Case 18-80856 Doc 582 Filed 02/27/19 Page 1 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA DURHAM DIVISION In re: Chapter 11 Advanced Sports Enterprises, Inc., et al., 1 Case No. 18-80856 (Joint Administration Debtors. MOTION TO ASSUME AND ASSIGN EXECUTORY CONTRACT WITH STONE AGE EQUIPMENT, INC., TO BIKECO, LLC Advanced Sports Enterprises, Inc., Advanced Sports, Inc., Performance Direct, Inc., Bitech, Inc. and Nashbar Direct, Inc. (collectively, the Debtors file this Motion pursuant to section 365 of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code, for the entry of an order authorizing the Debtors to assume and assign that certain executory contract described below to BikeCo, LLC or its designee, as follows: 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334. Consideration of this Motion is a core proceeding pursuant to 28 U.S.C. 157(b. Venue of this proceeding is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. 2. The statutory predicates for the relief requested herein are Section 365 of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules. 3. On November 18, 2018 (the Petition Date, the Debtors each filed voluntary petitions with the Court under chapter 11 of the Bankruptcy Code, no trustee has been appointed, 1 The Debtors in this case, along with each Debtor s case number, are: (i Advanced Sports Enterprises, Inc., Case No. 18-80856; (ii Advanced Sports, Inc., Case No. 18-80857; (iii Performance Direct, Inc., Case No. 18-80860; (iv Bitech, Inc., Case No. 18-80858; and (v Nashbar Direct, Inc., Case No. 18-80859.
Case 18-80856 Doc 582 Filed 02/27/19 Page 2 of 6 and the Debtors remain in possession of their respective assets. An official committee of unsecured creditors (the Committee has been duly appointed. BACKGROUND 4. On February 6, 2019, the Court entered an order (Doc. 505, the Sale Order approving the sale of certain assets of the Debtors to BikeCo, LLC ( BikeCo, Amain.com, Inc. ( AMain and K&B Investment Corporation ( K&B. Closings on the sales occurred on February 8, 2019. 5. The Sale Order provided that pursuant to the terms of BikeCo s APA, from the Closing Date until thirty (30 days prior to the conclusion of the Transition Period (as defined in the Transition Agreement, BikeCo or its designee shall have the right to designate any Wholesale-Related Contracts or unexpired real property leases which have not previously been rejected for assumption by the Sellers and assignment to BikeCo or its designee, as set forth below: a. Upon such designation by BikeCo or its designee pursuant to an Assumption Notice, the Debtors shall take all actions reasonably necessary to seek the authority of this Court, subject to BikeCo or its designee demonstrating adequate assurance of future performance thereunder and the satisfaction of any Cure Costs (as defined in BikeCo s APA relating thereto, to assume and assign to BikeCo or its designee pursuant to Section 365 of the Bankruptcy Code the contract(s or lease(s set forth in the applicable Assumption Notice. b. The Debtors will serve upon each non-debtor counterparty to such designated contracts and leases (the Designated Contracts notice of the intent to assume and assign the Designated Contracts to BikeCo or its designee (the Assignment Notice and provide an opportunity for objection, notice and further hearing upon any objection timely filed. c. The failure of this Court to approve the subsequent proposed assumption and assignment of any the contract(s or lease(s set forth in the applicable Assumption Notice will not constitute a breach of BikeCo s APA or reduction in the Purchase Price thereunder. d. All of the respective rights of the non-debtor counterparties to the Debtors executory contracts or unexpired real property leases arising under the Bankruptcy Code or prior orders of this Court, including without limitation to (i seek relief from the automatic stay or otherwise move to compel the Debtors to assume or reject their respective contracts or leases, (ii object to the proposed assumption and assignment of their respective 2
Case 18-80856 Doc 582 Filed 02/27/19 Page 3 of 6 contracts or leases on any grounds, and/or (iii object to any motion by the Debtors to extend their time to assume or reject unexpired real property leases, are reserved and shall be unaffected by the terms of this Sale Order. RELIEF REQUESTED 6. BikeCo has designated the following executory contract, which has not been previously rejected, for assumption by the Debtors and assignment to BikeCo or its designee: Trademark Co-Existence Agreement entered into as of August 5, 2016 between Stone Age Equipment, Inc., and Advanced Sports, Inc. (the Co-Existence Agreement. 7. By this Motion, the Debtors seek entry of an Order authorizing and approving the assumption and assignment of the Co-Existence Agreement to BikeCo, LLC, pursuant to the Sale Order and the BikeCo APA. 2 8. Section 365(a of the Bankruptcy Code provides, in pertinent part, that a debtor in possession, subject to the court s approval, may assume or reject any executory contract or unexpired lease of the debtor. See 11 U.S.C. 365(a. Courts have held that The purpose behind allowing the assumption or rejection of executory contracts is to permit the trustee or debtor-in-possession to use valuable property of the estate and to renounce title to and abandon burdensome property. Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp., 4 F.3d 1095, 1098 (2d Cir. 1993 (quoting 2 COLLIER ON BANKRUPTCY 365.01[1] (15th ed. 1993. 9. As set forth above, the Court has approved the sale of substantially all assets of the Debtors, and the BikeCo APA specifically provides for the designation of executory contracts related to the assets acquired by BikeCo to be assumed and assigned by the Debtors to BikeCo, subject to the provisions of Section 365. In addition, under section 365(k of the 2 BikeCo may designate additional executory contracts until 30 days prior to the conclusion of the Transition Period 90 days after the closing date. 3
Case 18-80856 Doc 582 Filed 02/27/19 Page 4 of 6 Bankruptcy Code, the assignment by a debtor to an entity of a contract or lease relieves the trustee and the estate from any liability for any breach of such contract or lease occurring after such assignment. See 11 U.S.C. 365(k. Thus, the proposed assignment is consistent with the Sale Order, and following an assignment of the Co-Existence Agreement to BikeCo, the Debtors will be relieved from any liability for any subsequent breach associated therewith. 10. Section 365(b(1 of the Bankruptcy Code requires that any outstanding defaults under the Co-Existence Agreement must be cured or that adequate assurance be provided that such defaults will be promptly cured. See 11 U.S.C. 365(b(1. The Debtors believe there are no defaults or amounts owed by the Debtors under the Co-Existence Agreement. Pursuant to the BikeCo APA, any required Cure Amount must be paid by or reserved for by BikeCo as a condition to the Debtors assumption and assignment of the Co-Existence Agreement. 11. Section 365(f(2 of the Bankruptcy Code provides that a debtor may assign an executory contract or unexpired lease of nonresidential real property if adequate assurance of future performance by the assignee of such contract or lease is provided. 11 U.S.C. 365(f(2. Pursuant to the BikeCo APA, BikeCo has the burden of satisfying the Court that it can provide such assurance to the contract counterparty, Stone Age Equipment, Inc. 12. Finally, Bankruptcy Rule 6006(d provides that an order authorizing the trustee to assign an executory contract or unexpired lease under 365(f is stayed until the expiration of 14 days after the entry of the order, unless the court orders otherwise. Fed. R. Bankr. P. 6006(d. 13. The Co-Existence Agreement provides, based on prior usage and trademark rights, that (i Advanced Sports, Inc., may use the word KESTREL for certain bicycle and structural parts and related goods, (ii Stone Age Equipment, Inc., may use the word KESTREL 4
Case 18-80856 Doc 582 Filed 02/27/19 Page 5 of 6 for certain goods comprising footwear, shoes, athletic footwear, and cycling shoes, and (iii the parties and their successors or assigns will be bound by the Co-Existence Agreement. The assignment of the Co-Existence Agreement is necessary and material to BikeCo s ability to market and sell the bikes as part of the wholesale business acquired from the Debtors. 14. For this reason and those set forth above, the Debtors submit that cause exists to justify a waiver of the fourteen-day stay imposed by Bankruptcy Rule 6006(d, to the extent applicable. [remainder of page intentionally left blank] 5
Case 18-80856 Doc 582 Filed 02/27/19 Page 6 of 6 WHEREFORE, the Debtors request entry of an Order authorizing the Debtors to assume and assign the Co-Existence Agreement to BikeCo, LLC or its designee, and such other and further relief as is just and proper. Dated: February 27, 2019 NORTHEN BLUE LLP /s/ John A. Northen John A. Northen (NC Bar No. 6789 jan@nbfirm.com Vicki L. Parrott (NC Bar No. 25449 vlp@nbfirm.com John Paul H. Cournoyer (NC Bar No. 42224 jpc@nbfirm.com 1414 Raleigh Road, Suite 435 Chapel Hill, North Carolina 27517 Telephone: (919 968-4441 and FLASTER/GREENBERG P.C. William J. Burnett (PA Bar No. 75975 (pro hac vice william.burnett@flastergreenberg.com Harry J. Giacometti (PA Bar No. 55861 (pro hac vice Damien Nicholas Tancredi (PA Bar No. 308317 (pro hac vice 1835 Market Street, Suite 1050 Philadelphia, PA 19103 (215 279-9383 Telephone (215 279-9394 Facsimile COUNSEL FOR DEBTORS IN POSSESSION 6