The opinion of the court was delivered by: John G. Koeltl, District Judge:
The appellants, Maximilian Coreth and Olivia Bam, appeal from Orders of the United States Bankruptcy Court for the Southern District of New York (Peck, J.), dated March 8, 2011, dismissing the appellants' complaints in two adversary proceedings. The Orders were based on a Memorandum Decision dated February 22, 2011. The appellants are two former employees of Lehman Brothers Inc. ("LBI") who seek to recover certain guaranteed minimum bonus payments they claim they are owed following their termination without cause from Barclays Capital Inc. ("Barclays"), where they were employed as "Transferred Employees" after Barclays bought LBI's business by way of an Asset Purchase Agreement ("APA") following Lehman's bankruptcy in September, 2008.
The Bankruptcy Court dismissed both appellants' adversary complaints, concluding that the appellants did not have standing to sue Barclays because they were third-party beneficiaries under the APA and that, in any event, Barclays did not assume the obligation to pay the guaranteed minimum bonuses owed under the appellants' LBI employment contracts. The appellants now challenge those conclusions. For the reasons explained below, the Orders of the Bankruptcy Court are affirmed.
In April, 2008, Maximilian Coreth entered into a contract with LBI for his employment as a Managing Director in LBI's Fixed Income Division. (Coreth R. 1 Ex. A.) Coreth's employment contract with LBI provided that, for each of performance years 2008 and 2009, Coreth would receive an annualized base salary of $200,000 and a "bonus in the amount of $9,800,000." Id. at 1. The agreement also provided that, "[f]or the avoidance of doubt, in the event your employment is terminated by [LBI] without Cause before the payment in full of the guaranteed minimum bonus for performance years 2008 and 2009, you will be paid on the applicable bonus payment dates any unpaid guaranteed minimum bonus for such years, payable part in cash and part in conditional equity awards . . . ." Id. at 2.
In March, 2008, Olivia Bam entered into a contract with LBI for her employment as a Salesperson with the corporate title of Vice President in LBI's Fixed Income Division. (Appendix to Plaintiff-Appellant's Brief ("Bam R.") at A-14.) Bam's employment contract with LBI provided that, for performance year 2008, Bam would receive a bi-weekly base salary of $4,423.08 and a "minimum bonus in the amount of $185,000." Id. The agreement provided that "[t]he bonus amount set forth above will be paid at the time and in the amount stated except that it will not be payable . . . if, before the date of scheduled payment, you have resigned or have been terminated from [LBI] because of misconduct, breach of [LBI] policies or rules" or other circumstances constituting "Cause." Id.
Lehman had a severance plan, pursuant to which Lehman "may offer severance pay, notice pay, accrued unused vacation pay and/or other separation payments if employment with the Firm is terminated involuntarily due to a 'reduction in force.'" (Bam R. at A-118.) Under the severance plan, an employee was ineligible to receive severance if, among other circumstances, that individual "will receive further payments pursuant to a compensation agreement (compensation 'guarantee') in an amount equal to or in excess of the total amount of severance . . . for which the employee might otherwise be eligible under the Plan." Id. Severance pay was to be "based on 'years of service,' 'base salary,' and corporate title" and the Plan Administrator was to have "sole and absolute discretion" to decide "whether an employee involved in a reduction in force will be offered an additional special separation payment" and to determine the amount of any such payment. (Bam R. at A-119.)
On September 15, 2008, Lehman Brothers Holdings Inc. filed a voluntary petition for bankruptcy relief pursuant to Chapter 11 of the Bankruptcy Code. In re Lehman Bros. Holdings Inc., Nos. 09-1045, 09-1130, 2011 WL 722601, at *3 (Bankr. S.D.N.Y. Feb. 22, 2011). On September 16, 2008, Lehman Brothers Holdings Inc., LBI, LB 745 LLC (collectively "Lehman"), and Barclays entered into an Asset Purchase Agreement, pursuant to which Barclays agreed to purchase certain assets and undertake certain obligations related to LBI's North American broker-dealer and investment banking operations. Id. at *2-3. The APA provided that Barclays "shall assume, effective as of the Closing, and shall timely perform and discharge in accordance with their respective terms," certain liabilities of LBI, including "all liabilities assumed under Article IX." (Bam R. at A-31 ("APA"), at §§ 2.3 & 2.3(c)).
Article IX enumerated certain obligations owed to employees of LBI. Specifically, Barclays agreed to continue to employ or offer employment to all active employees of LBI, with certain exceptions not applicable here. (APA § 9.1(a).) All such employees who accepted Barclays's offer of employment were to be referred to as "Transferred Employees." Id. Barclays also undertook to provide the Transferred Employees with certain severance benefits. Specifically, the APA provided that Barclays would provide to each Transferred Employee whose employment was terminated by Barclays during the period from the Closing to December 31, 2008 "by reason of a 'reduction in force' or a 'job elimination'": severance payments and benefits at levels that are no less favorable than such levels as the Transferred Employee would have been entitled to receive pursuant to the provisions of the Seller's severance plans or agreements covering such Transferred Employee as in effect immediately prior to the Closing. (APA § 9.1(b).)
The APA made clear that, other than those employment-related liabilities "expressly assumed pursuant to Article IX [of the APA]," Barclays would not assume or be liable for any "Liabilities relating to the employment, potential employment or termination of employment of any Person relating to or arising out of any period prior to the Closing, including without limitation any Liability under or relating to any employee benefit plan, program, agreement or arrangement." (APA § 2.4(d).) At the time the APA was executed, both Coreth and Bam were employees of LBI.
The APA also contained a no third-party beneficiary clause which provided that: "Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person or entity not a party to this Agreement except as provided below." (APA § 13.9.) The APA provided that it was to be governed by New York Law. (APA § 13.6.)
On September 20, 2008, following a lengthy hearing, the Bankruptcy Court signed the Sale Order approving the APA ("the Sale Order"). In re Lehman Bros. Holdings Inc., 2011 WL 722601, at *3. The Sale Order included a ...