Case Explained: In re: Kevin P. Dandurand Debtor —————————— Kanyon Holdings, LLC Creditor – v. Kevin P. Dandurand Debtor –

Court: United States Court of Appeals for the Eighth Circuit Filed: 2026-08-10 The eighth-circuit denied the debtor’s motion to dismiss the appeal and upheld the bankruptcy court’s orders allowing Kevin Dandurand to reject the stock purchase agreement with Kanyon Holdings and denying Kanyon relief from the automatic stay. The court first held the appeal could still be heard despite post-appeal events. It said Kanyon retained Article III standing and remained a “person aggrieved” under Eighth Circuit bankruptcy-appeal doctrine because the bankruptcy orders directly impaired Kanyon’s claimed contractual rights, including its asserted right to acquire the debtor’s company stock and seek specific performance in state court. The appeal also was not constitutionally moot because effective relief was still possible, and the court declined to dismiss on equitable-mootness grounds because the confirmed chapter 11 plan expressly contemplated alternative outcomes depending on whether rejection stood. On the merits, the court held the stock purchase agreement was an executory contract under 11 U.S.C. § 365 because both sides still had material unperformed obligations. Applying South Dakota contract law, it agreed the bankruptcy court could consider parol evidence because the agreement’s closing-condition provisions were ambiguous and because parol evidence was also admissible to show conditions precedent. Based on that evidence, the court accepted the bankruptcy court’s finding that Kanyon still had material obligations, including commitments tied to paying key DSF vendors and providing a financing plan, while Dandurand still had to transfer the stock and comply with other obligations. Because nonperformance by either side would have been a material breach, the agreement was executory. The court also held rejection was a proper exercise of the debtor’s business judgment. Under the § 365 business-judgment standard, rejection had to benefit the estate and not reflect bad faith or a gross abuse of discretion. The court said rejection benefited the estate by preserving Dandurand’s ability to keep working for the company, earn income to fund his chapter 11 plan, retain possible future value from the business, and avoid more costly litigation. It rejected Kanyon’s claim that the bankruptcy filing was in bad faith, finding the record showed legitimate bankruptcy purposes, including mounting personal financial distress, borrowing to pay debts, reduced or unpaid salary, and the burden of ongoing litigation. The court also upheld denial of stay relief under 11 U.S.C. § 362(d). As to § 362(d)(1), it agreed there was no “cause” to lift the stay. The court recognized bad faith can qualify as cause, but found no bad-faith filing here. It also applied the Eighth Circuit balancing test for allowing outside litigation to proceed and agreed the factors favored keeping the dispute in bankruptcy: the state case was only partly developed, would be expensive and lengthy, bankruptcy issues could resolve or reshape the dispute, and continued state-court litigation would burden the estate and other creditors. As to § 362(d)(2), the court said rejection of the agreement eliminated Kanyon’s colorable claim to force transfer of the stock, and in any event Kanyon failed to prove the debtor lacked equity in the company or that the stock was unnecessary to an effective reorganization. The practical result is that Dandurand’s rejection of the stock purchase agreement remains in place, Kanyon cannot return to state court to pursue specific performance through stay relief, and the bankruptcy case proceeds under the confirmed chapter 11 plan, with any remaining dispute centered on whatever claim or damages issues may still be addressed in bankruptcy. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.