this court is bound by the interpretations of the Federal courts . . . .” Lane v. Marshall, 452 N.Y.S.2d 238, 240 (2d Dep’t 1982) (internal quotations and citations omitted) (emphasis added).

Thus, it is clear that the Lease can be assumed or rejected by the Trustee pursuant to federal bankruptcy la-w. 25 To the extent that there is any conflict between New York state law and federal bankruptcy law, federal law controls regarding issues related to a trustee's authority to assume and assign a lease under 11 U.S.C. § 365. "Inasmuch as the power of Congress under . . . the Constitution of the United State to establish uniform laws on the subject of bankruptcy is paramount and exclusive of any State laws which may be in actual conflict with the system provided by the Bankruptcy Act of Congress, it necessarily follows that this court is bound by the interpretations of the Federal courts . . . ." Lane v. Marshall, 452 N.Y.S.2d 238, 240 (2d Dep't 1982) (internal quotations and citations omitted) (emphasis added).

Pl. Mem. at 27; see Footbridge, 584 F. Supp. 2d at 161; Major, 370 F. Supp. 2d at 128. Moreover, in enacting section 365(o), Congress intended the term “capital maintenance commitment” to be construed broadly “to prevent institution-affiliated parties from using Case 1:09-cv-00533-RMC Document 52 Filed 09/04/2009 Page 25 of 48 15 bankruptcy to evade commitments to maintain capital reserve requirements of a Federal insured depository institution.’” FirstCorp., 973 F.2d at 246 ((quoting H.R. Rep. No. 681(I), 101st Cong., 2d Sess. 179 (1990), reprinted in 1990 U.S.C.C.A.N. 6472, 6585); see, e.g., Overland Park, 236 F.3d at 1252 (rejecting holding company’s argument that informal net worth stipulation did not constitute a capital maintenance commitment). In this instance, WMI enjoyed the benefits of its commitment to the OTS for more than two years before WMB was closed by its regulators. WMI should not now be heard to assert that it never intended to subject itself to the burdens of that commitment in return. See Overland Park, 236 F.3d at 1253 (if holding company had not made ne

Accordingly, West Range is precluded, as a matter of law, from bringing this action against Scotts, and the Complaint must be dismissed with prejudice. III. WEST RANGE'S COMPLAINT SHOULD BE DISMISSED FOR ITS SEPARATE AND INDEPENDENT FAILURES TO PLEAD ITS CLAIMS SUFFICIENTLY A. West Range's Breach of Contract Claim Must Be Dismissed While West Range's contract claim is barred by the rejection of the Contract under 11 U.S.C. §365, the contract claim fails for the separate and independent reason that West Range fails to state a claim. As shown from the face of the Contract, Scotts is permitted to refuse delivery of additional goods and Scotts' obligation to pay requires delivery of the goods.

Second, section 365(c)(2) of the Bankruptcy Code prohibits a debtor from assuming any pre-petition contract to make a loan to the debtor, since the effect of such an assumption would be to require a prepetition creditor to provide post-petition financing to a bankrupt entity. See 11 U.S.C. § 365(c)(2); In re Sun Runner Marine, Inc., 945 F.2d 1089, 1092 (9th Cir. 1991). The Tax Allocation Policy is not such a contract, but if the Policy were the contract that BancGroup claims it to be then BancGroup would not be permitted to enforce it.

In the event of rejection, the non-debtor party is generally relegated to pursuing an unsecured prepetition claim against the estate”); id. (“Where assets of the estate are insufficient to pay unsecured creditors in full, the non-debtor party to a rejected executory contract, like other unsecured creditors of the estate, may receive only a fraction of the value of its claim”); In re Child World, Inc., 147 B.R. 847, 852 (Bankr. S.D.N.Y. 1992) (“[R]ejection under 11 U.S.C. § 365(a) simply means that the court will permit the debtor to breach the contract, with the result that the contractual obligations will be reduced to general unsecured claims for prepetition damages pursuant to 11 U.S.C. § 365(g)(1)”); In re Calpine Corp., 337 B.R. 27, 34 (S.D.N.Y. 2006) (rejection of a contract “amounts to an intentional breach of the contract, transforming the contractual obligations into a claim for damages treated Case 1:10-cv-06528-DLC Document 5 Filed 09/18/10 Page 17 of 23 13 as all other unsecured claims for damages against the estate”). Leading treatises on bankruptcy law similarly conclude that rejection of an executory contract, like the Service Agreement, is tantamount to breach.

Rejection and abandonment are governed by separate provisions of the Bankruptcy Code and subject to differing standards. Compare 11 U.S.C. § 365(a) (assumption or rejection) with § 554 (abandonment). As explained above, Section 365(g) establishes the effect of rejection – and nowhere refers to “abandonment” or Section 554.

i. Deposits. You agree that this Agreement is a contract of financial accommodation within the meaning of the Bankruptcy Code, 11 U.S.C. § 365 as amended from time to time. Subject to this Section, Bank will deposit to the Designated Account (defined in section 6 below) funds evidenced by Sales Drafts (whether evidenced in writing or by electronic means) complying with the terms of this Agreement and the Rules and will provide you provisional credit for such funds (less recoupment of any credit(s), adjustments, fines, chargebacks, or fees).

In each case the matter was presented to the bankruptcy court for resolution, and then appealed to the Federal Circuit court. For example, in R.T.C. v. FirstCorp, Inc. (In re FirstCorp, Inc.), 973 F.2d 243, 245-46 (4th Cir. 1992), both OTS and RTC, in separate motions made pursuant to 11 U.S.C. § 365(o), "asked the Case 1:09-cv-00533-RMC Document 65 Filed 09/25/2009 Page 28 of 32 23 bankruptcy court to order Firstcorp to assume its commitment under FHLBB Resolution No. 85- 219 and to immediately cure the deficiency in the capital maintenance obligation existing as of the date of the bankruptcy filing." The bankruptcy court denied the motions, the district court reversed, and Firstcorp then appealed.