Dormify, Inc.
24-12634
Bankr. D. Del.May 19, 2025Background
- Dormify, Inc. filed for Chapter 11 bankruptcy in the District of Delaware.
- The Debtor sought to sell its intellectual property assets and certain related assets to Williams-Sonoma, Inc. under section 363 of the Bankruptcy Code.
- The sale process included court-approved bidding procedures and notice to interested parties, resulting in a public auction where Williams-Sonoma presented the highest and best offer.
- The sale included the assumption and assignment of certain executory contracts and unexpired leases to Williams-Sonoma.
- The court considered objections, reviewed the adequacy of notice and bidding procedures, and scrutinized whether the transaction was conducted in good faith at arm’s length.
- The court authorized the sale free and clear of encumbrances (other than assumed liabilities), addressing cure amounts and the enforceability of anti-assignment provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sale of assets to Williams-Sonoma should be approved under § 363 | Sale maximizes value and is in estate's best interests | Sale not in creditors' best interests and/or process improper | Court approved the sale as the highest and best offer, conducted fairly and in good faith |
| Whether contracts can be assumed and assigned over counterparty objections | Debtor meets requirements of § 365, cure amounts will be paid | Anti-assignment clauses and defaults prevent assignment | Court held assignments valid, anti-assignment provisions unenforceable, defaults cured on payment |
| Whether sale can be free and clear of all encumbrances under § 363(f) | Sale free and clear necessary to effect transfer, protections in place | Creditors/lienholders argue interests not adequately protected | Sale may proceed free and clear, valid liens attach to proceeds |
| Whether Williams-Sonoma is a good-faith purchaser entitled to 363(m) protection | Transaction at arm’s length, no collusion, fair value | Williams-Sonoma not entitled to protections due to defects or bad faith | Court found Williams-Sonoma is a good-faith purchaser and entitled to § 363(m) protections |
Key Cases Cited
No traditional case law citations appeared in this legal opinion. The ruling was grounded in application and interpretation of the U.S. Bankruptcy Code, referencing statutory provisions and local rules rather than published judicial decisions.