- Case Type:
- Case Status:
- 20-1878 (3rd Circuit, May 21,2021) Published
- The Third Circuit Court of Appeals affirmed the District Court and the Bankruptcy Court's decision that certain "Investment Agreements" were not "Purchased Assets" assigned to Spyglass Media Group, LLC, the buyer of substantially all of The Weinstein Company's assets in bankruptcy because the agreements were not "executory" and the Asset Purchase Agreement included only executory contracts as contracts to be assumed by Spyglass. As a result, Spyglass was not obligated to turn over any of the profits related to the films related to the Investment Agreements.
- Procedural context:
- The investors in the Investment Agreements filed a motion with the bankruptcy court seeking a judgment that, pursuant to the Asset Purchase Agreement (APA), Spyglass bought all the Investment Agreements such that Spyglass was obligated to fulfill the obligations under the agreements. The bankruptcy court denied the motion, and the District Court affirmed.
- The sale to Spyglass closed in July 2018 and, pursuant to the approved APA, Spyglass had until November 2018 to designate or remove contracts for assumption. Prior to the sale closing, in May 2018, the debtor had filed a "Final List of Potentially Assumed Contracts and Leases (the "Assumed Contracts Schedule"). The Assumed Contracts Schedule listed all twelve of the Investment Agreements as contracts that could be assumed and assigned to Spyglass. Each of the Investment Agreements related to a different film in which the investors had invested. The Assumed Contracts schedule also included a disclaimer that "the presence of an Assumed Contract and Lease listed on Exhibit 1 attached hereto does not constitute an admission that such Assumed Contract and Lease is an executory contract or unexpired lease." The debtor subsequently filed supplemental schedules listing most--but not all--al of the Investment Agreements as "Excluded Contracts" that would not be assigned to Spyglass. The Third Circuit held that, under the terms of the APA, Spyglass did not assume the Investment Agreements. Under the APA, "Assumed Contracts" were defined to include only executory contracts and the Investment Agreements were not executory because the investors had already fulfilled their obligations--investing in the films. The court further held that, because a non-executory contract could not be an Assumed Contract, it did not matter if such a contract appeared on the Assumed Contracts Schedule. Because the Investment Agreements were not "Assumed Contracts," the obligations from the agreements were considered "Excluded Liabilities" such that Spyglass was not obligated to turn over any of the films' profits due to the investors under the Investment Agreements. The court also distinguished from another non-executory contract that was transferred to Spyglass. It found that Spyglass had specifically indicated that it had purchased that other agreement apart from the Assumed Contracts Schedule, whereas it had not done so with respect to the Investment Agreements.
- AMBRO, KRAUSE, and PHIPPS
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