Lewis Bros. Bakeries Inc. v. Interstate Brands Corp. (In Re Interstate Bakeries Corp.)
447 B.R. 879
W.D. Mo.2011Background
- Antitrust judgment required IBC to license Chicago area trademarks to LBB/CBC; license granted 1996 in asset purchase for $17M and note later paid; agreement contains quality, use, and ownership provisions; IBC filed Chapter 11 in 2004; bankruptcy court held the license was an executory contract; LBB/CBC appealed to challenge executory status; court’s decision affirms that the license is executory and not barred by promissory estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the license an executory contract under §365? | LBB/CBC contend no material remaining obligations. | IBC argues ongoing material obligations exist. | Yes, the license is executory. |
| Do quality obligations constitute a material breach? | Maintaining quality is not a material obligation. | Quality maintenance is a material obligation under §6.1 and §5.2. | Yes, maintaining character/quality is a material breach. |
| Does promissory estoppel bar treating the license as executory? | IBC promised sale of trademarks; estoppel should apply. | Parol evidence and promise to sell are not established; estoppel fails. | Promissory estoppel does not bar the executory-contract finding. |
| Can parol evidence or sale arguments alter the contract status? | Extrinsic evidence could show a sale of trademarks. | Parol evidence rule bars such arguments; license remains licensure, not sale. | Parol evidence barred; license status remains executory. |
Key Cases Cited
- In re Exide Technologies, Inc., 607 F.3d 960 (3d Cir. 2010) (discusses materiality of obligations under license after bankruptcy; distinguishes conditions vs material obligations)
- In re Qintex Entm't, Inc., 950 F.2d 1492 (9th Cir. 1991) (illustrates executory-contract analysis for licenses)
- Cameron v. Pfaff Plumbing and Heating, Inc., 966 F.2d 414 (8th Cir. 1992) (materiality framework for remaining obligations)
- In re Knutson, 563 F.2d 916 (8th Cir. 1977) (Countryman standard adoption in circuits)
- In re Baird, 567 F.3d 1207 (10th Cir. 2009) (promissory estoppel considerations in bankruptcy context)
- In re Penn Traffic Co., 524 F.3d 373 (2d Cir. 2008) (promissory estoppel and contract status relevance)
- In re Sunterra Corp., 361 F.3d 257 (4th Cir. 2004) (explicates material obligations in executory-contract analysis)
- In re CFLC, Inc., 89 F.3d 673 (9th Cir. 1996) (mentions scope of contractual obligations in bankruptcy)