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Case 18-10601-MFW Doc 709 Filed 05/03/18 Page 1 of 17 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 The Weinstein Company Holdings, LLC, et al., Bk. No. 18-10601 (MFW) Debtors.1 Jointly Administered Hearing Date: May 8, 2018 at 11:30 a.m. Re: Docket No. 8 LIMITED OBJECTION AND RESERVATION OF RIGHTS OF INTERSCOPE RECORDS, A DIVISON OF UMG RECORDINGS, INC., ANGRY BLONDE PRODUCTIONS, INC. FURNISHING THE SERVICES OF MARSHALL B. MATHERS III, SHADY RECORDS, INC., AND SHROOM SHADY MUSIC, LLC, TO DEBTORS’ MOTION FOR ENTRY OF ORDERS (I)(A) APPROVING BIDDING PROCEDURES FOR SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS, (B) APPROVING STALKING HORSE BID PROTECTIONS, (C) SCHEDULING AUCTION FOR, AND HEARING TO APPROVE, SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS, (D) APPROVING FORM AND MANNER OF NOTICES OF SALE, AUCTION AND SALE HEARING, (E) APPROVING ASSUMPTION AND ASSIGNMENT PROCEDURES AND (F) GRANTING RELATED RELIEF AND (II)(A) APPROVING SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (B) APPROVING ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES AND (C) GRANTING RELATED RELIEF Each of Interscope Records, a division of UMG Recordings, Inc. (“Interscope”), Angry Blonde Productions, Inc.Deadline (“ABP”) furnishing the services of Marshall B. Mathers III, professionally known as “Eminem” (“Artist”), Shady Records, Inc. (“Shady”), and Shroom Shady Music, LLC (“Shroom”) (which together with Interscope, ABP, Shady and Shroom, are 1 The last four digits of The Weinstein Company Holdings LLC’s federal tax identification number are ). The mailing address for The Weinstein Company Holdings LLC is 99 Hudson Street, 4th Floor, New York, New York 10013. Due to the large number of debtors in these cases, which are being jointly administered for procedural purposes only, a complete list of the Debtors and the last four digits of their federal tax identification is not provided herein. {00795991 v3 } 1 Case 18-10601-MFW Doc 709 Filed 05/03/18 Page 2 of 17 sometimes referred to individually and collectively, as “Music Parties”), respectfully submits this limited objection and reservation of rights (the “Limited Objection”) to the Debtors’ Motion for Entry of Orders (I)(A) Approving Bidding Procedures for Sale of Substantially All of the Debtors’ Assets, (B) Approving Stalking Horse Bid Protections, (C) Scheduling Auction for, and Hearing to Approve, Sale of Substantially All of the Debtors’ Assets, (D) Approving form and Manner of Notices of Sale, Auction and Sale Hearing, (E) Approving Assumption and Assignment Procedures and (F) Granting Related Relief and (II)(A) Approving Sale of Substantially All of the Debtors’ Assets Free and Clear of All Liens, Claims, Interests and Encumbrances, (B) Approving Assumption and Assignment of Executory Contracts and Unexpired Leases and (C) Granting Related Relief [Docket No. 8] (the “Sale Motion”),2 for the reasons set forth below. I. BACKGROUND A. The Debtors’ Chapter 11 Cases. 1. On March 20, 2018 (the “Petition Date”), the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. 11 U.S.C. § 101 et seq. On the same day, the Debtors filed the Sale Motion. The Debtors are continuing to operate their respective businesses and manage their respective properties as debtors in possession pursuant to sections 1107 and 1108 of theDeadline Bankruptcy Code. 2. On April 6, 2018, the Court entered an Order (I) (A) Approving Bidding Procedures for Sale of Substantially All of the Debtors’ Assets, (B) Approving Stalking Horse Bid Protections, (C) Scheduling Auction for, and Hearing to Approve, Sale of Substantially All of 2 All capitalized terms not otherwise defined herein shall have the respective meanings assigned to such terms in the Sale Motion. {00795991 v3 } 2 Case 18-10601-MFW Doc 709 Filed 05/03/18 Page 3 of 17 the Debtors’ Assets, (D) Approving Form and Manner of Notices of Sale, Auction and Sale Hearing, (E) Approving Assumption and Assignment Procedures and (F) Granting Related Relief [Docket No. 190] (the “Procedures Order”). 3. Pursuant to the Procedures Order, the Debtors have filed the following notices of potential assumption and assignment of contracts specifying the Contracts the Debtors may assume and assign as part of the Sale, and the proposed Cure Amount for each such Contract (collectively, the “Contracts Schedule”): Notice of Potential Assumption and Assignment of Executory Contracts or Unexpired Leases and Cure Amounts [Docket No. 216; Filed 4/13/18]; Notice of Supplemental Potential Assumption and Assignment of Executory Contracts or Unexpired Leases and Cure Amounts [Docket No. 282; Filed 4/20/18]; and Notice of Second Supplemental Potential Assumption and Assignment of Executory Contracts or Unexpired Leases and Cure Amounts [Docket No. 482; filed 4/27/18]. B. The Sale Motion and Purchase Agreement. 4. As set forth in the Sale Motion, the Debtors are a production studio that “creates, produces, and distributes feature film and premium television content for the U.S. and international markets.” Their “assets consist primarily of intellectual property, distribution rights and cash flows related to the Film Library, the Television Business and the Unreleased Film Portfolio.” [Sale Motion, at 3Deadline of 254].3 5. The Debtors propose to sell substantially all of their assets to the Successful Bidder following the procedures set forth in the Procedures Order, free and clear of all Liens, and to assume and assign to the Successful Bidder certain Contracts and Leases as 3 The references to provisions in the Purchase Agreement and the other parts of the Sale Motion herein refer to the page at the top of the Sale Motion [Docket No. 8], pages 1-254. {00795991 v3 } 3 Case 18-10601-MFW Doc 709 Filed 05/03/18 Page 4 of 17 determined by the Successful Bidder, pursuant to the terms of the Stalking Horse Agreement (the “Purchase Agreement”), which is attached to the Sale Motion. 6. The term “Lien” is broadly defined by the parties in the Purchase Agreement and includes, among other things, all licenses and other third party interests, whether imposed by Contract or otherwise, and includes rights of recoupment and set-off. [Sale Motion, at 148 of 254]. 7. The Purchased Assets include: [A]ll of the Seller Parties’ direct or indirect right, title and interest in, to or under the Business and all of the Seller Parties’ properties, rights, Claims and assets (other than the Excluded Assets) of every kind and description, wherever situated or located, real, personal or mixed, tangible or intangible, whether identifiable or contingent, owned, leased, licensed, used or held for use in or relating to the Business, whether or not reflected on the books and records of the Seller Parties, as the same shall exist on the Closing Date (collectively, the “Purchased Assets”). Without limiting the generality of the prior sentence, such Purchased Assets shall include, whether they relate exclusively to the Business or not, all of the assets set forth on Schedule 2.1. [Sale Motion, at 90-91 of 254]. Schedule 2.1 of the Purchase Agreement includes the following in relevant part: (b) all of the Seller Parties’ right, title and interest of any kind or nature in and to the Title Rights and the Covered Titles (whether tangible or intangible), including, for the avoidance of doubt, all Tangible Materials; [and] (c) the right to receive and retain all sums payable from the Exploitation of the Title Rights and the DeadlineCovered Titles pursuant to the Assumed Contracts in respect of the Covered Titles for all accounting periods commencing on or after the Closing Date[.] [Sale Motion, at 233 of 254]. The definition of “Title Rights” includes the following, in relevant part: (a) the Covered Titles and any and all versions existing thereof, and all elements thereof (including the screenplay and story) and all trailers, “bloopers”, footage, trims and outtakes thereof . .; {00795991 v3 } 4 Case 18-10601-MFW Doc 709 Filed 05/03/18 Page 5 of 17 (c) the Assumed Contracts and all other contract rights with respect to each Covered Title; (d) all right, title and interest of the Seller Parties and their respective Producer as an owner of each the Covered Titles under and pursuant to any and all existing contracts and other agreements to distribute, exhibit or otherwise Exploit any the Covered Titles in any and all media . .; [and] (f) all rights to manufacture, distribute, license, exhibit, market, promote, reissue, and otherwise Exploit each Covered Title, in all languages, by any and all means and devices now known or hereafter devised, and howsoever accessed by the viewer, and to otherwise Exploit each Covered Title in all media, whether now known or hereafter existing and howsoever accessed, including, without limitation, theatrical, home video, pay, cable and free television, computers, hand held devices, cell phones and other accessing devices; and all rights to license and Exploit each Covered Title in all ancillary markets (including, without limitation, hotels, airlines, ships, military bases, etc.)[.] [Sale Motion, at 152-153 of 254]. C. Weinstein Companies’ Relationship with Music Parties. 8. In 2015, the Music Parties entered into negotiations with representatives of The Weinstein Company LLC (“TWC”) for: (i) the songwriting services of Artist for the creation of one or more musical compositions to be written, in whole or in part, by Artist (each, a “Composition”), (ii) the recording, producing and mixing of one or more master recordings of the Composition(s) (each, a “Master Recording”) to be used in the motion picture Southpaw, (iii) the exclusive right to produceDeadline and distribute a soundtrack album for Southpaw (the “Album”), and (iv) the granting to Shady of certain merchandising rights (“Merchandising Rights”).