UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 20-1878

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

Debtors Y MOVIE, LLC; Y THEATRICAL, LLC; YFE HOLDINGS, INC.; OA3, LLC; RMF, LLC,

Appellants

Appeal from the United States District Court for the District of Delaware (D.C. Civil Action No. 1-19-cv-00675) District Judge: Honorable Maryellen Noreika

Argued January 13, 2021

Before: AMBRO, KRAUSE, and PHIPPS, Circuit Judges

(Opinion filed: May 21, 2021) Matthew G. Bouslog Gibson Dunn & Crutcher 3161 Michelson Drive Irvine, CA 92612 Blaine H. Evanson Gibson Dunn & Crutcher 3161 Michelson Drive Suite 1200 Irvine, CA 92612 Robert A. Klyman (Argued) Gibson Dunn & Crutcher 333 South Grand Avenue Los Angeles, CA 90071 Michael R. Nestor Young Conaway Stargatt & Taylor 1000 North King Street Rodney Square Wilmington, DE 19801 Max Schulman Gibson Dunn & Crutcher 1050 Connecticut Avenue, N.W. Washington, DC 20036

Counsel for Appellants

Rachel E. Albanese DLA Piper LLP

2 1251 Avenue of the Americas 27th Floor New York, NY 10020 Thomas R. Califano (Argued) DLA Piper LLP Sidley Austin 787 Seventh Avenue New York, NY 10019 Maris J. Kandestin R. Craig Martin DLA Piper LLP 1201 North Market Street Suite 2100 Wilmington, DE 19801

Counsel for Appellee Spyglass Media Group, LLC

OPINION OF THE COURT

AMBRO, Circuit Judge

When a debtor sells its business in bankruptcy, it negotiates what assets and liabilities are transferred to the buyer, including contracts with continuing debtor obligations. The terms of the sale (often negotiated quickly)—embodying

3 what is sold and what is left behind—are not always clear, creating confusion and disputes. We have such a case here, in essence one of contract interpretation.

A group of investors (the “Investors”) provided funding to The Weinstein Company and its affiliates (“TWC” or the “Debtors”) in exchange for a share of future profits in certain movies (the “Films”). When TWC declared bankruptcy, it sold substantially all its assets to Spyglass Media Group, LLC (also known as Lantern Entertainment LLC) under § 363 of the Bankruptcy Code, which they documented in an Asset Purchase Agreement (the “APA”).1

The Investors argue that, under the APA, Spyglass bought the Investment Agreements and assumed the associated obligations, but Spyglass disagrees. Although the Investors present creative and plausible arguments, we affirm the District Court’s affirmance of the Bankruptcy Court’s decision and hold that, under the APA, the Investment Agreements are not “Purchased Assets” and the associated obligations are not “Assumed Liabilities.”

1 The Bankruptcy Code allows the debtor, after notice and a hearing, to sell its property “free and clear of any interest in such property,” subject to certain conditions and applicable non-bankruptcy law. 11 U.S.C. § 363(f). This means that successor liability is often extinguished in a 363 sale. See In re Trans World Airlines, Inc., 322 F.3d 283, 285 (3d Cir. 2003). However, buyers can and typically do assume liabilities voluntarily under the terms of the sale.

4 I.

The Investors provided funding to the Debtors through twelve sets of Investment Agreements, each relating to a different Film. In exchange for their upfront contribution, the Investors were to receive a share of the Films’ profits (if any existed), though they did not own any intellectual property in them.2 Further, the Investors agreed that the Investment Agreements are not executory contracts under the Bankruptcy Code, as they already funded each investment and do not have remaining material obliga