In re Pioneer Ford Sales
United States Court of Appeals for the First Circuit
729 F.2d 27 (1984)
Pioneer Ford Sales, Inc. (Pioneer), a Rhode Island Ford franchisee, entered bankruptcy, and its largest secured creditor sought to assign Pioneer's Ford franchise to a nearby Toyota dealer, Toyota Village, Inc. (Toyota Village), which would pay roughly $85,000 for the assignment versus only $45,000-$55,000 Pioneer would get from selling parts back to Ford without it. Over Ford's objection, the bankruptcy court approved the assignment, finding "adequate assurance" of future performance based on Toyota Village's established track record, proximity, willingness to pay off Pioneer's existing $15,000 debt to Ford, and owner's stated willingness — despite evidence Toyota Village had far less working capital than Ford ordinarily required and weak sales despite strong regional demand for Japanese cars. The district court affirmed, and Ford appealed.
Whether a Rhode Island debtor should be permitted to assign a motor vehicle franchise over the objection of the franchisor where assignment would result in greater value to the estate than nonassignment but there is strong evidence that the franchisee will be unable to meet performance standards required by the franchisor.