This section contains the nature of the case and procedural background.

P filed for bankruptcy, and its principal creditor sought to assign its Ford franchise over D's objection to a Toyota dealer. The bankruptcy court approved the transfer, Toyota Village would pay $10,000 for the franchise and buy all parts and accessories in P's inventory at fair market value (about $75,000); if the franchise is not assigned, D will buy only some of the parts for between $45,000 and $55,000. The bankruptcy court agreed, and the district court approved. D appealed. Notable facts are that in accordance with its ordinary business practice and dealer guidelines incorporated into the franchise agreement, D would have required Toyota Village, to have a working capital of at least $172,000, of which no more than half could be debt. Toyota Village had $37,610; and its net worth was $31,747. Also, Toyota Village had consistently lost money from 1977 to 1981.

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