Bankruptcy court held that the buyer purchased the assets free and clear of any copyright interests held by the photographer supplier.
October 3, 2022
The buyer of the assets of business out of bankruptcy hopes to acquire the assets free and clear of all third party interests including intellectual property interests.
The seller owned and operated a NYC grocery chain. It displayed photos in its store furnishings that were subject to a copyright license the seller had with a photographer. The copyright license expired prior to the seller’s bankruptcy filing.
The buyer then purchased some of the stores in a bankruptcy sale, including the store furnishings containing the photographs.
The photographer went into bankruptcy court after the sale to stop the buyer from using the photos. The court held that the buyer had purchased the store furnishings and photos free of any interest of the photographer.
See In Re Old Market Group Holdings Corp., Case No. 20-10161 (JLG), (Jointly Administered), United States Bankruptcy Court, S.D. New York, (September 21, 2022).
A buyer of the assets of a business out of bankruptcy, generally includes title to assets free and clear of any types of claims or interests.
The photographer challenged this ruling saying that it should have received actual notice of the proposed sale because it was a known creditor. The court concluded that this ground for objection should have been made by the photographer earlier in the proceedings. Thus, it was too late for the photographer to make the notice argument now.
By John McCauley: I write about recent legal problems of buyer and sellers of small businesses.
Telephone: 714 273-6291
Check out my book: Buying Assets of a Small Business: Problems Taken From Recent Legal Battles
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