Case 14-11791-KG
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re: AMBIENT CORPORATION, Debtors.
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Chapter 11 Case No. 14-11791 (KG) Hearing Date: September 26, 2014 at 10:00 AM Objection Date: September 19, 2014 Related Docket Nos. 10, 52, 61, 62 & 68
ORACLE’S RIGHTS RESERVATION REGARDING DEBTOR’S: (I) MOTION FOR AN ORDER AUTHORIZING AND APPROVING (A) THE SALE OF THE DEBTOR’S ASSETS, AND (B) THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES (“SALE MOTION”) and (II) NOTICE OF CURE AMOUNT WITH RESPECT TO EXECUTORY CONTRACTS OR UNEXPIRED LEASES TO BE ASSUMED AND ASSIGNED (“RIGHTS RESERVATION”) Oracle America, Inc., successor in interest to Oracle Corporation (“Oracle”), a creditor and contract counterparty in the above-captioned Chapter 11 case, submits this Rights Reservation regarding the Sale Motion and the Notice of Cure Amount With Respect to Executory Contracts or Unexpired Leases to be Assumed and Assigned (“Cure Notice”), inclusive of Exhibit A thereto, filed by Ambient Corporation (“Debtor”). In support of the Rights Reservation, Oracle states: I.
INTRODUCTION 1.
In connection with the Sale Motion, the Debtor filed and served the Cure Notice,
identifying those contracts which potentially may be assumed and assigned to the Successful Bidder. 2.
Exhibit “A” to the Cure Notice includes three Oracle contracts, described as:
(a) “Partner Netword World Wide Agreement – Dated 4/2/2014”; (b) “Distribution Agreement – Dated 3/18/2014”; and (c) “Oracle License and Services Agreement – Dated 7/3/2012”
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(collectively, the “Oracle Agreements”). The Debtor’s total stated cure amount for the Oracle Agreements is $3,666.69. 3.
Although the descriptions of the Oracle Agreements are fairly specific, they fail to
include, and identify, related support renewals and governing license agreements. It is not clear whether this is reflective of the Debtor’s intent, or an oversight. 4.
For the Debtor to assume and assign Oracle’s contracts, it must describe the
licenses or other contracts at issue with enough specificity to allow identification, including any licenses and support renewals. 5.
Based on the descriptions in the Cure Notice, Oracle cannot, at this time,
determine the universe of the targeted Oracle Agreements and the appropriate cure amount owed. 6.
In addition, the purchaser may be someone other than the Stalking Horse Bidder,
Ericsson, Inc. (“Ericsson”), since the Sale Motion specifically contemplates an auction at which a different buyer may emerge as the Successful Bidder. 7.
Both the Qualified Bid deadline of September 22, 2014, and the scheduled auction
on September 24, 2014, are after both Sale Motion and Cure Notice objections are due.1 8.
As a result, Oracle cannot evaluate either the eventual purchaser’s identity, or its
acceptability as an assignee. 9.
While Ericcson is an acceptable proposed assignee, given the uncertainty
remaining about the auction’s outcome, Oracle cannot now know whether the prerequisites of 11 U.S.C. § 365(b) will be met.
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Oracle is aware that pursuant to the Cure Notice, contract counterparties have until prior to the sale hearing to object to adequate assurance if the Successful Bidder is someone other than the Stalking Horse Bidder. Through the filing of this Rights Reservation, Oracle reserves its rights to be heard on this point as well.
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10.
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Since Oracle cannot assess how its pecuniary and proprietary interests may be
affected under the proposed sale, Oracle reserves its right to be heard on these matters once the ultimate purchaser is known. 11.
As described below, Debtor may not assume and assign the Oracle Agreements
without Oracle’s consent, as such contracts involve the licensing of patented and/or copyrighted materials. In the absence of more information regarding the Debtor’s intentions, Oracle cannot consent to the proposed assumption and assignment. 12.
If the Debtor intends to assume and assign the Oracle Agreements via the Sale
Motion, in order to ensure adequate assurance of future performance by the ultimate purchaser, Oracle requests that Debtor, at a minimum, provide to Oracle the following information about the Successful Bidder: (a) financial bona fides; (b) confirmation of status as a non-competitor of Oracle’s; and (c) confirmation of the eventual purchaser’s willingness to execute an Oracle Assignment Agreement and related documentation, identifying succinctly and specifically, all of the executory contracts to be assigned. 13.
Without this information, Oracle is unable to determine the eventual buyer’s
creditworthiness or suitability/ability to adequately perform. Until these intentions are clear, Oracle reserves all rights to object to the ultimate Successful Bidder as its eventual customer and assignee. 14.
Furthermore, to the extent the Debtor seeks assumption and assignment of the
Oracle Agreements, Debtor also must pay the correct cure amounts due and owing, and confirm the Successful Bidder’s ability to perform. 15.
Since the contract descriptions appear to omit certain agreements between Oracle
and the Debtor, Oracle cannot now confirm the cure’s accuracy.
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For these reasons, Oracle requests that the Court not allow, at this time, any
contemplated assumption and assignment of the Oracle Agreements targeted by the Cure Notice, pending provision of additional information and certainty regarding the Successful Bidder, the cure amount and the complete list of contracts at issue. II.
ARGUMENT A.
The Debtor May Not Assume And Assign Or Transfer The Oracle Agreements, As They Pertain To One Or More Licenses Of Intellectual Property And Oracle Does Not Consent To The Proposed Assignments At This Time.
17.
Section 365(c)(1) of the Bankruptcy Code provides, in relevant part: The trustee may not assume or assign any executory contract ... of the debtor ... if (1)(A) applicable law excuses a party, other than the debtor, to such contract or lease from accepting performance from or rendering performance to an entity other than the debtor ..., whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties; and (B) such party does not consent to such assumption or assignment.
18.
Federal law makes non-exclusive patent licenses non-assignable absent consent of
the licensor. In re Catapult Entertainment, Inc., 165 F.3d 747 (9th Cir. 1999), cert. dismissed, 528 U.S. 924 (1999). See, In re Access Beyond Technologies, Inc., 237 B.R. 32, 48-49 (Bankr. D. Del 1999) (citing In re: West Elec., Inc.) 852 F. 2d 79 (3d Cir. 1988); In re ANC Rental Corporation, Inc., 277 B.R. 226, 235 (Bankr. D. Del. 2002); In re Golden Books Family Entertainment, Inc., 269 B.R. 311, 316 (Bankr. D. Del. 2001)). Oracle’s license agreements involve the licensing of non-exclusive, patented software. 19.
For the stated reasons, Oracle does not consent at this time to any proposed
assignments, and instead reserves its rights to be heard pending provision of further information.
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B.
The Sale Motion And Related Assumption And Assignments Potentially Designated Via The Cure Notice Should Not Be Granted At This Time With Respect To The Oracle Agreements Because They May Fail To Provide For Payment Of Appropriate Cure Amounts.
20.
Since assumption and assignment of one or more Oracle contracts is
contemplated, the Debtor cannot assign the license agreements until any arrearages are tendered, for Oracle will not consent to the assignment of contracts in payment default. 21.
At this time, Oracle does not have enough certainty about the targeted contracts to
allow for clarity on the correctness of the stated cure. 22.
For this reason, Oracle reserves, for now, regarding its consent to any assumption
or assignment of the Oracle Agreements. See 11 U.S.C. § 365(b)(1)(A). C.
The Proposed Assumption And Assignment Should Not Be Granted At This Time With Respect To The Oracle Agreements Because The Sale Motion Currently Fails To Confirm The Ultimate Buyer’s/Potential Assignee’s Identity.
23.
Section 365(b) of the Bankruptcy Code sets forth specific prerequisites that must
be met before a trustee/debtor can assume and assign an executory contract, including: (a) curing (or providing adequate assurance of a prompt cure of) any defaults under the subject contracts; and (b) providing adequate assurance of future performance. 24.
Absent the foregoing, the executory contracts may not be assumed, or assumed
and assigned. 25.
The Sale Motion is subject to an auction and the Debtor may receive additional
qualified bids. As a result, the ultimate identity of the purchaser/assignee remains unknown as of the Sale Motion’s and Cure Notice’s objection deadlines. 26.
Therefore, at this time, Oracle cannot determine whether: (a) the ultimate
purchaser/assignee is capable of providing adequate assurance of future performance; (b) the ultimate assignee is a competitor of Oracle’s; and (c) the ultimate purchaser is willing to enter 5
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into a standard form of Oracle Assignment Agreement and related documentation, reflecting the terms, post-assignment, of the parties’ relationship. 27.
Until at least the information identified above is provided, Oracle is unable to
determine whether Debtor has complied, or will comply, with the protections of section 365(b)(1)(C). III.
CONCLUSION 28.
The Debtor is prohibited from assuming and assigning, or transferring, any Oracle
agreements in the absence of first obtaining Oracle’s consent pursuant to section 365(c) and applicable case law. 29.
At this time, the Debtor has not met the statutory prerequisites for assumption and
assignment of the targeted Oracle Agreements by failing to: (a) identify the ultimate buyer with certainty so as to permit an evaluation of its ability to perform; () identify the contract or contracts at issue with enough specificity and completeness so as to permit an evaluation of their assignability and the accuracy of the resultant cure payment; and (c) provide adequate assurance of future performance 30.
For these reasons, and all those set forth above, Oracle respectfully reserves its
rights to be heard regarding, and requests that the Court not allow at this time, any effort via Debtor’s Sale Motion and Cure Notice to assume and assign the Oracle Agreements.
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Dated: September 19, 2014 Wilmington, Delaware
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Respectfully submitted, MARGOLIS EDELSTEIN /s/ James E. Huggett James E. Huggett, Esq. (#3956) 300 Delaware Avenue, Suite 800 Wilmington, Delaware 19801 Telephone: (302) 888-1112 E-mail:
[email protected] Amish R. Doshi, Esq. MAGNOZZI & KYE, LLP 23 Green Street, Suite 302 Huntington, New York 11743 Tel: (631) 923-2858 Shawn M. Christianson, Esq. BUCHALTER NEMER P.C. 333 Market Street, 25th Floor San Francisco, California 94105-2126 Telephone: (415) 227-0900 Deborah Miller, Esq. ORACLE AMERICA, INC. 500 Oracle Parkway Redwood City, California 94065 Telephone: (650) 506-5200 Attorneys for Oracle America, Inc.
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Case 14-11791-KG
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re: AMBIENT CORPORATION, Debtors.
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Chapter 11 Case No. 14-11791 (KG)
CERTIFICATE OF SERVICE I, James E. Huggett, hereby certify that on September 19, 2014, I served a copy of Oracle’s Rights Reservation Regarding Debtor’s: (I) Motion For An Order Authorizing And Approving (A) The Sale Of The Debtor’s Assets, And (B) The Assumption And Assignment Of Certain Executory Contracts And Unexpired Leases (“Sale Motion”) And (Ii) Notice Of Cure Amount With Respect To Executory Contracts Or Unexpired Leases To Be Assumed And Assigned (“Rights Reservation”) on the parties listed on the attached service list via electronic mail or facsimile.
/s/ James E. Huggett___________ James E. Huggett (#3956)
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SERVICE LIST Ambient Corporation 7 Wells Avenue, Suite 11 Newton, MA 02459 Attn: John J. Joyce Fax No. (617) 332-7260 Bayard, P.A. 222 Delaware Avenue, Suite 900 Wilmington, DE 19801 Attn: Charlene D. Davis & Justin R. Alberto
[email protected] [email protected] Gavin/Solmonese, LLC 919 Market Street, Suite 600 Attn: Wayne P. Weitz
[email protected] Office of the United States Trustee 844 King Street, Suite 2207 Lockbox 35 Wilmington, DE 19801 Attn: Tiiara Patton
[email protected] Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019 Attn: Marilyn Sobel & Diane Meyers
[email protected] [email protected] Young, Conaway, Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, DE 19801 Attn: Pauline K. Morgan
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