## Facts

- Robert Noonan, a professional musician performing as “Willie Nile,” entered an 18-month recording contract with Arista Records requiring at least two albums.
- The contract gave Arista unilateral options to extend the agreement for three additional 18-month terms, each term requiring at least two more albums.
- Arista paid Noonan an advance of about $300,000, recoupable only from Noonan’s future royalties.
- Noonan filed for Chapter 11 relief while the recording agreement (including unexercised renewal options) remained in effect.
- After the filing, Arista exercised an option to renew, which would obligate Noonan to deliver two additional albums during the extended term.
- Noonan sought and obtained a determination that the renewed recording agreement was an executory contract.
- Noonan then converted the case to Chapter 7, positioning the executory recording agreement for non-assumption/rejection.
- Arista moved to reconvert the case back to Chapter 11 and pressed for a reorganization plan premised on Noonan’s continued performance under (and assumption of) the recording contract.

## Issues

1. Whether a creditor may obtain reconversion from Chapter 7 to Chapter 11 over the debtor’s objection based on a claimed higher return to creditors under a proposed plan.
2. Whether a bankruptcy court may, through reconversion and plan structure, effectively compel an individual debtor to assume and perform an executory personal-services recording contract.
3. Whether a Chapter 11 plan is feasible or appropriate when its primary funding source depends on an unwilling debtor’s future personal services.

## Decision

- The court denied Arista’s motion to reconvert the case to Chapter 11.
- The court refused to require Noonan to assume the renewed recording agreement as part of a creditor-driven reorganization plan.
- The case remained in Chapter 7, leaving Arista to pursue a claim in the Chapter 7 estate rather than continued contractual performance.

## Legal Principles

- Conversion or reconversion between Chapter 7 and Chapter 11 is discretionary and turns on the interests of the estate and the creditor body, not solely on one creditor’s preference for a higher projected recovery.
- Executory contracts may be assumed or rejected under the Bankruptcy Code, but creditors generally cannot force assumption, particularly where ongoing performance is personal and nondelegable.
- Bankruptcy courts are reluctant to compel specific performance of personal-services contracts, and plans dependent on coerced personal labor raise serious practical and policy objections.
- A reorganization proposal premised on an unwilling debtor’s future personal services may be deemed impracticable and inconsistent with bankruptcy’s rehabilitative aims.

## Conclusion

The bankruptcy court declined to reconvert the case to Chapter 11 where the creditor’s proposed plan depended on forcing an artist-debtor to continue performing under an executory personal-services recording contract, allowing the debtor to proceed in Chapter 7 and leaving the creditor with a liquidation claim rather than compelled performance.


In re Noonan (p/k/a Willie Nile), 17 B.R. 793 (Bankr. S.D.N.Y. 1982)