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Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 1 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) In re: ) Chapter 11 ) FRANCESCA’S HOLDINGS ) Case No. 20-13076 (BLS) CORPORATION, et al., ) ) Jointly Administered ) Debtors. ) Hearing Date: January 21, 2021 at 11:00 AM Sale Objection Date: January 14, 2021 Cure Objection Date: January 18, 2021 Docket No. 45 & 295 ORACLE’S LIMITED OBJECTION TO AND RESERVATION OF RIGHTS REGARDING (1) DEBTORS’ MOTION FOR ENTRY OF AN ORDER (1) (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; and (2) AMENDED NOTICE OF POTENTIAL ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES AND CURE AMOUNTS Oracle America, Inc., successor in interest to MICROS Systems, Inc., BEA Systems, Inc., Sunopsis, Retek, NetSuite, Inc., and Bronto Software, Inc. (“Oracle”), a creditor and contract counter-party in the above-captioned jointly administered Chapter 11 cases, submits this limited objection to and reservation of rights (“Rights Reservation”) regarding: (1) Motion of Debtors 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 Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 2 of 12 Related Relief [Dkt. No. 45] (“Sale Motion”); and (2) Amended Notice of Potential Assumption and Assignment of Executory Contracts or Unexpired Leases and Cure Amounts (“Assumption Notice”), filed by Francesca’s Holding Corporation, et al. (“Debtors”). I. INTRODUCTION 1. In connection with the Sale Motion, the Debtors seek Bankruptcy Court authority to, among other things, assume and assign certain executory contracts between the Debtors and Oracle. 2. Oracle objects to the proposed assumption and assignment for several reasons. a) First, the targeted Oracle agreements are, or pertain to, one or more licenses of intellectual property which are not assignable absent Oracle’s consent pursuant to both the underlying license agreements and applicable law. b) Second, the Assumption Notice does not provide a complete description of the Oracle contracts which the Debtors seek to assume and assign. As a result, Oracle is unable to identify with certainty the agreements at issue, or to confirm whether the Debtors’ proposed cure is accurate. In addition, the Assumption Notice identifies certain agreements between the Debtors and two Oracle partners/resellers. Oracle is currently in the process of reviewing its records to determine the scope of its relationship and the impact the assignment may have on those agreements. c) Third, the Sale Motion does not provide Oracle with sufficient information to determine whether the ultimate purchaser/assignee is capable of performing under the terms of the contracts the Debtors seek to assume and assign. d) Finally, the APA (defined below) could potentially include the unauthorized shared use of Oracle’s licenses, in a manner which is not permitted by Oracle’s agreements. Oracle objects to any unauthorized shared use of its licenses which may be contemplated by the Debtors. 3. Accordingly, Oracle requests that the Court deny the Debtors’ request for authority to assume and assign, transfer, or share use of any Oracle agreement without Oracle’s consent. 2 Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 3 of 12 II. FACTUAL BACKGROUND 4. The Debtors filed the above captioned cases on December 3, 2020 and an order directing joint administration was entered shortly thereafter. The Debtors continue to operate as debtors in possession. 5. On December 4, 2020, the Debtors filed the Sale Motion, which seeks Court authority to sell substantially all of the Debtors’ assets. The stalking horse bidder is TerraMar Capital, LLC (the “Stalking Horse”). 6. On January 4, 2021, an Order [Dkt. No. 263] was entered approving certain bid and assumption and assignment procedures (“Bid Procedures Order’). 7. The Bid Procedures Order sets forth the following deadlines: (a) January 13 at 5:00 p.m. for bids; (b) January 14 at 5:00 p.m. to object to the Sale Motion; (c) January 15 at 10:00 a.m. for the auction; and (4) January 19th at 5:00 p.m. to object to the auction results. 8. This timeline requires that objections to the Sale Motion be filed prior to the auction’s occurrence. 9. In addition, if someone other than the Stalking Horse is the winning bidder, this timeline provides little time for interested parties to review any additional or amended sale or purchaser related documents, including the resultant asset purchase agreement. 10. On January 6, 2021, the Debtors filed their Notice of Potential Assumption and Assignment of Executory Contracts or Unexpired Leases and Cure Amounts [Dkt. No. 271] (“Initial Assumption Notice”). 11. The Initial Assumption Notice listed numerous contracts between Oracle and the Debtors. 3 Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 4 of 12 12. On January 10, 2021, the Debtors filed their Assumption Notice. Exhibit “1” to the Assumption Notice identifies several Oracle agreements (“Oracle Agreements”) which may be assumed and assigned, each with a stated $0.00 cure amount. 13. The Oracle Agreements are identified as follows: Contract Counterparty Date of Contract Description Cure Amount Oracle America, Inc. 2/10/20 Ordering Document $0.00 Oracle America, Inc. 11/27/2013 Oracle Master Agreement $0.00 Amendment Three Oracle America, Inc. 4/5/2016 Oracle Master Agreement $0.00 Amendment Two Oracle America, Inc. 11/27/2013 Executable Quote $0.00 Oracle America, Inc. 4/28/2106 Ordering Document $0.00 Oracle America, Inc. 5/2/2016 Executable Quote $0.00 Oracle America, Inc. 5/2/2016 Executable Quote $0.00 Oracle America, Inc. 4/28/2016 Amendment One $0.00 Oracle America, Inc. 10/17/2016 Limited Use License $0.00 Document 14. In addition to the Oracle Agreements, the Assumption Notice identifies eight agreements with Kibo Software, Inc, (“Kibo”) accompanied by a stated $349,079 cure (“Kibo Agreements”). 15. The Kibo Agreements are identified as follows: Contract Counterparty Date of Contract Description Cure Amount Kibo Software, Inc. 1/1/2017 Service Package Order Kibo Software, Inc. 1/14/2019 Statement of Work Kibo Software, Inc. 5/31/2017 eCommerce Email Service Order - Renewal Kibo Software, Inc. 11/20/2017 eCommerce Email Service Order - Renewal $349,079 Kibo Software, Inc. 12/06/2018 eCommerce Email Service Order - Renewal Kibo Software, Inc. 6/06/2017 eCommerce Email Service Order - Renewal Kibo Software, Inc. 6/16/2017 Fourth Amendment – Agreement Extension Kibo Software, Inc. 6/08/2016 Third Amendment – Agreement Extension 4 Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 5 of 12 16. The Assumption Notice also identifies seven agreements with MarketLive, Inc. (Bronto) (“MarketLive”) with a $0.00 cure amount (“MarketLive Agreements”). 17. The MarketLive Agreements, some of which appear to have the same contract descriptions as the Kibo Agreements, are identified as follows: Contract Counterparty Date of Contract Description Cure Amount MarketLive, Inc. (Bronto) 5/31/2017 eCommerce Email Service $0.00 Order - Renewal MarketLive, Inc. (Bronto) 11/20/2017 eCommerce Email Service $0.00 Order - Renewal MarketLive, Inc. (Bronto) 12/06/2018 eCommerce Email Service $0.00 Order - Renewal MarketLive, Inc. (Bronto) 6/06/2017 eCommerce Email Service $0.00 Order - Renewal MarketLive, Inc. (Bronto) 6/25/2015 Extension and Renewal $0.00 MarketLive, Inc. (Bronto) 6/16/2017 Fourth Amendment – $0.00 Agreement Extension MarketLive, Inc. (Bronto) 6/08/2016 Third Amendment – $0.00 Agreement Extension 18. Oracle believes that the Kibo Agreements and the MarketLive Agreements relate to certain NetSuite products and services. 19. Both MarketLive and Kibo are Oracle partners/resellers. Based on Oracle’s records, MarketLive changed its name to Kibo, and the reseller agreement between the parties was terminated on September 30, 2020. 20. Oracle is in the process of determining whether a new agreement was entered into and if so, the terms of such an agreement. 21. Since this investigation is ongoing, Oracle reserves its rights with respect to assumption and assignment of the Kibo and MarketLive Agreements. 22. On January 8, 2021, the Debtors filed a Notice of Filing of Stalking Horse Agreement [Dkt. No. 280] (“Notice”). 5 Case 20-13076-BLS Doc 315 Filed 01/14/21 Page 6 of 12 23. Attached as Exhibit 2 to the Notice is the Asset Purchase Agreement between the Debtors and the Stalking Horse (“APA”). 24. The APA appears to intend to grant both the Stalking Horse and the Debtors simultaneous access to certain information for up to twelve (12) months following the Closing Date. 25. The relevant language on this point in the APA is as follows: Upon reasonable request from Seller during reasonable hours and taking into consideration the workload of Buyers’ employees on behalf of Buyers, Acquisition Buyer will, for a period of twelve (12) months following the Closing Date, provide to Seller, and the accountants, counsel and representatives of Seller, including any administrator or liquidator of Seller’s estate, such access to the pre-Closing books and records relating to the Business as is reasonably necessary to permit Seller to monetize any Excluded Assets and otherwise liquidate its estate after the Closing and to conclude the Bankruptcy Case, including the reconciliation and litigation of claims and making of distributions to creditors or otherwise.