The bankruptcy judge overseeing Kodak’s Chapter 11 case has approved its rejection of naming rights in the Kodak Theatre.
Kodak’s attempt to reject had been opposed by the landlord, which argued that the contract was a one-time deal which it had substantially performed, rather than an ongoing (“executory”) contract in which both sides have continuing obligations. Only executory contracts can be rejected in bankruptcy. The best the landlord could do was to point out that much of its expense, and much of the benefit to Kodak, came in the early years, when the link between “Kodak” and the theater was first made. This argument was rather weak, since the contract required the “Kodak” name to remain on the building for 20 years. The bankruptcy judge found that the contract was, in fact, executory.
The landlord also argued against Kodak’s request for rejection as of January 31, 2012, the date it filed its motion to reject. The landlord pointed out that this came “after Kodak has already reaped the benefits of all the publicity arising from the 2012 Academy Awards.” The landlord argued that rejection should not be effective until the end of 2012, since Kodak would gain the benefits of the 2012 Academy Awards. In its Order, the court found that rejection would be effective “no later than” February 15, 2012, but reserved for later decision whether the effective date should be retroactive to January 31, 2012. Although expected, this was a significant victory for Kodak.
If you are considering requesting Chapter 11 bankruptcy protection, you should consult with an attorney familiar with Chapter 11 bankruptcies to discuss your options. For a free consultation, call (480) 719-1152.