18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 1 of UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION IN RE: A GACI, L.L.C., Debtor. Chapter 11 Case No. 18-50049-rbk-11 ORACLE AMERICA, INC. S LIMITED OBJECTION TO AND RESERVATION OF RIGHTS REGARDING (I) FIRST AMENDED PLAN OF REORGANIZATION OF A GACI, L.L.C. PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE; AND (2) NOTICE OF CURE PROCEDURES Oracle America, Inc., including in its capacity as successor-in-interest to Datavantage Corporation and MICROS Systems, Inc. and Oracle Credit Corporation (jointly, Oracle ), a creditor and contract counter-party in the above-captioned case, submits this Limited Objection and Reservation of Rights (the Rights Reservation ) in response to the First Amended Plan of Reorganization of A GACI, L.L.C. Pursuant to Chapter 11 of the Bankruptcy Code ( Plan ) and the Notice of Cure Procedures ( Cure Notice ) filed by A GACI, L.L.C. ( Debtor ). I. INTRODUCTION 1. Through the Plan and Cure Notice, the Debtor is seeking Bankruptcy Court authority to, among other things, assume certain executory contracts between the Debtor and Oracle. At this time, Oracle objects to the proposed assumption, for the following reasons. 2. First, Oracle agreements are, or pertain to, one or more licenses of intellectual property which may not be assumed absent Oracle s consent. As discussed herein, Oracle does not presently consent to the assumption of its agreements. Second, the Cure Notice does not provide a complete description of the Oracle contracts the Debtor seeks to assume. In addition, it is unclear whether the Debtor also intends to assume the underlying support agreements, which may in any event have expired, making them no longer executory. Third, the cure amount {01369/0015/0022256.1}
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 2 of identified in the Cure Notice is inaccurate. Finally, the Debtor has failed to provide adequate assurance of future performance. 3. Accordingly, Oracle requests that the Court deny confirmation of the Plan, solely to the extent it seeks to authorize the Debtor to assume any Oracle agreement pursuant to the Plan s provisions. II. FACTUAL BACKGROUND 4. The above-captioned case was filed on January 9, 2018. The Debtor continues to operate as a debtor-in-possession. 5. The Debtor filed its Plan on June 5, 2018. The Plan sets forth the following procedures for assumption and rejection of executory contracts: On the Effective Date, except as otherwise provided herein, all Executory Contracts or Unexpired Leases, not previously assumed or rejected pursuant to an order of the Bankruptcy Court, will be deemed rejected, in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, other than those Executory Contracts or Unexpired Leases that: (1) previously were assumed or rejected by the Debtor; (2) are specifically designated on the Schedule of Assumed Contracts and Leases filed and served prior to commencement of the Confirmation Hearing; (3) are subject to a motion to assume Executory Contracts or Unexpired Leases that is pending on the Confirmation Date; or (4) are subject to a motion to reject an Executory Contract or Unexpired Lease pursuant to which the requested effective date of such rejection is after the Effective Date; or (5) are the subject of Article IV.M or Article V.F. of the Plan. Plan, Art. V.A. 6. On June 22, 2018, the Debtor filed its Cure Notice. 1 Schedule 1 to the Cure Notice identifies those contracts to be assumed through the Plan, and includes two Oracle contracts, described as follows: 1 On July 9, 2018 the Debtor filed a Notice of Filing of Correction to Notice of Cure Procedures, which did not impact Oracle s contracts. {01369/0015/0022256.1} 2
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 3 of Contract Counterparty Description of Contract or Lease Proposed Cure Amount Datavantage Corp. IP License Contract $0.00 d/b/a MICROS-Retail Attn: President 30500 Bruce Industrial Parkway Cleveland, OH 44139 Oracle America, Inc. Attn: General Counsel, Legal Department 500 Oracle Parkway Redwood Shores, CA 94065 Master Agreement with Effective Date of December 4, 2015 and the documents, schedules, and licenses associated therewith, including the Ordering Document dated as of February 2016 $84.25 The agreements listed above are referred to herein as the Oracle Agreements. III. ARGUMENT A. The Debtor May Not Assume The Oracle Agreements Absent Oracle s Consent Because The Agreements Pertain To One Or More Licenses Of Intellectual Property.. Section 365(c) 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. 11 U.S.C. 365(c) (emphasis added). 8. Federal law makes non-exclusive intellectual property licenses non-assignable absent consent of the licensor. See In re Catapult Entertainment, Inc., 165 F.3d 4 (9th Cir. 1999), cert. dismissed, 528 U.S. 924 (1999) (patent law renders non-exclusive patent licenses {01369/0015/0022256.1} 3
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 4 of personal and non-assignable under Bankruptcy Code 365(c)(1)); see also In re Trump Entm't Resorts, Inc., 526 B.R. 116, 126 (Bankr. D. Del. 2015) ( Non-exclusive patent and copyright licenses create only personal and not property rights in the licensed intellectual property and so are not assignable. ). 9. The Oracle Agreements are, or pertain to, non-exclusive licenses of copyrighted software. Therefore, the Debtor must obtain Oracle s consent before seeking to assume the Oracle Agreements. At this time, for the reasons discussed, Oracle does not consent to assumption of its agreements. B. The Debtor Has Not Provided a Complete Description Of The Oracle Agreements To Be Assumed. 10. Although the Debtor has made an effort to describe the Oracle Agreements, as noted above, the Datavantage Corp. contract is only generally described as an IP License Agreement. No governing license agreement is identified. In addition, it is unclear whether the Debtor intends to assume the underlying support agreements associated with the contracts identified. Oracle is in the process of reviewing its records in order to determine whether support under the Oracle Agreements is current, or if those contracts are even executory, but the catchall phrases in Debtor s contract descriptions could be read to include assumption of support. 11. To properly identify the Oracle contracts the Debtor wishes to assume, Oracle requests that the Debtor provide (1) a specific contract name and date, where one is not provided; (2) a contract identification number, if any; (3) whether the targeted contracts pertain to support or support renewals; and (4) the governing license agreement for each contract. This information will enable Oracle to evaluate whether the contracts are in default and, if so, the appropriate cure amount. Oracle reserves its right to be heard on this issue until after the Oracle Agreements which the Debtor seeks to assume are identified with greater specificity. {01369/0015/0022256.1} 4
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 5 of C. The Debtor Has Not Provided The Correct Cure Amount. 12. Before assuming an executory contract, the Debtor must cure any default under the subject contracts. 11 U.S.C. 365(b)(1). The Debtor has identified $84.25 as the cure for one of the Oracle Agreements, and a $0 cure amount for the other. 13. Oracle is in the process of reviewing its records to determine whether there may be additional sums owed, but cannot confirm the correct cure until it has more certainty about the contracts at issue, among other things. Currently, Oracle s records reflect that it is owed not less than $6,149.81 under the MICROS contract, as well as additional sums which may relate to the Oracle Master Agreement. In addition, there may be sums owed on support renewals. Absent Debtor s cure of any default, the Oracle Agreements may not be assumed. 14. As is noted above, the existing contract descriptions provided in the Cure Notice are inadequate for Oracle either to determine the entirety of the contracts targeted for assumption, or to evaluate the appropriate resulting cure amount. 15. Therefore, Oracle reserves its right to be heard further regarding the cure owed, until after the contracts the Debtor seeks to assume are identified with greater specificity. D. The Debtor Has Not Provided Adequate Assurance. 16. Section 365(b)(2) of the Bankruptcy Code also obligates the trustee/debtor to provide adequate assurance of future performance under the contract before the executory contract can be assumed. In light of the Debtor s vague descriptions of the Oracle Agreements and the failure to confirm that the full cure amount will be paid, at this time Oracle is unable to determine whether Debtor has complied, or will comply, with the requirements of section 365(b). {01369/0015/0022256.1} 5
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg 6 of IV. CONCLUSION For the reasons set forth above, Oracle respectfully requests that the Court deny confirmation of the Plan, solely to the extent it authorizes the Debtor to assume the Oracle Agreements, and Oracle reserves its right to be heard on all issues set forth herein. July 16, 2018 Respectfully submitted, STREUSAND, LANDON, OZBURN & LEMMON, LLP /s/ Sabrina L. Streusand Sabrina L. Streusand Texas State Bar No. 110100 811 Barton Springs Road, Suite 811 Austin, Texas 804 (512) 236-9901 (telephone) (512) 236-9904 (facsimile) struesand@slollp.com Co-Counsel for Creditor, Oracle America, Inc. BUCHALTER, A Professional Corporation SHAWN M. CHRISTIANSON (CSB #1140) 55 Second Street, Suite 100 San Francisco, California 94105-2126 Telephone: (415) 22-0900 Facsimile: (415) 22-00 ORACLE AMERICA, INC. DEBORAH MILLER (CSB #9552) BENJAMIN J. WHEELER (CSB #28229) 500 Oracle Parkway Redwood City, California 94065 Telephone: (650) 506-5200 Facsimile: (650) 506-114 Attorneys for Oracle America, Inc. {01369/0015/0022256.1} 6
18-50049-rbk Doc#452 Filed 0/16/18 Entered 0/16/18 10:15:01 Main Document Pg of CERTIFICATE OF SERVICE I hereby certify that a true and complete copy of the foregoing instrument has been served on this 16 th day of July, 2018, on all parties requesting ECF notification and/or by electronic mail and/or by first class mail to the following parties: Ian T. Peck David L. Staab Haynes and Boone LLP 2323 Victory Avenue, Suite 00 Dallas, Texas 5219 ian.peck@haynesboone.com david.staab@haynesboone.com Counsel for Debtor W. Steven Bryant Locke Lord LLP 600 Congress Avenue, Suite 2200 Austin, Texas 801 sbryant@lockelord.com Counsel for JPMorgan Chase Bank, N.A. Richard Lauter Emily S. Chou Lewis Brisbois Bisgaard & Smith LLP 2100 Ross Avenue, Suite 2000 Dallas, Texas 5201 richard.lauter@lewisbrisbois.com emily.chou@lewisbrisbois.com Counsel for the Committee Steve A. Peirce Norton Rose Fulbright, (US) LLP 300 Convent, Suite 2100 San Antonio, Texas 8205 steve.peirce@nortonrosefulbright.com Counsel to Bank of America, N.A. Kevin Epstein Office of the U.S. Trustee 615 E. Houston Street, Suite 533 San Antonio, Texas 8205 Counsel to the U.S. Trustee /s/ Sabrina L. Streusand Sabrina L. Streusand {01369/0015/0022256.1}