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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
FTD COMPANIES, INC., et al.,
Debtors.
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Chapter 11
Case No. 19-11240 (LSS)
Jointly Administered
Hearing Date: July 31, 2019
Hearing Time: 11:00 AM
Objection Date: July 16, 2019
Docket No. 82, 210 and 286
ORACLE’S LIMITED OBJECTION TO AND RESERVATION OF RIGHTS
REGARDING MOTION OF THE DEBTORS FOR ENTRY OF ORDERS
(I)(A) APPROVING BIDDING PROCEDURES FOR THE SALE OF
SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS, (B) AUTHORIZING
THE DEBTORS TO ENTER INTO ONE OR MORE STALKING HORSE
AGREEMENTS AND TO PROVIDE BIDDING PROTECTIONS THEREUNDER,
(C) SCHEDULING AN AUCTION AND APPROVING THE FORM AND MANNER
OF NOTICE THEREOF, (D) APPROVING ASSUMPTION AND ASSIGNMENT
PROCEDURES, (E) SCHEDULING A SALE HEARING AND APPROVING THE FORM
AND MANNER OF NOTICE THEREOF AND (F) GRANTING RELATED RELIEF;
(II)(A) APPROVING THE SALE OF THE DEBTORS' ASSETS FREE AND CLEAR OF
LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (B) APPROVING THE
ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND
UNEXPIRED LEASES AND (C) GRANTING RELATED RELIEF
(“SALE MOTION”); AND (2) NOTICE OF CURE COSTS AND POTENTIAL
ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND
UNEXPIRED LEASES IN CONNECTION WITH SALE OF SUBSTANTIALLY ALL
ASSETS (“ASSUMPTION NOTICE”)
Oracle America, Inc. (“Oracle”), a creditor and contract counter-party in the above-
captioned jointly administered Chapter 11 cases, submits this Limited Objection and Reservation
of Rights (“Rights Reservation”) regarding the Sale Motion and the Assumption Notice filed by
FTD Companies, Inc., et al. (“Debtors”).
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I. INTRODUCTION
1. By the Sale Motion and the Assumption Notice, the Debtors seek Bankruptcy
Court authority to, among other things, assume and assign certain executory contracts between
the Debtors and Oracle.
2. Oracle objects to the proposed assumption and assignment on multiple grounds:
a) First, the targeted Oracle agreements are, or pertain to, one or more
licenses of intellectual property which are not assignable absent Oracle’s
consent, pursuant to both the underlying license agreements and applicable
law. Debtors also request a judicial determination that any anti-assignment
provision in contracts to be assumed and assigned is unenforceable and
void. Oracle objects to this sweeping determination being made regarding
its agreements with the Debtors.
b) Second, the Assumption Notice does not provide a complete description of
the Oracle contract the Debtors seek to assume and assign. The
Assumption Notice identifies one Oracle contract, while Oracle has
numerous active contracts with the Debtors. As a result, Oracle is unable
to determine either the accuracy of the Debtors’ proposed cure, or whether
the contract designation in the Assumption Notice is complete and correct.
c) Third, the Sale Motion does not provide Oracle with sufficient information
to determine whether the purchaser/assignee is capable of performing
under the terms of the contract, or contracts, which Debtors seek to
assume and assign.
d) Finally, the Sale Motion and the Purchase Agreements (defined below)
confirm both that the Debtors and the eventual purchasers will enter into a
TSA (defined below) which provides for certain transition services in
connection with the proposed sale, and indicate that the eventual
purchasers shall be joint owners of the Software Systems1 governed by a
Mutual PQUAD Covenant Agreement (“PQUAD Agreement”).
e) Oracle needs clarification about both the contemplated TSA and the
PQUAD Agreement, for the reasons set forth in more detail below.
1 Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the APA
and Sale Motion.
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3. Accordingly, Oracle requests that the Court deny the Sale Motion, solely to the
extent it seeks authority for the Debtors to assume and assign, transfer or share use of any Oracle
agreements in the absence of Oracle’s consent.
II. FACTUAL BACKGROUND
4. The above captioned case was filed on June 3, 2019 and an order directing joint
administration was entered shortly thereafter. The Debtors continue to operate as debtors in
possession.
5. On June 6, 2019, the Debtors filed their Sale Motion seeking Court authority to
sell substantially all of their assets.
6. Through the Sale Motion, the Debtors propose to sell the entire company or
certain segments of their company, dependent upon how the sale progresses.
7. On June 19, 2019, the Debtors entered into an asset purchase agreement with
Gateway Mercury Holdings, LLC (“Gateway”) for the sale of their FTD.com business, their
florist business segment and the Restructured ProFlowers Business (“Gateway APA”).
8. The Gateway APA is attached as Exhibit “B” to the Motion of the Debtors for
Entry of An Order (I) Authorizing the Debtors to Provide Bidding Protections in Accordance
with the Bidding Procedures and the Gateway Stalking Horse Agreement and (II) Granting
Related Relief.
9. On June 23, 2019, the Debtors entered into an asset purchase agreement with
Farids & Co., LLC (“Farids”) for the sale of their gourmet food business, including Shari’s
Berries (“Farid APA”).
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10. The Farids APA is attached as Exhibit “B” to the Motion of the Debtors for Entry
of An Order (I) Authorizing the Debtors to Provide Bidding Protections in Accordance with the
Bidding Procedures and the Farids Stalking Horse Agreement and (II) Granting Related Relief.
11. On June 23, 2019, the Debtors entered into an asset purchase agreement with
PlanetArt LLC (“PlanetArt”, together with Gateway and Farids, the “Purchasers”) for the sale of
the personal creations business, including Gifts.com (“PlanetArt APA”, together with Gateway
APA and Farid APA, “Purchase Agreements”).
12. The PlanetArt APA is attached as Exhibit “B” to the Motion of the Debtors for
Entry of An Order (I) Authorizing the Debtors to Provide Bidding Protections in Accordance
with the Bidding Procedures and the PlanetArt Stalking Horse Agreement and (II) Granting
Related Relief.
13. On July 1, 2019, the Debtors filed the Assumption Notice. Schedule “1” to the
Assumption Notice lists one agreement between Provide Commerce, Inc. and Oracle, described
only as an “Oracle Cloud Service Agreement” (“Oracle Agreement”).
14. The cure amount shown in the Assumption Notice for the Oracle Agreement is
$0.00. The Assumption Notice does not indicate whether the proposed assignee will be
Gateway, Farids or PlanetArt.
15. The Purchase Agreements contemplate a transition services agreement (“TSA”)
between and among the Debtors, Gateway and the Purchasers, which will be negotiated prior to
Closing.
16. Based on the Farids APA and PlanetArt APA, it appears these services will be
made available for at least twelve (12) months after the closing, as follows:
Access Agreements. Prior to the Closing, Sellers and Purchaser will negotiate
mutually acceptable terms of an agreement providing Sellers with access, for a
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period of at least 12 months following the Closing Date, to Purchaser’s personnel,
including the Transferred Employees, information technology systems, including
email, third party service providers and books and records, and use of office space
and office support for employees of Sellers, as is reasonably necessary or
appropriate in connection with the administration of the Bankruptcy Case and to
permit Sellers to wind-down and liquidate the Sellers’ Bankruptcy estates
following the Closing.
(See, Section 8.8 of PlanetArt APA and Section 8.7 of Farids APA).
17. Since the TSA has not been filed, Oracle is unable to determine how its contracts
will be affected by the proposed transitional use.
18. The Purchase Agreements also indicate that the Purchasers will be joint owners of
the Software Systems to be governed by the PQUAD Agreement.
19. These Software Systems may contain Oracle software. Oracle currently is unable
to determine how its rights may be affected since the PQUAD Agreement has not been provided,
despite the fact that the Farids APA indicates that it is attached as Exhibit “A”.
III. ARGUMENT
A. Debtors May Not Assume And Assign The Oracle Agreement Absent Oracle’s
Consent Because It Pertains To One Or More Licenses Of Intellectual Property.
20. 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.
21. Federal law makes non-exclusive patent and copyright licenses non-assignable
absent consent of the licensor. In Re Catapult Entertainment, Inc., 165 F.3d 747 (9th Cir. 1999),
Cert. Dismissed, 528 U.S. 924 (1999). See, In Re Access Beyond Technologies, Inc., 237 B.R.
32, 48-49 (Bankr. D. Del 1999) (Citing In Re: West Elec., Inc.) 852 F. 2d 79 (3d Cir. 1988); In
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Re ANC Rental Corporation, Inc., 277 B.R. 226, 235 (Bankr. D. Del. 2002); In Re Golden Books
Family Entertainment, Inc., 269 B.R. 311, 316 (Bankr. D. Del. 2001)); 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.”)).
22. The Oracle Agreement referenced in the Assumption Notice is, or pertains to,
non-exclusive licenses of copyrighted software.
23. Therefore, pursuant to Bankruptcy Code section 365, the Debtors may not assume
and assign the Oracle Agreement without Oracle’s consent.
24. For the reasons discussed herein, Oracle does not, at this time, consent to the
Debtors’ proposed assumption and assignment.
25. The Sale Motion is also objectionable because it requests a blanket determination
by the Court that any anti-assignment provision in contracts to be assumed and assigned is
unenforceable and void.
26. The request is framed by the Debtors as follows:
“Finally, in order to facilitate the assumption and assignment of Contracts in
furtherance of maximizing the value of the Assets, the Debtors further request that
the Court find that any anti-assignment provision included in any Contract,
whether such provision expressly prohibits, or has the effect of restricting or
limiting assignment of a Contract, is unenforceable and prohibited pursuant to
section 365(f) of the Bankruptcy Code.”
Sale Motion ¶57.
27. Oracle objects to the Debtors’ requested finding because, as discussed above, the
Oracle Agreement involves the non-exclusive license of copyrighted software, which is non-
assignable absent Oracle’s consent.
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28. Because Bankruptcy Code section 365 and applicable law expressly preserve
Oracle’s right to consent to any assignment of its license agreements, the Debtors may not
unilaterally nullify the anti-assignment provisions of the Oracle Agreement.
29. Accordingly, Oracle requests that the Debtors be denied this blanket authorization
to the extent it would allow them to assume and assign, or transfer, the Oracle Agreement.
B. The Debtors Have Not Adequately Identified The Oracle Agreement To Be
Assumed and Assigned.
30. The Oracle contract the Debtors seek to assume and assign is described very
generally as a “Cloud Services Agreement.”
31. The Debtors have omitted specific mention of the related support agreement. In
addition, Oracle has numerous agreements with the Debtors, leaving Oracle unable to determine
which contract Debtors potentially may assume and assign.
32. It is impermissible for the Debtors to segregate the underlying Oracle license
agreement from the corresponding support and any payment agreement for purposes of
assumption and assignment, if that is the Debtors’ intention. See, e.g., In re Interstate Bakeries
Corporation, 751 F.3d 955, 963 (8th Cir. 2014); In re Buffets Holdings, 387 B.R. 115 (Bankr. D.
Del. 2008).
33. To clarify which Oracle contract Debtors may seek to assume and assign, Oracle
requests that the Debtors specify the targeted contract’s (a) name and date; (b) identification
number; and (c) any associated support or support renewals.
34. This information will enable Oracle to evaluate whether the Oracle agreement
proposed for assumption and assignment is assignable, whether it is supported, expired or in
default, and, if in payment default, the appropriate cure amount.
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35. Additionally, it will allow Oracle to assess whether Oracle may accept
performance from an entity other than the Debtors.
36. Oracle reserves its right to be heard on this issue until after the Oracle
agreement(s) the Debtors seek to assume and assign are identified with greater specificity.
C. The Debtors May Not Have Provided The Correct Cure Amount.
37. Before assuming and assigning any executory contract, the Debtors must cure (or
provide adequate assurance of a prompt cure of) any default under the subject contracts. 11
U.S.C. § 365(b)(1).
38. The Debtors have failed to describe the Oracle Agreement they seek to assume
and assign with sufficient particularity for Oracle to identify which agreements are at issue, and
thereby confirm the corresponding cure amount.
39. As discussed above, Oracle has more than one agreement with the Debtors, so
Oracle needs specific information about which Oracle agreement(s) may be assumed and
assigned, in order to confirm the correct cure amount.
40. Therefore, Oracle reserves its right to be heard further regarding the cure amount
until after the contract or contracts the Debtors seek to assume and assign are identified with
enough specificity to allow Oracle to determine the correct cure.
D. The Debtors Have Not Provided Adequate Assurance of Future Performance By
the Assignees.
41. Before assuming and assigning any executory contract, the Debtors must provide
adequate assurance of future performance. 11 U.S.C. § 365(b)(1).
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42. Gateway, Farids and PlanetArt are currently the stalking horse bidders, but one or
more bidders may emerge in connection with the auction scheduled to be held on July 22, 2019;
after objections to the Sale Motion and Assumption Notice are due.2
43. The Assumption Notice is silent on the intended assignee of the Oracle
Agreement.
44. To satisfy 11 U.S.C. § 365(b), Oracle requests that the Debtors provide the
following information about the Purchasers or the ultimate assignee: (a) financial bona fides;
(b) confirmation that the purchaser is not an Oracle competitor; and (c) confirmation that the
ultimate assignee will (i) execute an Oracle Assignment Agreement and related documentation
which identifies with specificity the Oracle executory contract(s) to be assigned; and, if
appropriate, (ii) enter into an Oracle Master License Agreement.
45. Absent these assurances, Oracle cannot determine the proposed assignee’s
creditworthiness, its suitability as an Oracle customer, or its ability to adequately perform the
terms of the Oracle Agreement.
46. Until the information described above is provided, the Debtors have not complied
with the requirements of section 365(b)(1)(C).
47. Therefore, the Sale Motion and Assumption Notice must be denied, solely to the
extent they seek to authorize the Debtors to assume and assign the Oracle Agreement in the
absence of Oracle’s consent.
2 Oracle is aware that pursuant to the Notice of Sale, Bidding Procedures, Auction Sale Hearing and other Deadlines
Related Thereto, it has until July 26, 2019 in which to file an objection to adequate assurance. However, in order to
save duplicate filings, Oracle incorporates its objection to adequate assurance here and reserves its right to be heard
on this point.
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E. The Oracle Agreement Does Not Authorize Simultaneous Use By The Debtors
and the Purchasers.
48. The Purchase Agreements contemplate that certain transition services will be
provided between the Debtors and Purchasers.
49. The Debtors have not provided any additional information and the TSA has not
been filed, rendering Oracle unable to determine the scope of the proposed transitional use or
whether its contracts will be affected.
50. Shared access to, and use of, Oracle’s licenses exceed the scope of the permitted
uses under the Oracle Agreements, and may constitute an unauthorized splitting of the respective
licenses.
51. In addition, Oracle needs more information with respect to the PQUAD
Agreement to determine how its software will be affected.
52. Oracle reserves all rights regarding the TSA and PQUAD Agreement until it has
had a chance to review these agreements, and assess how they may impact, and potentially
constitute non-compliance under, the Oracle Agreement’s terms.
IV. CONCLUSION
53. For the reasons set forth above, Oracle respectfully requests that the Court deny
approval of the Sale Motion and the Assumption Notice, solely to the extent each seeks to
authorize Debtors to assume and assign, transfer, or share use of, any Oracle agreement. Oracle
reserves its right to be heard on all issues set forth herein.
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Dated: July 15, 2019
Wilmington, Delaware
MARGOLIS EDELSTEIN
By: /s/ James E. Huggett
James E. Huggett, Esq. (#3956)
300 Delaware Avenue, Suite 800
Wilmington, Delaware 19801
Telephone: (302) 888-1112
E-mail: jhuggett@margolisedelstein.com
Amish R. Doshi, Esq.
DOSHI LEGAL GROUP, P.C.
1979 Marcus Avenue, Suite 210E
Lake Success, NY 11042
Tel: (516) 622-2335
E-Mail: amish@doshilegal.com
Shawn M. Christianson, Esq.
BUCHALTER, A PROFESSIONAL
CORPORATION
55 Second Street, Suite 1700
San Francisco, CA 94105
Tel: (415) 227-0900
Deborah Miller, Esq.
Benjamin Wheeler, Esq.
ORACLE AMERICA, INC.
500 Oracle Parkway
Redwood City, California 94065 Telephone: (650) 506-5200
Attorneys for Oracle America, Inc.
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Case 19-11240-LSS Doc 383 Filed 07/15/19 Page 12 of 12
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
FTD COMPANIES, INC., et al.,
Debtors.
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Chapter 11
Case No. 19-11240 (LSS)
Jointly Administered
Hearing Date: July 31, 2019
Hearing Time: 11:00 AM
Objection Date: July 16, 2019
Docket No. 82, 210 and 286
CERTIFICATE OF SERVICE
I, James E. Huggett, hereby certify that on July 15, 2019, I served a copy of Oracle’s
Limited Objection To And Reservation Of Rights Regarding Motion Of The Debtors For Entry Of
Orders (I)(A) Approving Bidding Procedures For The Sale Of Substantially All Of The Debtors'
Assets, (B) Authorizing The Debtors To Enter Into One Or More Stalking Horse Agreements And
To Provide Bidding Protections Thereunder, (C) Scheduling An Auction And Approving The Form
And Manner Of Notice Thereof, (D) Approving Assumption And Assignment Procedures, (E)
Scheduling A Sale Hearing And Approving The Form And Manner Of Notice Thereof And (F)
Granting Related Relief; (Ii)(A) Approving The Sale Of The Debtors' Assets Free And Clear Of
Liens, Claims, Interests And Encumbrances, (B) Approving The Assumption And Assignment Of
Executory Contracts And Unexpired Leases And (C) Granting Related Relief (“Sale Motion”);
And (2) Notice Of Cure Costs And Potential Assumption And Assignment Of Executory Contracts
And Unexpired Leases In Connection With Sale Of Substantially All Assets (“Assumption Notice”)
on the parties listed on the attached Service List via electronic mail, where available.
_/s/ James E. Huggett___________
James E. Huggett (#3956)
Case 19-11240-LSS Doc 383-1 Filed 07/15/19 Page 1 of 2
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SERVICE LIST
BY ECF
Daniel J. DeFranceschi, Esq.
Brett M. Haywood, Esq.
Megan F. Kenney, Esq.
Sarah Silveira, Esq.
RICHARDS LAYTON & FINGER, P.A.
One Rodney Square, 920 N. King Street
Wilmington, DE 19801
Jennifer R. Hoover, Esq.
Kevin M. Capuzzi, Esq.
BENESCH, FRIEDLANDER, COPLAN &
ARONOFF, LLP
222 Delaware Avenue, Suite 801
Wilmington, DE 19801
Timothy J. Fox, Jr., Esq.
OFFICE OF UNITED STATES
TRUSTEE
844 King Street, Suite 2207, Lockbox 35
Wilmington, DE 19899
BY REGULAR MAIL
Heather Lennox, Esq.
Thomas A. Wilson, Esq.
JONES DAY
901 Lakeside Avenue
Cleveland, OH 44114
Jason R. Adams, Esq.
William S. Gyves, Esq.
Maeghan J. McLoughlin, Esq.
Lauren S. Schlussel, Esq.
Eric R. Wilson, Esq.
KELLEY DRYE & WARREN, LLP
101 Park Avenue
New York, New York 10178
Caitlin K. Cahow, Esq.
Brad B. Erens, Esq.
Timothy Hoffman, Esq.
Jones Day
77 W. Wacker
Suite 3500
Chicago, IL 60601
Danielle D. Donovan, Esq.
JONES DAY
1420 Peachtree Street, N.E., Suite 800
Atlanta, GA 30309
Genna L. Ghaul
Jones Day
250 Vesey Street
New York, NY 10281
Case 19-11240-LSS Doc 383-1 Filed 07/15/19 Page 2 of 2