Third Circuit disposition — 20-1878

PRECEDENTIAL
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)

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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

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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

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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.

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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 obligations under those Agreements.
Investors’ Br. at 16; see In re Exide Techs., 607 F.3d 957, 962
(3d Cir. 2010).3
2 Many of the Investment Agreements provided for the Investor
to have a lien on the Film’s profits to secure TWC’s
obligations. However, the security interests apparently were
not deemed meaningful, for no financing statements were filed
to perfect the liens (perhaps because the purported collateral
comprised of speculative streams of payments). See Oral Arg.
Tr. 4:7–14.
3 Whether a contract is “executory” has significant
implications for its treatment under the Bankruptcy Code, the
main one being that a debtor has the right to assume (i.e.,
continue) or reject (i.e., breach) an executory contract with
court approval. See 11 U.S.C. § 365(a). As background, our
Circuit has adopted the definition of an executory contract
proposed by Professor Vern Countryman—“[A] contract under
which the obligation of both the bankrupt and the other party
to the contract are so far [unperformed] that the failure of either
to complete performance would constitute a material breach
excusing the performance of the other.” Exide, 607 F.3d at 962
(internal quotation marks and citation omitted).

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On March 19, 2018, following many sexual misconduct
allegations against TWC’s co-founder Harvey Weinstein,
TWC sought bankruptcy protection to facilitate the sale of its
assets to Spyglass. That same day, TWC and Spyglass signed
the APA, which was later amended twice with input from
creditors. The sale closed in July 2018 and Spyglass paid $287
million.
One important function of the APA was to specify the
assets Spyglass would purchase and the liabilities it would take
over from TWC. “Purchased Assets,” as its name suggests, are
part of the sale, while “Excluded Assets” obviously are not.
App. 843–44, APA §§ 2.1, 2.2. Spyglass also took the bitter
with the sweet and agreed to assume all liabilities associated
with the Purchased Assets. App. 844, APA § 2.3. They are
defined broadly and can include some “Contracts,” which the
APA states are “any written contract, lease, license, agreement,
arrangement, understanding, commitment, instrument,
guarantee, undertaking, bid or proposal.” App. 897, APA Ex.
A-4. The main category of Contracts within Purchased Assets
are “Assumed Contracts,” which are those Contracts that
Spyglass designates in writing it wants to buy and assume,
though the parties dispute just which Contracts can be
Assumed Contracts. App. 917, APA Sch. 2.1(e). Subject to
certain conditions, Spyglass was given until November 2018,
almost four months after the sale’s closing in July 2018, to
designate or remove Assumed Contracts. App. 850, APA §
2.8(i); App. 1084–85, 1087.
This dispute stems in part from confusing notices about
Assumed Contracts filed by the Debtors and Spyglass. In May
2018, the Debtors filed a Final List of Potentially Assumed

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Contracts and Leases (“the Assumed Contracts Schedule”) that
purported to identify the “Assumed Contracts . . . subject to
assumption and assignment.” App. 668–69. That Schedule
listed all the Investment Agreements, but with a disclaimer that
“the presence of an Assumed Contract and Lease listed on
Exhibit 1 attached hereto does not constitute an admission that
such Assumed Contract and Lease is an executory contract or
unexpired lease.” App. 669.
The Debtors later tried to remove the Investment
Agreements from the Assumed Contracts Schedule but did not
do so clearly. In the June 2018 Contract Notice, they listed
eight of the Investment Agreements on a schedule that
“identifies certain non-executory contracts that are being
removed from the Assumed Contracts Schedule.” App. 10,
678. Following the sale closing in July, Spyglass filed the
November 2018 Contract Notice, which listed nine Investment
Agreements as “Excluded Contracts,” therefore not Assumed
Contracts. App. 11, 847, 1483, 1558. The effect of these
confusing contract notices is disputed, but the key takeaway is
that not all the Investment Agreements were removed from the
Assumed Contracts Schedule. See Spyglass Br. at 17
(conceding that one Investment Agreement remained on the
list of contracts to be assumed).
The Investors were essentially quiet until January 2019,
when they sent a letter to Spyglass requesting payments (i.e.,
their asserted share of a Film’s profits) due under one of the
Investment Agreements. Spyglass refused. In response, the
Investors filed a motion in the Bankruptcy Court seeking a
judgment that Spyglass bought all the Investment Agreements
under the APA. The Bankruptcy Court denied the motion, and
the District Court affirmed.

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II.
We look anew at the District and Bankruptcy Courts’
conclusions of law. In re Goody’s Family Clothing Inc., 610
F.3d 812, 816 (3d Cir. 2010) (citation omitted). Our task here
is to interpret the APA, which by its terms is governed by
federal bankruptcy and Delaware law. App. 880, APA §
13.6(a). Where a contract is unambiguous, we interpret it as a
matter of law. See Wayne Land & Mineral Grp. LLC v.
Delaware River Basin Comm’n, 894 F.3d 509, 528 (3d Cir.
2018).
III.
This case reduces to a single question: Did Spyglass
assume TWC’s obligations under the Investment Agreements?
We first address the Investors’ primary argument that the
Investment Agreements are Assumed Contracts and thus
Purchased Assets whose obligations were assumed by
Spyglass.
The parties agree that the Investment Agreements are
Contracts but disagree if they are Assumed Contracts. In turgid
legalese meant to be precise but hardly simple, section 2.8(a)
of the APA provides as follows (with explanatory annotations):
[First sentence] Section 2.8(a) of the Disclosure
Schedule sets forth a list of all executory Contracts
relating to the Business or the Purchased Assets to
which one or more of Seller Parties [TWC] are party
(the “Available Contracts”) . . . and which may be
updated from time to time after the Execution Date by

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the Seller Parties to add any Contracts not included on
such schedule as of the Execution Date. [Second
sentence omitted] . . . [Third sentence] Prior to the
Closing Date, Buyer [Spyglass], in its sole discretion by
written notice to the Seller Parties, shall designate in
writing which Available Contracts . . . relating to the
Business or the Purchased Assets that Buyer wishes to
“assume” (the “Assumed Contracts”) and subject to the
right of Buyer, at any time prior to the Closing Date,
Buyer may, in its sole discretion, determine not to
“assume” any Available Contracts previously
designated as an Assumed Contract. [Fourth sentence]
All executory Contracts of the Seller Parties that are
listed on Section 2.8(a) of the Disclosure Schedule as of
the Closing Date and which Buyer does not designate in
writing for assumption shall not be considered Assumed
Contracts or Purchased Assets and shall automatically
be deemed “Excluded Contracts” (and for the avoidance
of doubt, Buyer shall not be responsible for any related
Cure Amounts related to any Excluded Contracts).
App. 847 (emphasis and explanatory notes added). The
Second Amendment to the APA, executed in July 2018 before
the sale closed that month, added the word “executory”
(italicized above) in the fourth sentence. App. 949, 1083.
We conclude that, based on the APA and bankruptcy
law, the Investment Agreements are not Assumed Contracts.
First, section 2.8 limits Assumed Contracts to executory
Contracts, but the Investment Agreements are, without dispute,
not executory. Assumed Contracts can only be selected from
the list of Available Contracts, which is “a list of all executory
Contracts.” App. 847, APA § 2.8(a) (emphasis added). The

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Investors rejoin that because the second clause of the first
sentence in section 2.8(a) says that “any Contracts” can be
added to the list, that means non-executory Contracts can be
Available Contracts and thus can be designated as Assumed
Contracts subject to sale.
We reject that reading. The term “Available Contracts,”
which lists those Contracts that can be designated for
assumption by Spyglass, is limited to executory Contracts (the
first clause of the first sentence in section 2.8(a)). Further, the
references to cure amounts elsewhere in the section make sense
only for executory contracts. See 11 U.S.C. § 365(b)(1)(A)
(discussing “cure” obligations in the context of executory
contracts).
Second, the word “assume” is a term of art in
bankruptcy that applies only to executory contracts. See 11
U.S.C. § 365(a); In re Columbia Gas Sys. Inc., 50 F.3d 233,
239 (3d Cir. 1995) (“In cases where the nonbankrupt party has
fully performed [that is, a non-executory contract], it makes no
sense to talk about assumption or rejection.”); In re Exide
Techs., 378 B.R. 762, 765 (Bankr. D. Del. 2007) (“Section 365
allows debtors to assume or reject an executory contract[] but
provides no such option for a non-executory contract.”). Here,
the APA is to be “construed in accordance with federal
bankruptcy law.” App. 880, APA § 13.6(a). The Investors do
not offer any persuasive arguments that the APA deviated from
the Bankruptcy Code. Read as a whole, the APA is not
ambiguous—an Assumed Contract must be an Available
Contract and an Available Contract must be an executory
Contract, so Assumed Contracts must be executory.

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Third, because a non-executory Contract cannot be an
Assumed Contract, it does not matter if it appeared on the
Assumed Contracts Schedule. We acknowledge that the
Debtors and Spyglass did not clearly remove all the Investment
Agreements from the Assumed Contracts Schedule, and
despite two attempts to do so in the June and November 2018
Contract Notices, at least one Investment Agreement still
remained on that Schedule. Spyglass Br. at 17. But for
Spyglass this mistake is not fatal to its case that none of the
Investment Agreements were Assumed Contracts, as it only
failed to remove what should not have been there in the first
place.4 Thus we do not reach any of the Investors’ arguments
about whether Spyglass properly removed any of the
Investment Agreements from the Assumed Contracts
Schedule, including whether it could do so after the sale
closing.
Fourth, we also reject the Investors’ judicial estoppel
argument. The Investors point by analogy to the treatment of
the Cohen Agreement, a work-made-for-hire contract between
TWC and a producer (though not an Investment Agreement),
as evidence that a non-executory Contract can still be an
Assumed Contract. Specifically, they note that the Cohen
Agreement was listed on the Assumed Contracts Schedule,
later listed in the June 2018 Contract Notice as a non-executory
Contract, then ultimately purchased pursuant to § 363 of the
4 None of this is meant to reward oversights in drafting the
contract notices. However, because tens of thousands of
contracts were at issue in this case, we are sympathetic to the
reality that mistakes are inevitable. App. 2293, Bankr. Hr’g
Tr. 58 (acknowledging that there was “confusion because the
original list . . . may have included non-executory contracts”).

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Bankruptcy Code. The Investors insist that what is good for
the goose must be good for the gander, so if Spyglass bought
the Cohen Agreement, a non-executory Contract, by listing it
on the Assumed Contracts Schedule, then that Schedule can be
used to purchase the Investment Agreements too.
But this argument omits a critical fact—Spyglass
indicated in the November 2018 Contract Notice that it
believed it had already purchased the Cohen Agreement. App.
1484 n.3 (“The Purchaser [Spyglass] filed a declaratory action
against one talent counterparty, Bruce Cohen, on October 17,
2018, seeking a determination that the contract between Cohen
and The Weinstein Company is not executory and therefore
was already assigned to the Purchaser pursuant to Bankruptcy
Code section 363 [to repeat, the Code’s sale section].”); see
also App. 2295, Bankr. Hr’g Tr. 60 (noting that the Investment
Agreements “are distinguishable from the Cohen contract[] . .
. because the buyer designated the Cohen contract[] as one[]
that the buyer bought under 363”). Here, Spyglass never
indicated it wished to purchase the Investment Agreements
under § 363. The only glimmer of that intent is the Assumed
Contracts Schedule, a document filed early in the sale process
that was over 2,000 pages long and listed tens of thousands of
Contracts under a glaring disclaimer that the presence of any
Contract on that list is not an admission it is executory. That
Schedule is not enough for us to override the otherwise lucid
language in the APA. Put differently, mistakenly listing non-
executory Contracts on a behemoth schedule meant to include
only executory Contracts hardly suffices as explicit intent to
purchase them. And to be clear, it is possible for Spyglass to
purchase a non-executory Contract as part of the § 363 sale, as
it purported to do for the Cohen Agreement. But that purchase

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is not accomplished by relying on “Assumed Contracts,” a
term limited to executory Contracts.
Having concluded the Investment Agreements are not
Assumed Contracts, we turn next to the definition of
“Excluded Liabilities” (i.e., liabilities retained by TWC and not
transferred to Spyglass), which includes “all liabilities arising
under any Contract that is not an Assumed Contract.” App.
845, APA § 2.4(f). This describes the Investment Agreements.
Thus Spyglass did not assume any obligations under the
Investment Agreements and is not required to turn over any of
the Films’ profits to the Investors.5
This result is not an accident but a feature of bankruptcy
law. Where the nonbankrupt party has performed a contract
but the debtor has not (in other words, the contract is not
executory because there is no material obligation to be
5 We do not need to resolve whether the Investment
Agreements are also “Excluded Liabilities” because they are
debt instruments. App. 500, APA § 2.4(c). Still, we think the
District Court likely erred when it concluded the Investment
Agreements are debt instruments. The Investors’ right to
payment is tied solely to the Films’ performance, and they
recover nothing if the Films do not generate profit. Indeed,
many of the Autostyle factors our Circuit previously used to aid
in the analysis weigh against the conclusion these Investment
Agreements are debt instruments. See In re HH Liquidation,
LLC, 590 B.R. 211, 292–96 (Bankr. D. Del. 2018); see also In
re Autostyle Plastics, Inc., 269 F.3d 726, 749–50 (6th Cir.
2001). For instance, the agreements are called “Investment
Agreements” rather than loan or note agreements, most lack a
fixed maturity date, and none has a set rate of interest.

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performed by the non-debtor), “the estate could receive no
benefit from” assuming the contract, so “it seems appropriate
to simply bar the trustee from ever assuming such a contract.”
3 Collier on Bankruptcy ¶ 365.02[2](a) (16th ed. 2020). In
effect, the Bankruptcy Code views these non-executory
contracts as liabilities for the debtor, unlike executory contracts
whose value is uncertain and must be afforded the flexible
assumption and rejection process set out in § 365. Of course,
buyers can still voluntarily assume liabilities, including (as
noted above) buying non-executory contracts as part of a § 363
sale, but they must clearly agree to do so. Here, we have no
evidence of that clear agreement, nor do the Investors present
any evidence that the assumption of these liabilities was ever
negotiated with the Debtors or Spyglass. The Investors’
arguments fail because the Bankruptcy Code anticipates that
Spyglass would typically not want to buy these Investment
Agreements and, indeed, nothing indicates otherwise.
IV.
The Investors raise additional arguments, but they are
based on less plausible readings of the APA.
The Investors’ first alternative argument is that the
Investment Agreements are Purchased Assets because they are
“Title Rights,” which include “other contract rights with
respect to each Covered Title.” App. 917, APA Sch. 2.1(b);
App. 1008, APA Ex. A-13. All the Films are Covered Titles,
so the Investors assert that the Investment Agreements are Title
Rights. This catch-all term, however, was meant to address
valuable intellectual property and other rights in TWC’s
movies to ensure that Spyglass received the benefit of its
bargain. By contrast, the Investment Agreements do not

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contain any valuable rights in the Films. Ancillary contract
rights in the Investment Agreements such as indemnification
and confidentiality are about the contractual arrangement and
not rights “with respect to” the Films. The only provision
remotely approaching a Title Right is the Investors’
opportunity to provide guidance regarding production,
distribution, and marketing of the Films. But this is hardly a
“right” for TWC, especially given all the Films were released
years ago. The Investors did not retain any intellectual
property in the Films, so they are stuck with the bargain they
struck.
Second, we also reject the Investors’ back-door
argument that the Investment Agreements were purchased by
Spyglass because they are not “Excluded Assets.” As
amended, the definition of Excluded Assets captures “all
executory Contracts that are not Assumed Contracts.” App.
844, APA § 2.2; App. 919, APA Sch. 2.2(h). The term
“executory” was added in the Second Amendment. App. 1021.
The Investors argue that assets under the APA are either
“Purchased” or “Excluded,” so if they are not Excluded, they
must be Purchased. No doubt this provision is not the model
of clarity, for the definition of “Excluded Assets” is silent on
how to classify non-executory Contracts. But we do not need
to adopt the Investors’ reading. For one thing, the definition of
“Excluded Liability,” as noted above, states that Spyglass did
not assume liabilities under Contracts that are not Assumed
Contracts. That express provision supersedes the silent one.
App. 844, APA § 2.4 (“Notwithstanding any provision in this
Agreement or any other writing to the contrary, . . . Buyer is
assuming only the Assumed Liabilities and is not assuming any
other Liability of any Seller Party of whatever nature.”)
(emphasis added); cf. Gerber v. Enter. Prods. Holdings, LLC,

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67 A.3d 400, 419 (Del. 2013), overruled on other grounds by
Winshall v. Viacom Int’l, Inc., 76 A.3d 808 (Del. 2013).
Further, the Investors’ argument defies logic. Under their
view, Spyglass agreed in the APA, by default, to buy every
non-executory Contract and assume their post-closing
obligations. The APA and common sense do not require us to
go so far.
Finally, the Investors argue that because the Films are
Purchased Assets, and Spyglass assumed all liabilities “arising
out of the operation of the Purchased Assets,” App. 844, APA
§ 2.3, it also assumed obligations under the Investment
Agreements. This argument fails because the Investment
Agreements only provided funding for the Films and did not
affect their operation, as the Investors had no hand in making
or releasing the Films.
* * * * *
Ultimately, the Investors’ arguments amount to a
“gotcha”—that Spyglass accidentally purchased the
Investment Agreements due to a foot fault.6 For us to conclude
that it agreed to assume significant liabilities under non-
executory contracts with no obvious benefit, we need clear
language in the APA or an unambiguous indication of
Spyglass’s intent to do so. We have neither here, so we affirm
6 Tellingly, the Investors did not try to clarify whether Spyglass
bought the Investment Agreements until January 2019, nearly
six months after the sale closed and two months after the
November 2018 Contract Notice was filed. Oral Arg. Tr.
10:14–11:7.

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the District Court’s order affirming the Bankruptcy Court’s
ruling.

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