Bankruptcy Court Denies Netflix Early Streaming of Films – June 16, 2016

Pepper Hamilton

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amendments as required under Section 5.6 of the agreement. Section 1142(b) of the Bankruptcy Code provides, in relevant part, that "the court may direct any necessary party to ... perform any act ... that is necessary for the consummation of the plan." The court found that, as a matter of custom and under the contract, Relativity and its lender are entitled to new assignment notices that would incorporate reasonable new outside dates.

However, the court reasoned that Section 1142(b) does not go so far as to authorize the court to impose upon Netflix the new outside dates proposed by Relativity. Instead, the court strongly signaled to Relativity that it may seek—in another judicial forum—to compel Netflix's execution of amended assignment notices with new outside dates. It is easy to assume that Relativity will take the court's advice in this regard. The court likewise denied Netflix's Stern claim because there was no stare decisis preventing the bankruptcy court from enforcing its own prior plan confirmation order or making a final ruling as to res judicata and judicial estoppel matters in the context of the confirmation process. The Relativity decision highlights the need in a bankruptcy proceeding to be mindful of the potential impact an asserted position at one hearing may have later in the case, even if it involves different circumstances.

Among other examples of this conundrum include whether a secured creditor takes the position at the outset of the case as to whether or not it is fully secured. In this case, Netflix has already filed its notice of appeal with the U.S. District Court for the Southern District of New York.

It will be interesting to see how things play out on appeal. The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship. Copyright © 2016 Pepper Hamilton LLP Privacy Policy | Terms & Conditions | Attorney Advertising Contact Us: phinfo@pepperlaw.com or 866.737.7372 | Brand design by Greenfield/Belser Ltd. With PDFmyURL anyone can convert entire websites to PDF! .