In re Rooster, Inc.

Rooster, Inc. (debtor) was in the business of manufacturing and selling men’s neckwear. In 1987, Pincus Bros., Inc. (Pincus) granted Rooster an exclusive sublicense to use the trademark of fashion designer Bill Blass on Rooster’s neckties. Under the terms of the agreement, Pincus would provide Rooster with information about the look to be created for a line. Rooster would then review catalogues of patterns maintained by Italian silk manufacturers and choose patterns for the items to be produced that would fit the design, color, and quality dictated by Pincus and Bill Blass. Pincus and Bill Blass exercised substantial supervision and control over the design process, and production did not begin until Bill Blass had approved the patterns that Rooster had selected. The agreement also required Rooster to submit labels, press releases, and other printed matter to Bill Blass for approval. In 1989, Rooster petitioned for relief under Chapter 11 of the United States Bankruptcy Code. As a debtor-in-possession, Rooster wanted to sell its rights under the license agreement. Pincus, on the other hand, wanted to control the choice of a new sublicensee and sought relief from the automatic stay, arguing that the license agreement constituted a personal-services contract that could not be assigned or sold by Rooster under applicable Pennsylvania law.