Oracle's Limited Objection and Reservation of Rights re Sale Motion (Vyaire Medical, Doc 314)

Summary

Oracle America, Inc., a creditor and contract counterparty, files a limited objection and reservation of rights (Doc 314, filed 07/25/24, Case No. 24-11217 (BLS)) regarding the Debtors' Sale Motion and First Notice to Contract Parties of Potentially Assumed and Assigned Executory Contracts and Unexpired Leases. Oracle states that the agreements are, or pertain to, licenses of intellectual property that are not assignable without Oracle's consent, and that the Assumption Notice does not completely describe the agreements. It states that the Debtors identified a $0.00 cure while Oracle's records currently reflect that it is owed not less than $168,379.07. Oracle also requests information about the purchaser and objects to shared use of the Oracle licenses by the Debtors and the purchaser(s).

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:
VYAIRE MEDICAL, INC., et. al.,

Debtors.

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Chapter 11
Case No. 24-11217 (BLS)
(Jointly Administered)
Hearing Date: August 15, 2024 at 2:00 PM
Sale Objection Date: August 2, 2024
Contract Notice Objection Date: August 1,, 2024
Docket Nos. 16 & 256

ORACLE’S LIMITED OBJECTION TO AND RESERVATION OF RIGHTS
REGARDING (A) DEBTORS’ SALE MOTION AND (B) DEBTORS’ FIRST NOTICE
TO CONTRACT PARTIES OF POTENTIALLY ASSUMED AND ASSIGNED
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Oracle America, Inc., successor in interest to PeopleSoft, Inc., JD Edwards and
BigMachine (“Oracle”), a creditor and contract counterparty in the above-captioned jointly
administered Chapter 11 cases, submits this limited objection and reservation of rights (“Rights
Reservation”) regarding (A) Motion of Debtors for Entry of an Order (I) Approving Bidding
Procedures in Connection With the Sale of Substantially All of the Debtors’ Assets, (II) Authorizing
the Debtors to Enter Into a Stalking Horse Agreement and Provide Bid Protections, (III)
Approving the form and Manner of Notice Thereof, (IV) Scheduling an Auction and Sale Hearing,
(V) Approving Procedures for the Assumption and Assignment of Contracts, (VI) Approving the
Sale of the Debtors’ Assets Free and Clear, and (VII) Granting Related Relief  [Dkt. No. 16] (“Sale
Motion”) and (B) First Notice to Contract Parties of Potentially Assumed and Assigned Executory
Contracts and Unexpired Leases [Dkt No. 256] (“Assumption Notice”).
I.
INTRODUCTION
1.
By the Sale Motion and the Assumption Notice, Vyaire Medical, Inc., et al.
(“Debtors”), seek Bankruptcy Court authority to, among other things, assume and assign certain
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executory contracts between the Debtors and Oracle. Oracle objects to the proposed assumption
and assignment on multiple grounds.
i.
First, Oracle’s agreements with Debtors 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.
ii.
Second, the Assumption Notice does not provide a complete
description of the Oracle agreements the Debtors seek to assume and
assign, rendering Oracle unable to confirm the cure amount owed
until it has a better understanding about which contracts are being
assumed and assigned.
iii.
Third, at present, there is no stalking horse bidder and the bid
deadline is after objections to the Assumption Notice are due.
Therefore, Oracle is unable to determine whether the ultimate
purchaser/assignee is capable of performing under the terms of the
contracts which the Debtors seek to assume and assign.
iv.
Finally, to the extent any Asset Purchase Agreement (“APA”)
indicates that both the Debtors and the eventual purchaser(s) may
enter into a transition services agreement in connection with the
proposed sale or another agreement which may allow any
unauthorized, shared use of Oracle’s licenses, Oracle objects to such
use.
2.
Accordingly, Oracle requests that the Court deny the Debtors’ request for authority
to assume and assign, transfer, or share use of any Oracle agreement without Oracle’s consent.
II.
FACTUAL BACKGROUND
3.
The Debtors filed the above-captioned case on June 9, 2024, and an order directing
joint administration was entered shortly thereafter. The Debtors continue to operate as debtors in
possession.
4.
On June 10, 2024, the Debtors filed their Sale Motion.  Pursuant to the Sale Motion,
the Debtors propose to sell substantially all, or one or more subsets, of the Debtors’ assets.  There
is currently no stalking horse bidder.
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5.
On July 11, 2024, the Debtors filed the Assumption Notice.  Exhibit “A” to the
Assumption Notice identifies several Oracle agreements between Vyaire Medical, Inc. and Oracle
(“Oracle Agreements”), each with a stated cure of $0.00. The Oracle Agreements are described as
follows:
Unique Vendor Name
Debtor Entity
Description
Cure
Oracle America, Inc.
Vyaire Medical, Inc.
Oracle CPQ Renewal Contract
CRF-2021-001
$0.00
Oracle America, Inc.
Vyaire Medical, Inc.
Oracle Tech Support Renewal
Contract 5144264
$0.00
Oracle America, Inc.
Vyaire Medical, Inc.
General Terms and Conditions
US-OMA-1474330
$0.00
Oracle America, Inc.
Vyaire Medical, Inc.
Oracle 2017-08-01 IT Master
Service & Amend1
$0.00
Oracle America, Inc.
Vyaire Medical, Inc.
Oracle 2017-08-04 IT Quote
$0.00

6.
On July 17, 2024, the Debtors filed a Notice of Extension of Certain Key Dates and
Deadlines [Dkt No. 263] (“Notice”), extending certain sale related deadlines. It sets forth the
following deadlines: (a) 14 days following service of any notice of potential assumption and
assignment (i.e., July 25, 2024, for the Assumption Notice) as the assumption and assignment
objection deadline; (b) August 5, 2024 at 5 p.m. (Eastern Time) is the bid deadline; (c) August 8,
2024 at 10:00 a.m. (Eastern Time) for the date and time of the auction; (d) August 8, 2024 (or as
soon as reasonably practicable thereafter) as the deadline to file a notice of successful bidder; (e)
August 9, 2024 at 4:00 p.m. (Eastern Time) for the post-auction objection deadline;  and (f) August
15, 2024, for the proposed sale hearing.
7.
This timeline requires that objections to the Assumption Notice be filed before the
purchaser’s identity is known and precludes interested parties from reviewing any sale-related
documents, including the APA and any ultimate transitional services agreement proposed by the
parties (“TSA”).
8.
As of the date of filing this Rights Reservation, the Debtors have not identified a
stalking horse nor any other potential bidder, nor have they filed a proposed form of asset purchase
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agreement. As such, Oracle is unable to determine how its rights may be affected by the sale or
any potential APA entered into between the Debtors and the ultimate purchaser(s).
9.
Therefore, Oracle reserves all rights to object to the APA, including a TSA or any
proposed transitional or shared use of Oracle’s agreements by the Debtors and the ultimate
purchaser(s).
III.
ARGUMENT
A.
The Debtors May Not Assume And Assign Oracle’s Agreements
Absent Oracle’s Consent Because They Pertain To Licenses Of
Intellectual Property.
10.
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.
Federal law makes non-exclusive patent licenses non-assignable absent consent of
the licensor.  See In re Catapult Entertainment, Inc., 165 F.3d 747 (9th Cir. 1999), cert. dismissed,
528 U.S. 924 (1999) (patent law renders non-exclusive patent licenses personal and non-assignable
under Bankruptcy Code § 365(c)(1)); In re Sunterra Corp., 361 F.3d 257, 271 (4th Cir. 2004)
(holding that a debtor was statutorily barred by § 365(c)(1) from assuming a computer software
license where contract counterparty did not consent to the assumption); In re: West Elec., Inc.) 852
F. 2d 79 (3d Cir. 1988) (holding that the “provision limiting assumption of contracts is applicable
to any contract subject to a legal prohibition against assignment.”), 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.”); In re Rupari Holding Corp., 573 B.R. 111, 119 (Bankr. D. Del. 2017) (holding that
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the debtor could not assume and assign a trademark license without the consent of the non-debtor
licensor).
12.
The Oracle Agreements are, or pertain to, non-exclusive licenses of copyrighted
software.  Therefore, pursuant to Bankruptcy Code section 365, the Debtors may not assume and
assign the Oracle Agreements without Oracle’s consent.
13.
For the reasons discussed herein, Oracle does not consent to the Debtors’ proposed
assumption and assignment at this time.
B.
The Debtors Have Not Identified The Oracle Agreements To Be
Assumed and Assigned.
14.
The Debtors’ Assumption Notice generally describes the Oracle Agreements the
Debtors seek to assume and assign, but the descriptions’ generality renders Oracle unable to
determine which contracts are at issue.
15.
For example, in some instances the Assumption Notice fails to identify a support
renewal and omits inclusion of an underlying master agreement.  It is impermissible for the Debtors
to segregate the underlying Oracle license agreement from the corresponding support agreement
and master 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).  An executory contract must be assumed in its
entirety and, “[c]orrespondingly, all of the contracts that comprise an integrated agreement must
either be assumed or rejected, since they all make up one contract.”  In re Taylor-Wharton Int'l
LLC, 2010 WL 4862723, at *3 (Bankr. D. Del. Nov. 23, 2010) (citing In re Exide Techs., 340 B.R.
222, 228 (Bankr. D. Del. 2006)).  Under California law,1 made applicable by the Oracle

1  In re Hawker Beechcraft, Inc., No. 12-11873 (SMB), 2013 WL 2663193, at *3 (Bankr. S.D.N.Y. June 13, 2013)
(“State law governs the question whether an agreement is divisible or indivisible for the purposes of assumption and
rejection under Bankruptcy Code § 365.”).
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Agreements, “[s]everal contracts relating to the same matters, between the same parties, and made
as parts of substantially one transaction, are to be taken together.”  Cal. Civ. Code § 1642.
16.
Because the support agreements and master agreements relate to the underlying
license agreements as part of substantially the same transaction, they constitute integrated contracts
which may not be separately assumed and assigned.
17.
 In order to determine which contracts the Debtors wish to assume and assign,
Oracle requests that the Debtors specify the targeted contracts’ (a) name and date; (b) identification
number; (c) any associated support or support renewals; and (d) the governing license agreement.
18.
This information will enable Oracle to evaluate whether the Oracle Agreements are
supported, expired, or in default, and, if in payment default, the appropriate cure amount.
Additionally, the information will allow Oracle to assess whether Oracle may accept performance
from an entity other than the Debtors.
19.
Oracle reserves its right to be heard on this issue until after the Debtors specify the
Oracle Agreements they seek to assume and assign.
C.
The Debtors May Not Have Provided The Correct Cure Amount.
20.
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).
21.
The Debtors have identified a $0.00 cure for the Oracle Agreements listed in the
Assumption Notice.  Oracle’s records currently reflect that it is owed not less than $168,379.07.
22.
However, without a complete description of the Oracle Agreements, Oracle is
unable to determine the correct cure amount.
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23.
Therefore, Oracle reserves its right to be heard further regarding the cure amount,
until after the 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 Assignee.
24.
Before assuming and assigning any executory contract, the Debtors must provide
adequate assurance of future performance. 11 U.S.C. § 365(b)(1).
25.
There is currently no stalking horse bidder and the auction is after the deadline for
Oracle to object to the Assumption Notice.2
26.
To satisfy Bankruptcy Code section 365(b), Oracle requests that the Debtors
provide the following information about the purchaser(s) to which Debtors propose to assume and
assign the Oracle Agreements: (a) financial bona fides; (b) confirmation that the purchaser is not
an Oracle competitor; and (c) confirmation that the purchaser(s) will (i) execute an Oracle
Assignment Agreement and related documentation which identifies with specificity the Oracle
Agreements to be assigned; and, if appropriate (ii) enter into an Oracle Master License Agreement.
27.
Absent these assurances, Oracle cannot determine the proposed assignee’s
creditworthiness, its suitability as an Oracle customer, or its ability to adequately perform under
the terms of the Oracle Agreements.
28.
Until the information described above is provided, the Debtors have not complied
with the requirements of section 365(b)(1)(C).

2 Oracle understands that the last day to object to the identity of the successful bidder and adequate assurance is August
13, 2024 @ 4:00 p.m. (est).   However, in order to avoid duplicate filings, Oracle incorporates its objection to adequate
assurance here and reserves its right to be heard on this point if and when the ultimate purchaser is identified.
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E.
Oracle’s Agreements Do Not Authorize Simultaneous Use By the
Debtors and the Purchaser.
29.
Oracle reserves all rights to object to the final APA between the Debtors and the
ultimate purchaser(s), including to the extent the APA or any accompanying TSA includes any
broad provisions regarding transitional use or shared use of the Oracle Agreements or Oracle-
licensed software.
30.
Simultaneous use of, and access to, Oracle’s licensed software exceeds the scope
of the permitted uses under the Oracle Agreements, and would potentially result in an unauthorized
“splitting” of the licenses between the Debtors and the purchaser(s).
31.
Oracle objects to the extent that any transitional use or shared use arrangement
purports to grant to both the Debtors and purchaser(s) the right to shared use of the Oracle licenses
beyond the license terms.
32.
Oracle reserves all rights regarding any transitional use, including under any TSA,
until after Oracle has had an opportunity to review the final TSA proposed, and to assess how that
TSA may impact Oracle, including whether the use contemplated thereunder constitutes non-
compliance under the terms of the Oracle Agreements.
IV.
CONCLUSION
33.
For the reasons set forth above, Oracle respectfully requests that the Court deny the
Debtors’ request for approval of the Assumption Notice, solely to the extent the Debtors seek to
assume and assign, transfer or share use of any Oracle agreements. Oracle reserves its right to be
heard on all issues set forth herein.
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Dated: July 25, 2024
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
425 Market Street, Suite 2900
San Francisco, California 94105-2491
Tel: (415) 227-0900

Peggy Bruggman, Esq.
Benjamin Miller, Esq.
ORACLE AMERICA, INC.
500 Oracle Parkway
Redwood City, California 94065

Attorneys for Oracle America, Inc.

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