Precision Industries v. Qualitech Steel SBQ

Precision (plaintiff) built and leased a supply warehouse on Qualitech's property under a 10-year lease and supply agreement; after Qualitech filed for Chapter 11 bankruptcy and sold substantially all its assets to prepetition lenders under Section 363(f) free of liens and interests (with Precision's leasehold not carved out and Precision raising no objection), the buyers transferred the assets to new entity Qualitech Steel SBQ (defendant), and negotiations to assume Precision's agreements collapsed, resulting in de facto rejection. When New Qualitech took possession of the warehouse, Precision sued, and the bankruptcy court held its leasehold interest had been extinguished by the sale, while the district court reversed based on Section 365(h)'s lease-rejection protections.