Coralee G. Penabad, Esq.

Admitted Pro Hac Vice

HELLINGER & PENABAD, P.A.
235 Altara Avenue
Coral Gables, Florida 33146
Phone No.: (305) 567-2869

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

x
In re Chapter 11

TEEVEE TOONS, INC. Case No. 08-10562 (ALG)

d/b/a TVT RECORDS,

Debtor.
x

RESPONSE AND OPPOSITION TO NOTICE OF PROPOSED ASSUMPTION AND

ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

TO ALL INTERESTED PARTIES:

Famous Artist Entertainment, Inc. f/k/a Diaz Brothers Music Group, Inc. (“FAE”) f/s/o

Pitbull Productions, Inc. f/s/o Armando Perez p/k/a Pitbull, (collectively “Pitbull”) by and

through its undersigned counsel, responds and opposes the Debtor’s Notice of Proposed

Assumption and Assignment of Executory Contracts and Unexpired Leases (“Notice of

Assumption”) to the extent the Debtor purports to assume and assign its Agreement with Pitbull,

and moves the Court to enter an Order denying such proposed assumption and assignment of

Pitbull’s Agreement and as grounds therefore states:

I. SUMMARY OF THE ARGUMENT.

The Debtor is attempting to “cram down” a plan of liquidation on artists and creditors

without full and complete disclosure. Based on the limited record, it is clear that the Notice of

Assumption is premature and the sale process is flawed. Since the inception of this case, the

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Debtor has worked to quickly advance the interest of insiders while trampling upon rights of

creditors and artists. The instant motion is yet another example of Debtor’s cramdown efforts at

the expense of artists and creditors. Debtor has failed to meet its burden on the Notice of

Assumption and failed to comply with its evidentiary burdens.

Pitbull objects to the Notice of Assumption on the grounds that: (a) Pitbull’s Agreement

is not capable of assumption without Pitbull’s consent, full cure; (b) even if the Agreement is

capable of assumption and assignment, the cure amounts provided by the Debtor are inaccurate

and incomplete; and (c) Debtor has failed to provide adequate assurance of future performance.

Thus, Pitbull opposes the Debtor’s attempt to assume and assign his contract.

II. PROCEDURAL AND FACTUAL BACKGROUND.

1. On or about October, 23, 20031, Debtor entered into an exclusive recording artist

agreement with Pitbull (collectively “Agreement”). Pursuant to the Agreement, TVT elected to

undertake recording and distribution of Pitbull’s albums including, M.I.A.M.I. (Money Is A

Major Issue, M.I.A.M.I. Still (Money Is Still a Major Issue); El Mariel and The Boatlift.

2. Unlike most artist recording contracts, Pitbull Productions, Inc. retained the

publishing rights for Pitbull’s music. While TVT could distribute the records exclusively, Pitbull

retained the rights to publish his music subject to a first use license given to TVT for the

exploitation subject to TVT’s payment of mechanical royalties.

3. On February 19, 2008, the Debtor filed its Petition for relief under Chapter 11 of

the Bankruptcy Code.

4. TVT is a record label whose business is to create, release and distribute records.

A record label generally sells records by locating talent; choosing the songs, styles and format

1
This Agreement was not executed until approximately two years later when certain amendments were executed as
addendum to the Agreement. There are also additional letter agreements modifying the Agreement including but not
limited to a modification addressing separate distribution arrangements for Pitbull’s Spanish language recordings.

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for the albums; hiring engineers and producers; assuring the tracks are mixed and re-mastered;

arranging the cover art; having the CDs or records manufactured; working with distributors to

sell the records and promoting and marketing its albums to increase sales. Artists rely on the

successful marketing, promotion and sale of their work by the recording company. Artists

depend on royalty revenue to off-set any advance. TVT has not acted as a “record label” since

late 2007 and certainly in 2008 based upon Court testimony.

5. Prepetition, Pitbull advised TVT of its breaches and provided TVT with the

opportunity to cure said defaults which it failed to do. Post-petition, TVT has continued to

breach the Agreement. Pitbull has not acted on the uncured defaults because of concerns

regarding Debtor’s alleged interference claims, the automatic stay provisions and other rules of

this Court. This Objection is without prejudice to Pitbull’s rights to deem the Agreement

rejected due to the post petition default and/or seek to have the Agreement declared terminated.

6. TVT itself admitted in its correspondence to Pitbull post petition that the

Agreement is in breach both prepetition and postpetition. Specifically, TVT claims Pitbull

breached the Agreement and TVT continued to perform solely on the indemnity provisions.

Thus, both TVT and Pitbull are in consensus that the Agreement has been breached.

7. On May 28, 20008, the Debtor filed the Notice of Assumption pursuant to which

the Debtor seeks to assume and assign the Agreement.

8. Pitbull was granted an extension to file his objection to the Notice of Assumption

until June 13, 2008.

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 III. SPECIFIC OBJECTIONS.

A. The Debtor Cannot Assume and Assign Pitbull’s Agreement Without

Pitbull’s Consent.

9. Section 365(c)(1) of the Bankruptcy Code provides, in relevant part:

The Trustee may not assume or assign any executory contract

or unexpired lease of the Debtor…if:

(A) applicable law excuses a party, other than the debtor

to such contract or lease from accepting performance from or
rendering performance to an entity other than the debtor or
the debtor in possession…; and,

(B) such party does not consent to such assumption or

assignment…

If an executory contract cannot be assumed or assigned pursuant to applicable non-bankruptcy

law, the contract cannot be assumed or assigned without the party’s consent. In re: Patient Educ.

Media, Inc., 210 B.R. 237, 241-242 (Bankr. S.D.N.Y. 1997). Pitbull’s Agreement is a personal

services contract. Under New York law, a personal services contract cannot be assumed and

assigned without Pitbull’s consent. In Re Mitchell, 249 B.R. 55 (Bankr. S.D.N.Y. 2000). See

also, E.G., In re: Adelphia Communications Corp. 359 B.R. 65, 73-74 (Bankr.S.D.N.Y. 2007). In

re: Catron, 158 B.R. 624, 627 (Bankr.E.D.Va. 1992). Pitbull does not consent to the assumption

and assignment of his Agreement.

B. The Debtor has failed to Meet its Evidentiary Burden to Establish a

Right to Assume and Assign Pitbull’s Agreement.

10. Pitbull objects to the cure amounts listed by the Debtor in the Notice of

Assumption because the Debtor has exclusive control of the accurate accounting information

without which Pitbull is unable to verify the actual amounts due to him under the Agreement the

Debtor seeks to assume and assign.

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 11. The Debtor has attached an extensive list of contracts which it purports to assume

and assign through its pending sale procedure. The Debtor listed the cure amounts in most of

these executory contracts at $0.00. The Debtor has submitted no evidence and no affidavits

regarding how such determinations were made.

12. With respect to Pitbull, the Debtor disclosed limited amounts due Pitbull. The

Debtor’s listed amounts are incorrect and incomplete. Therefore, Pitbull objects under

Fed.R.Evid. Rules 601, 602 and 803(6) that the assumption motion cannot be granted, for failure

of the Debtor to make a foundation (or any evidentiary showing whatsoever, in reality) that

any particular contract cure amount is supported by either the personal knowledge of a

representative of Debtor, or the Debtor’s properly admitted business records.

13. Pitbull is prejudiced in his analysis of the Notice of Assumption and cure amounts

because the Debtor is in exclusive possession of accurate information regarding sales and

payments. Pitbull has, by letter to TVT, objected to the Debtor’s purported accounting on

royalties related to Pitbull’s Agreement and requested the opportunity to review and audit the

Debtor’s books and records. The Debtor and its President have failed and refused to allow

Pitbull to review and audit records related to his Agreement. Thus, Pitbull’s ability to

challenge the proposed "cure amount" is impaired by the Debtor's own conduct. Accordingly,

the proposed assumption and assignment should be denied based on the Debtor’s own conduct in

concealing its books and records from artists.

C. Pitbull’s Agreement is Not Executory because Rejection has occurred

as result of the breach.

14. Both pre and post-petition, the Debtor and Pitbull exchanged default letters. TVT

remains in default of the Agreement post petition, has failed to cure its breach and has continued

to engage in post petition breaches of the Agreement.

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 15. Rejection of the Agreement has occurred when the Debtor breached the

Agreement post petition. In Re Central Metal Fabrication Inc., 190 B.R. 119, 123 (Bankr.N.D.

Fla. 1995). In addition, as a result of the breaches, Pitbull has sufficient cause to seek to lift the

stay and seek termination of the Agreement. In re El Paso Refinery, L.P., 220 B.R. 37 (Bankr.

W.D.Tex. 1998). As of the date of this objection, Pitbull has not sought this relief in order to

allow the Debtor the opportunity to find a record label acceptable to Pitbull with whom Pitbull

can seek a resolution of his claims and continue to advance his career. Notwithstanding, Pitbull

reserves his rights to seek relief from the Court, including lift to the automatic stay.

D. Pitbull’s Limited Investigation on Amounts Due Him Under the

Contract Greatly Exceeds the Sums Disclosed by the Debtor.

16. Assuming the Court finds that Pitbull’s Agreement can be assumed and assigned

by the Debtor, then the Debtor and/or its assignee must pay Pitbull his cure claim in full (and

subject to Pitbull’s further audit rights) as a condition of assumption and assignment of the

Agreement. So far, Pitbull can identify two types of cure claims: (i) a monetary claim which

will need to be paid upon any closing of the sale of Pitbull’s Agreement; and (ii) a setoff against

Pitbull’s royalty account with TVT.2

17. With regard to Pitbull’s monetary claims, the following estimated sums must be

paid to Pitbull at closing:

a. TVT owes Pitbull $100,000.00 from his delivery of the El Mariel

recordings;

b. TVT owes Pitbull the sum of $100,000.00 from the delivery of the
“Boatlift” recordings;

2
These amounts are subject to increase according to information that may be developed by a properly
conducted audit of the Debtor's books and records, and Pitbull waives no rights either to require such an audit, or to
require payment according to the findings of such an audit as a condition of continued validity of any particular
contract.

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 c. TVT owes Pitbull the sum of $5,000.00 for his services under a side artist
agreement for Shake;

d. TVT owes Pitbull the sum of $47,000 for unpaid expenses:

e. TVT owes Pitbull the sum of $50,000.00 from Pitbull’s Cuban Rideout.
This track was embodied on Lil Jon’s album entitled Kings of Crunk;

f. TVT owes Pitbull the sum of $325,000.00 for music

publishing/mechanical royalties;

g. TVT failed and refused to acknowledge various side artist agreements.

TVT owes Pitbull the sum of $300,000.00 for damages arising from the side artist
agreements which remain unpaid; and,

h. attorneys’ fee and costs in excess of $175,000.00.

Based upon the limited information received and reviewed by Pitbull as of the date

hereof, the Debtor owes Pitbull an estimated payment of at least $802,000.00.

18. In addition to the amounts which must be paid in cash at closing and upon any

assumption and assignment of Pitbull’s Agreement, the following estimated sums must be

applied to Pitbull’s royalty account to reduce the amount of this account as follows:

a. TVT owes Pitbull a credit for six compilation projects, five (5) of which
were never accounted for and the sixth (6th) which was under-accounted for based
upon information and belief and on Sound Scan reports. These are for Crunk
Hits Vol. 1; Crunk Hits Vol.2; Crunk Hits Vol. 3; Crunk Hits Vol. 4; Crunk Hits 2
CD Set; Crunk & Disorderly. Based on current estimates, TVT under-accounted
by at least $100,000.00. This is subject to a further audit by Pitbull.

b. TVT owes Pitbull credits for under-accounting on foreign releases of his

records and sales. TVT Europe has significant royalties payable to TVT. A
majority of these sales were generated by Pitbull. M.I.A.M.I. was licensed to EMI
for sales in Latin America. However, Pitbull was not credited or otherwise paid
on these units. As such, we estimate the credit to be not less than $100,000. This
is subject to further audit by Pitbull.

c. TVT did not actively market and/or promote either "El Mariel" or the
"Boatlift." Pitbull is entitled to a credit of his royalty account of $466,819 for the
Debtor’s failure to market these records.

d. The Debtor has improperly accounted for and credited Pitbull with
various digital sales, ring tone sales and these sums are subject to an accounting

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 and further application to the royalty account. Pitbull estimates that this sum is no
less than an additional $500,000.00.

19. Without waiving Pitbull’s other objections, Pitbull respectfully requests this

Court's order determining that, to the extent that the Pitbull’s Agreement may otherwise be

assumed by the Debtor,3 such assumption should be expressly conditioned on the Debtor or the

Debtor's purchaser making cure payments to Pitbull in the amounts as set forth herein, not

later than closing of the sale of the Debtor's assets, and further, that nothing in the Court's order

approving either assumption or assignment affects any contract or right of Pitbull where those

contracts or rights have not been expressly specified in the Debtor's notice.

E. The Debtor Has Failed to Provide Adequate Assurance of Future

Performance as Required By Section 365 of the Bankruptcy
Code.

20. 11 U.S.C. §§365(b) and (f) also provides that as a condition of assumption and

assignment of executory contracts, the Debtor must provide adequate assurance of cure, plus

adequate assurance of future performance. The Debtor bears the burden of showing adequate

assurance of future performance. In Re M. Fine Lumber Co., 383 B.R. 565, 573

(Bankr.E.D.N.Y. 2008). The Debtor has failed to meet its burden insofar as it has failed to

identify the proposed purchaser or assignee and failed to provide Pitbull with sufficient

information to establish that there can and will be adequate assurance of both cure and future

performance.

21. Pitbull preserves and reserves its objection regarding adequate assurance. Pitbull

submits that it cannot adequately advance its objections based on adequate assurance grounds until:

! Debtor actually identifies its proposed purchaser;

3
It appears that the Debtor is not at present attempting to assume or assign mechanical licenses related to Pitbull’s
lyrics. As a matter of caution Pitbull objects to any purported assumption of mechanical licenses absent full cure,
and subject to Pitbull’s further audit rights. Pitbull further reserves its rights to seek damages (including statutory
damages) and injunctive relief for infringing use or distribution of material subject to Pitbull’s mechanical licenses.

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 ! Debtor and/or the purchaser present the counterparties to executory contracts with
sufficient information to establish that there can and will be adequate assurance of
both cure and future performance; and

! Pitbull has had sufficient time to review such information for the purposes of
determining whether in fact Pitbull objects to the showing made by Debtor and/or
its purchaser.

22. To the extent the Debtor has identified its DIP Lender or any of the Debtor’s

affiliates or subsidiaries including TVT Music LLC or TVT Music Enterprise, LLC as credit

bidders and possible future owners of the Debtor’s assets and the Agreement, Pitbull objects to

these companies as purchasers.

23. As it relates to D.B Zwirn, this entity is a hedge fund or lender and has no

experience in the music industry. Thus, D.B. Zwirn cannot act as a record label and perform the

functions of the record label under the Agreement.

24. To the extent Debtor’s affiliates or subsidiaries, including TVT Music Enterprise,

LLC would be a credit bidder and wind up with the Debtor’s assets, then artists and creditors are

right back in the same position as when the bankruptcy case started. Thus, if the purchaser

involves Mr. Gottlieb or his family as a controlling party, directly or indirectly, the Debtor can

never provide Pitbull with adequate protection of future performance. The relationship with Mr.

Gottlieb is irreversibly destroyed. Under his leadership, the Debtor has been unable to operate as

a record label, failed to address the changes in the market place, and failed to properly manage the

artists’ careers, all of which resulted in Debtor’s bankruptcy. There is no evidence submitted that

Mr. Gottlieb will not repeat his failures with a new entity.

25. Thus, neither D.B. Zwirn nor Mr. Gottlieb, individually or through any of its

entities, affiliates or family members, can provide adequate protection of future performance.

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 F. Pitbull Objects to any extension of Debtor rights to Assume or
Assign the Agreement beyond June 30, 2008.

26. To the extent that the Debtor has requested an extension of Debtor’s rights to

assume and assign his Agreement, Pitbull objects to an extension of time beyond June 30, 2008,

the current date on the closing of the sale. In order for artists to continue to advance their careers

it is imperative that they and their music be marketed and promoted by their record labels.

Pitbull’s career is currently in abeyance and on hold due to the financial difficulties that faced the

Debtor and the Debtor’s bankruptcy filing. The Debtor is unable to market and promote Pitbull

during the bankruptcy as evidenced by their budget. Pitbull is suffering irreparable harm as a

result of Debtor’s failure and it is imperative that his Agreement be rejected (or assumed and

assigned subject to Pitbull’s consent and satisfaction of adequate assurance and the cure claim

before his career is irretrievably damaged. Any extension of assumption or rejection, if granted,

should be granted only through June 30, 2008.

IV. CONCLUSION.

Pitbull’s agreement is not executory and not subject to assumption and assignment.

Assuming the Court finds the Agreement is subject to assumption and assignment, TVT has

failed and refused to provide potential buyers, as well as Pitbull, with sufficient and adequate

information to properly address the amounts which are otherwise due the artist in exchange for

an assumption and assignment of Pitbull’s Agreement. The Debtor has purposefully shielded its

books and records from review, audit and investigation. Finally, the Debtor cannot assume and

assign Pitbull’s Agreement without Pitbull’s consent and without proving adequate protection of

future performance. At this point, the evidence before the Court indicates that there is no buyer

or bidder for the Debtor’s assets. Thus, the Agreement may not be assumed and assigned.

Accordingly, Pitbull objects to the purported assumption and assignment, the cure claim

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proffered by the Debtor and that Section 365(c) (1) is applicable as to any attempted sale of the

Agreement.

WHEREFORE, Pitbull respectfully requests the Court enter and order finding that the

Agreement with Pitbull is not subject to assumption and assignment and that the Agreement is

rejected and/or terminated, and for such other and further relief as the Court deems just and

proper.

Dated: June 13, 2008

Miami, Florida
Respectfully submitted,

/s/ Coralee G. Penabad

CORALEE G. PENABAD
Florida Bar No. 157030
(Admitted Pro Hac Vice)
ANDREW B. HELLINGER
Florida Bar No. 851663
HELLINGER & PENABAD, P.A.
235 Altara Avenue
Coral Gables, Florida 33146
Telephone: 305-567-2869
Facsimile: 305-447-2294
Counsel for Pitbull Productions, Inc.

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