MOAC Mall Holdings LLC v. Transform Holdco LLC

This case involves a dispute between MOAC Mall Holdings LLC, the owner of a shopping mall in Minnesota, and Transform Holdco LLC, which acquired the assets of Sears after its bankruptcy. After Sears filed for Chapter 11 bankruptcy in 2018, Transform Holdco sought to assign the lease of a former Sears store at the mall to a third party. MOAC objected, arguing that the assignment did not satisfy the specific requirements of 11 U.S.C. § 365(b)(3)(A), which mandates adequate assurance of future performance for shopping center leases. The case reached the U.S. Supreme Court to determine a procedural question: whether the statute’s requirements are jurisdictional limits on a bankruptcy court’s authority, such that a final sale order can be voided if the requirements are not met, or merely non-jurisdictional elements that can be waived if not timely raised.

The U.S. Supreme Court unanimously ruled that Section 365(b)(3)(A) is not a jurisdictional requirement. The Court held that the provision is a non-jurisdictional claim-processing rule. Because the statute does not clearly state that it limits a court's adjudicatory authority, the failure to fully satisfy its adequate assurance requirements before approving a lease assignment does not automatically void the bankruptcy court's order. This decision overturned the Second Circuit Court of Appeals' finding to the contrary.

The central legal issue was whether Section 365(b)(3)(A) of the U.S. Bankruptcy Code imposes a jurisdictional prerequisite that a debtor must satisfy before a bankruptcy court can approve the assignment of a shopping center lease. If jurisdictional, a failure to meet the requirement would render any resulting court order void, allowing challenges at any time. If non-jurisdictional, the requirement is merely a claim-processing rule that must be raised promptly, and its violation does not strip the court of the authority to decide the case.

This decision provides significant clarity and stability to bankruptcy proceedings and commercial real estate transactions involving distressed retailers. By confirming that Section 365(b)(3)(A) is a non-jurisdictional rule, the Supreme Court ensured that final sale orders approving lease assignments cannot be challenged indefinitely on this technical ground. This protects the finality of bankruptcy sales, encourages the timely resolution of objections, and provides greater certainty to assignees and landlords in the restructuring of major retail chains, thereby facilitating the efficient reorganization of distressed businesses.