Reference no: EM13654057

An attorney representing a rock group. Recently the group has toldyou that it wants to get out of its present recording contract in order to takeadvantage of a much better offer. The group's contract is a "new kid"agreement common in the recording industry. The group complains, andyou agree, that the terms of the contract heavily favor the recordingcompany. For example, although the contract calls for the group to makeeight records, the company can drop the group at any time. In contrast,however, under the contract, your client (the rock group) cannot terminatethe agreement at will (i.e. whenever it wants to), but instead must stay withthe recording company and make all eight recordings. These could taketwelve years to produce, however.The rock group entered into the contract, before you represented them, at atime when the members were all just out high school. In your opinion,however, had you been there to represent them, you probably could nothave secured a much better deal because the above kinds of contractualterms are standard throughout the recording industry. In this regard,record companies say they have to rely upon "new kid" contracts tobalance the financial risks of signing and producing many new artists,most of whom do not pan out.A lawsuit requesting a court to release the group from its contract could goon for years. You know about another legal strategy, however, that couldgenerate the same result much sooner -- declaring bankruptcy. Underfederal bankruptcy law, the courts may free debtors from contracts thecourt views as burdensome. You realize, although you have not yetshared this with the rock group, that it might be able to get out of thecontract if the group members all rapidly accumulated large debts thatmight convince a judge they are financially bankrupt.