UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Nos. 20-1750 and 20-1751

In re: WEINSTEIN COMPANY HOLDINGS LLC, et al.,

Debtors

SPYGLASS MEDIA GROUP, LLC, f/k/a Lantern Entertainment LLC

v.

BRUCE COHEN PRODUCTIONS; BRUCE COHEN, Appellants in 20-1751 BRADLEY COOPER; 22ND & INDIANA, INC.; BRUCE COHEN; BRUCE COHEN PRODUCTIONS; ROBERT DE NIRO; CANAL PRODUCTIONS, INC.; DAVID O. RUSSELL; KANZEON CORP.; JON GORDON; JON GORDON PRODUCTIONS, INC.,

Appellants in 20-1750 ________________

Appeal from the United States District Court for the District of Delaware (D.C. Civil Action Nos. 1-19-cv-00242 and 1-19-cv-00243) District Judge: Honorable Maryellen Noreika ________________

Argued January 13, 2021

Before: AMBRO, KRAUSE, and PHIPPS, Circuit Judges

(Opinion filed: May 21, 2021)

Angela M. Butcher (Argued) Michael I. Gottfried Roye Zur Elkins, Kalt, Weintraub, Reuben, Gartside 10345 West Olympic Boulevard Los Angeles, CA 90064 Kevin S. Mann Christopher P. Simon Cross & Simon 1105 North Market Street Suite 901, P.O. Box 1380 Wilmington, DE 19899

Counsel for Appellants

2 Thomas R. Califano (Argued) Sidley Austin 787 Seventh Avenue New York, NY 10019 R. Craig Martin, Esq. DLA Piper 1201 North Market Street Suite 2100 Wilmington, DE 19801

Counsel for Appellee

Anne M. Collart William P. Deni, Jr. Lawrence S. Lustberg Gibbons One Gateway Center Newark, NJ 07102

Counsel for Amicus Appellant Producers Guild of America Inc.

3 OPINION OF THE COURT

AMBRO, Circuit Judge

The Chapter 11 bankruptcy process gives a debtor many means to rehabilitate its business, including several to manage contractual obligations. Chief amongst them is the flexibility to assume (i.e., continue) or reject (i.e., breach) executory contracts, which are contracts where the debtor and the nonbankrupt counterparty each has material obligations left to perform as of the bankruptcy filing.

With great power comes great responsibility. To assume an executory contract, a debtor must cure existing defaults and put the contract in the same place as if the bankruptcy never happened. See 11 U.S.C. § 365(b)(1)(A). This scheme interacts with the Bankruptcy Code’s sale provision, 11 U.S.C. § 363, which allows a purchaser to buy substantially all the debtor’s property “free and clear of any interest in such property.” Id. § 363(f). In practice, an executory contract can be “assumed” and then “assigned” to a buyer under § 365 of the Bankruptcy Code provided all existing defaults are cured. A non-executory contract, on the other hand, can be sold under § 363 to a buyer, who must satisfy post-closing obligations but need not worry about pre- closing breaches or defaults, which typically remain unsecured claims against the debtor’s estate. Thus, whether a contract is classified as executory or non-executory has significant implications for its treatment in a bankruptcy sale.

4 This case is about whether a work-made-for-hire contract between a producer and a bankrupt movie company is an executory contract. The Weinstein Company and its affiliates (“TWC” or the “Debtors”) filed bankruptcy petitions to facilitate the sale of substantially all their assets to Spyglass Media Group, LLC (a/k/a Lantern Entertainment LLC) under § 363. Spyglass wished to buy TWC’s contract with Bruce Cohen (the “Cohen Agreement”) for producing the critically acclaimed 2012 film Silver Linings Playbook. At stake is whether Spyglass must cure existing defaults and pay around $400,000 owed to Cohen before the sale’s closing. In re