RPD Holdings, L.L.C. v. Tech Pharmacy Services, dba Advanced Pharmacy Services

This case raises two important issues of first impression under the Bankruptcy Code: what happens to an undisclosed executory contract—frequently a valuable asset, yet deemed rejected if not timely assumed—and what exactly is an executory contract? The facts of this case show why this Court should resolve these issues, and they present the perfect matrix in which to do so, while also addressing a key intersection between bankruptcy and patent law. RPD Holdings, LLC purchased bankruptcy assets pursuant to final bankruptcy court orders, which also provided for the assumption and assignment of executory contracts. The assets included a patent license from Tech Pharmacy Services, LLC, although neither RPD nor the bankruptcy trustees knew this at the time, because the debtors failed to schedule the license. When Tech Pharmacy sued to invalidate the license, RPD sought to enforce the bankruptcy court’s final orders against this collateral attack. Reasoning that the license was an executory contract that had been rejected even though it was not scheduled, and ignoring that the bankruptcy court ordered an assumption and assignment, the courts below concluded that the license could not have been assumed and assigned to RPD. This result threatens the finality of bankruptcy sales, is inequitable, punishes the innocent, and conflicts with the Code. Accordingly, the questions presented are: 1. Is an executory contract that is not scheduled by a debtor automatically rejected under the