The Supreme Court of the United States granted Mission Product Holdings’ petition for certiorari to determine whether a debtor-licensor can terminate the rights of trademark licensees by rejecting its trademark licensing agreements as part of its bankruptcy case. Mission Product Holdings, Inc. v. Tempnology LLC, Case No. 17-1657 (Supr. Ct. Oct. 26, 2018). The specific question presented is:

Trademark licensing is a driving force in business relationships. One common example is where one business owns a trademark, which it licenses out to other companies who manufacture and sell the products bearing the mark. But, what happens if the trademark owner goes bankrupt? Bankruptcy law gives a debtor the right to “reject” contracts to free itself of obligations, but if a trademark owner/licensor “rejects” a trademark license agreement, how does that affect the trademark licensee?

The US Court of Appeals for the 11th Circuit affirmed the district court’s dismissal of a fraudulent conveyance claim for a “blocking right” and right of first refusal under a patent transfer agreement, addressing the district court’s proper exclusion of expert testimony on whether the debtor was insolvent at the time of the relevant transfer. In re: Teltronics, Inc., Case No. 16-16140 (11th Cir. Oct. 2, 2018) (Kaplan, J).

The Bankruptcy Code (“Code”) “does not limit the allowability of unsecured claims for contractual post-[bankruptcy] attorneys’ fees,” held the U.S. District Court for the District of Delaware on Nov. 26, 2018. In re Tribune Media Company, 2018 WL 6167504 (D. Del. Nov. 26, 2018). In a short and sensible opinion, the district court reversed the bankruptcy court’s disallowance of an undersecured lender’s fees.

In October 2018, the Wisconsin Court of Appeals reversed a decision by Circuit Court Judge Clare Fiorenza that previously granted summary judgment on behalf of certain defendants. The plaintiff in the case is the Committee of Unsecured Creditors, which represents the interests of approximately 140 unsecured creditors in the Chapter 11 bankruptcy case of Great Lakes Quick Lube LP.

Alno AG, a manufacturer and retailer of kitchen furniture headquartered in Pfullendorf, Germany, has filed a petition for relief under chapter 15 in the Bankruptcy Court for the District of Delaware (Case No. 18-12651).

LBI Media, Inc., along with seventeen affiliates and subsidiaries, has filed a petition for relief under chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 12655).

In re Altadena Lincoln Crossing LLC, 2018 Westlaw 3244502 (Bankr. C.D. Cal.), a California bankruptcy court held that a default interest rate provision was an unenforceable penalty under applicable California law because, among other things, the applicable loan agreements did not contain an estimate of the probable costs to the lender resulting from the debtor’s default.

Background

It happens all too often: a company declares bankruptcy and then the company’s bank, vendors, or other creditors are forced to return a payment that the company made before declaring bankruptcy because the payment was a “fraudulent transfer” under the bankruptcy code. When that happens, the creditor typically files a proof of claim in the bankruptcy case to recover its payment. To succeed, the creditor must show that it provided some benefit to the debtor in exchange for its payment.

In Lone Star State Bank of West Texas v. Waggoner, et al. (In re Waggoner Cattle, LLC), Adv. P. No. 18-02003 (RLJ) (Bankr. N.D. Tex. Nov. 19, 2018), the United States Bankruptcy Court for the Northern District of Texas reminded us that creditor’s claims against third parties can confer jurisdiction on a bankruptcy court when the claims could have a conceivable effect on the bankruptcy estate.