In a decision yet to be published, the United States Court of Appeals, Fifth Circuit, has issued a
decision in Darby v. Time Warner Cable, Inc. (Matter of Darby), No. 05-20931 (5th Cir. Nov. 14, 2006), which states that cable TV provider is not a utility governed by 11 U.S.C. § 366. In a case of first impression appealed from the United States Bankruptcy Court of the Southern District of Texas, the 5th Circuit found:
The word “utility” as it is used in § 366 is not defined within the statute, but some guidance is provided by the legislative history of the provision. Both the House Judiciary Report and the Senate Report on the provision state in relevant part: “This section gives debtors protection from a cut-off of service by a utility because of the filing of a bankruptcy case. This section is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier, or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility”…We must decide if Time Warner stands in a “special position” with respect Because § 366 is a restriction on the general right of a creditor to cease doing business with a debtor for any reason, it seems logical that a strong justification, such as the need for continued access to essential services, underlies the provision…The services mentioned in the legislative history are considered “necessary to meet minimum standards of living,” and we hold that the necessity of a service is what creates a “special” relationship between a debtor and a utility…“cable television is not a necessity as millions of Americans continue to exist without such a service”… Therefore, cable service is not covered by § 366, and Time Warner is not required to reinstate Darby’s service despite his offer of adequate assurances of future payment …Because cable television is neither a necessity nor would Darby be faced with crippling inconvenience in obtaining alternate service, Time Warner is not a utility as contemplated by § 366.















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