In Re M.J. & K. Co., Inc.

M.J. & K. Co., Inc. (debtor) operated bookstores at Brooklyn Law School (BLS) and other New York law schools. The license agreement with BLS allowed M.J. & K. to sell only bookstore-related products beginning in 1982 “for a period of one year with a three-year contract to follow if Brooklyn law school is satisfied.” M.J. & K. operated the bookstore until faculty complained that the bookstore lacked required books. BLS solicited bids from other vendors to operate the bookstore. Shortly thereafter, the dean learned M.J. & K. had filed bankruptcy and was involved in litigation with a major book publisher. Three other publishers refused to ship books without cash on delivery. BLS inventoried the bookstore and found it had less than half the books needed for spring semester. M.J. & K. responded with old inventory lists including books from other bookstores not needed for BLS courses. M.J. & K’s counsel advised that BLS could not interfere with M.J. & K.’s operations absent relief from the automatic bankruptcy stay. BLS requested relief to serve a notice to quit the premises, arguing that M.J. & K.’s license expired in 1983. M.J. & K. argued it had a long-term license effective until December 1995 with guaranteed sales. Its principal admitted the bookstore had no cash to buy books but said he would personally finance the books using lines of credit exceeding $50,000.