## Facts

- Rooster, Inc., a manufacturer and seller of men’s neckwear, operated as a Chapter 11 debtor-in-possession.
- Pincus Bros., Inc. held rights connected to the “Bill Blass” trademark program and granted Rooster an exclusive sublicense (Feb. 1987) to use the Bill Blass mark on neckties.
- The sublicense relationship involved ongoing and detailed design and quality control:
  - Rooster proposed patterns and designs, but production did not begin until Bill Blass approved them.
  - Bill Blass personally reviewed and altered aspects of the neckwear designs (including size, shape, and color) before manufacturing.
  - The contract required written approval for all materials involving the trademark, including labels, press releases, displays, advertising, and other printed matter.
- Rooster treated the sublicense as a key asset and sought to sell or assign its rights as part of reorganization.
- Pincus moved for relief from the automatic stay under 11 U.S.C. § 362 to prevent assignment and to enforce its rights to control selection of any sublicensee, arguing the contract was non-assignable without consent under 11 U.S.C. § 365(c)(1) and applicable Pennsylvania law.

## Issues

1. Whether a Chapter 11 debtor-in-possession may assume and assign an exclusive trademark sublicense without the licensor’s consent when applicable nonbankruptcy law would excuse the licensor from accepting performance from an assignee.  
2. Whether “cause” existed under 11 U.S.C. § 362(d) to lift or modify the automatic stay to permit the licensor to enforce its contractual rights against assignment.

## Decision

- The court held that the debtor could not assume or assign the Bill Blass trademark sublicense without Pincus’s (and effectively the trademark owner’s) consent.
- The court treated the sublicense as identity-dependent and comparable to a personal-services or special-trust arrangement under applicable Pennsylvania contract principles.
- The court granted Pincus relief from the automatic stay to allow enforcement of its rights regarding control of the sublicense relationship.

## Legal Principles

- Under 11 U.S.C. § 365(c)(1), a debtor may not assume or assign an executory contract if applicable law excuses the non-debtor from accepting performance from or rendering performance to an entity other than the debtor, absent the non-debtor’s consent.
- Applicable contract law may render a contract non-assignable where performance depends on the identity, skill, cooperation, or trust associated with the counterparty, such that substitution would materially alter the bargain.
- Trademark licensing commonly requires ongoing quality and brand control; extensive approval and supervision provisions support treating the license as non-assignable without the licensor’s consent.
- When assignment is barred under § 365(c)(1), a bankruptcy court may find “cause” under § 362(d) to grant stay relief so the licensor can protect its contractual and trademark rights.

## Conclusion

The court concluded that the Bill Blass designer trademark sublicense depended on ongoing supervision and confidence in the particular sublicensee, making it non-assignable without the licensor’s consent under § 365(c)(1); because the debtor could not lawfully assign the license over objection, the court granted the licensor relief from the automatic stay under § 362(d).


In re Rooster, Inc., 100 B.R. 228 (Bankr. E.D. Pa. 1989)