## Facts

- Jeffrey J. Thompkins (rap artist “JT Money,” associated with “Poison Clan”) entered an exclusive recording agreement in 1989 with a predecessor to Luke Records.
- The agreement transferred ownership of copyrights in the sound recordings to the recording company and entitled Thompkins to royalties from record sales.
- Between 1989 and 1994, three Poison Clan albums were recorded and distributed; the agreement expired by its terms in 1994.
- Luke Records and Luther Campbell later entered Chapter 11 bankruptcy proceedings; the bankruptcy court confirmed a joint reorganization plan.
- In the bankruptcy, the court ordered rejection of executory contracts and approved a sale/assignment of the debtors’ copyrights to Lil’ Joe Records, Inc.
- After Lil’ Joe exploited the Poison Clan catalog, Thompkins sued in federal district court (2002), alleging copyright infringement and related claims, asserting that rejection caused the copyrights to revert to him or, alternatively, that he was owed royalties.
- The district court granted summary judgment to defendants on all claims; Thompkins appealed.

## Issues

1. Whether rejection of the 1989 recording agreement under 11 U.S.C. § 365 rescinded the agreement and caused previously transferred copyrights to revert to Thompkins.
2. Whether, after the bankruptcy confirmation and court-approved sale, Thompkins could assert copyright infringement against Lil’ Joe based on alleged ownership or reversion of copyrights.
3. Whether Thompkins’ royalty and related contract/tort claims could be pursued in later litigation, or instead had to be asserted as claims in the bankruptcy case.

## Decision

- The Eleventh Circuit affirmed summary judgment for defendants on all claims.
- Rejection under § 365 is treated as a breach, not a rescission, and does not unwind completed transfers of property interests.
- The copyrights conveyed under the recording agreement remained property of the bankruptcy estate and were validly transferred to Lil’ Joe under the confirmed plan and sale order.
- Any remedy for unpaid royalties or damages from rejection was a prepetition claim to be asserted in the bankruptcy; Thompkins could not use later litigation to undermine the confirmed plan and sale.
- Because Lil’ Joe held lawful title, its exploitation of the recordings did not constitute infringement, and the dependent state-law theories also failed.

## Legal Principles

- Rejection of an executory contract under 11 U.S.C. § 365 constitutes a breach occurring immediately before the bankruptcy filing; it relieves the debtor of future performance but does not rescind the contract.
- Rejection does not divest the bankruptcy estate of property interests previously acquired under the contract; completed transfers are not reversed by rejection.
- Intellectual property rights owned by the debtor become estate property and may be sold or assigned pursuant to bankruptcy court orders and a confirmed plan.
- The non-debtor counterparty’s post-rejection remedy is typically a claim for damages as a general unsecured creditor within the bankruptcy process, not a later attempt to recover transferred property through collateral litigation.
- Claims premised on ownership inconsistent with the bankruptcy court’s confirmation and sale orders fail as a matter of law.

## Conclusion

The court held that bankruptcy rejection of the recording agreement did not cause copyrights previously transferred to the debtor to revert to the artist; the copyrights remained in the estate and were validly sold to Lil’ Joe, and any royalty or breach remedy had to be pursued in the bankruptcy case.


Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294 (11th Cir. 2007)