In a case of first impression that has important implications for parties who acquire intellectual property rights under international license agreements, the U.S. Bankruptcy Court for the Eastern District of Virginia held that the protections of Section 365(n) of the U.S. Bankruptcy Code applied to licensees of U.S. patents in a Chapter 15 case, despite the fact that those protection were not available under the foreign law applicable to the foreign debtor.  In re Qimonda AG, Case No. 09-14766 (Bankr. E.D. Va., Oct. 28, 2011) (Mitchell, Bankruptcy J.).

The Internal Revenue Service’s recently issued general legal advice memorandum (GLAM) should provide beneficial results to certain taxpayers that use a check-the-box election to convert an insolvent foreign corporation into a partnership.

Overview

Recently, the Third Circuit held that withdrawal liability triggered after a bankruptcy filing date may be apportioned to pre- and post-petition service for the debtor, and that the withdrawal liability attributable to post-petition service may be entitled to priority over general unsecured claims under the Bankruptcy Code.  Employers that participate in a multiemployer pension plan should determine the claims impact of withdrawal in light of this court decision and also assess whether filing for bankruptcy protection outside of the Third Circuit is appropriate.  

Considering the fate to befall certain trademarks upon an owner’s bankruptcy, the U.S. Court of Appeals for the Seventh Circuit Court determined that a trademark license is not assignable without the owner’s express permission or in the absence of a clause explicitly authorizing assignment and a trademark license cannot be implied from a contract for services.  In re XMH Corp., Case No. 10-2596 (7th Cir. August 2, 2011) (Posner, J.).

The arrival of private equity and hedge funds into the US restructuring and insolvency markets is last year’s news. How these funds are transforming the restructuring markets in the United States and exporting these transformations to Europe is what’s of interest now. Keen on making higher and higher profits in a low interest rate environment, funds are directing vast amounts of their liquidity into purchasing and trading distressed bond debt, bank debt and trade debt in restructurings and in insolvency proceedings in the United States.

Effective January 1, 2016, the Pension Benefit Guaranty Corporation (PBGC) altered the reportable event rules for defined benefit pension plans. Under new final regulations, the PBGC substantially reduced the reporting requirements for pension plan administrators, sponsors and contributing employers. In fact, the PBGC estimates that the final regulations will allow 82 percent of pension plans with more than 100 participants to utilize a reporting waiver. 

In North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, the Delaware Supreme Court, in a case of first impression, addressed the ability of creditors to assert claims for breach of fiduciary duty against directors of a Delaware corporation that is insolvent or operating within the zone of insolvency.

Decision determines that silica trust and channeling injunction are appropriate under Third Circuit standards.

On September 24, 2007, the U.S. Bankruptcy Court for the Western District of Pennsylvania issued an opinion recommending confirmation of the Chapter 11 plans of North American Refractory Company (NARCO) and Global Industrial Technologies, Inc. (GIT). The decision caps a five-and-a-half-year reorganization for the Pittsburgh, Pennsylvania-based family of industrial companies.

The decision of the U.S. Bankruptcy Court in Hutson v. Smithfield Packing Co. (In re National Gas Distributors, LLC)1 poses potentially serious problems for parties trading gas under the North American Energy Standards Board (NAESB) base contract. The U.S. Court of Appeals for the Fourth Circuit will soon review this case of first impression about what constitutes a “swap agreement” under the expanded definition included in the U.S. Bankruptcy Code after the 2005 amendments.

Organizations that acquire claims in bankruptcy should acquire such claims by a sale without knowledge of the debtors’ claims against the original holder or prior transferees, and obtain an indemnification from the transferor of such claims.