## Facts

- Vice Group Holding Inc., Vice Media, LLC, and related entities (collectively, Vice Media) filed chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York.
- Before bankruptcy, Vice Media entered into an agreement with Showtime Networks Inc. (Showtime) to “produce, deliver, and license” a weekly newsmagazine television series (the “Vice Series”) for up to eight seasons.
- Vice Media personnel had won two Emmys before the parties entered into the agreement, and the contract stated that “first-class technical quality” was “of the essence.”
- The contract did not require that any identified individual personally perform services. Instead, it required Vice Media to deliver episodes meeting contractual standards.
- Showtime had approval rights over key creative elements and certain “key personnel,” including on-air talent, the showrunner, the director, and executive producers.
- The agreement also included a takeover right tied to an approved director’s incapacity.
- At the time of the bankruptcy proceedings, the Vice Series was in its fourth season, leaving up to four seasons remaining under the multi-season structure, subject to Showtime’s option to order additional seasons.
- Three of Vice Media’s creditors formed a new acquisition entity to purchase Vice Media’s business as a going concern. The purchasers represented that they intended to keep Vice Media’s existing management and key employees.
- Vice Media sought court approval under 11 U.S.C. § 365 to assume the Showtime agreement and assign it to the acquisition entity in connection with the sale.
- Showtime objected, arguing that the agreement was a non-assignable personal-services contract under California law and therefore could not be assumed and assigned without Showtime’s consent under § 365(c)(1).

## Issues

1. Whether the Vice Media–Showtime agreement to produce and deliver the Vice Series was a “personal services” contract under California law.
2. If the agreement was a personal-services contract, whether 11 U.S.C. § 365(c)(1) barred Vice Media from assuming and assigning the agreement to the purchaser without Showtime’s consent.

## Decision

- The court overruled Showtime’s objection.
- The court held that the Vice Media–Showtime agreement was not a personal-services contract under California law.
- Because applicable nonbankruptcy law did not excuse Showtime from accepting performance from an assignee, § 365(c)(1) did not bar assumption and assignment.
- The court granted Vice Media authority to assume and assign the Showtime agreement in connection with the sale, subject to the Bankruptcy Code’s ordinary assumption/assignment requirements (including cure and adequate assurance where required).

## Legal Principles

- A debtor in possession may assume an executory contract with court approval. 11 U.S.C. § 365(a).
- A debtor may assign an assumed executory contract if statutory conditions are satisfied, including curing defaults (or providing assurance of prompt cure) and providing adequate assurance of future performance. 11 U.S.C. § 365(b), (f).
- Section 365(c)(1) limits assumption and assignment if “applicable law” excuses the nondebtor counterparty from accepting performance from a party other than the debtor, and the counterparty does not consent.
- Under California law, a contract is treated as a personal-services contract when performance depends on a special relationship between the parties or on specialized, unique skill such that substitute performance would not satisfy the contract.
- A production agreement framed around delivery of a finished product, without requiring the services of identified, non-substitutable individuals, is generally not treated as a non-assignable personal-services contract.
- Contract provisions giving a network approval rights over creative elements and key personnel, and limited takeover rights tied to specified contingencies, function as contractual controls and do not necessarily make performance legally non-delegable.

## Conclusion

In In re Vice Group Holding Inc., the bankruptcy court held that Vice Media’s agreement with Showtime to produce and deliver the Vice Series was not a California personal-services contract because it did not require performance by identified individuals and was structured around delivery of completed episodes subject to contractual quality and approval provisions. As a result, § 365(c)(1) did not prevent Vice Media from assuming and assigning the agreement to the purchaser in the chapter 11 sale over Showtime’s objection.


In re Vice Group Holding Inc., 652 B.R. 423 (2023)