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Franchising and Insolvency

This chapter is taken from Lexology GTDT’s Practice Guide to Franchise, examining key themes topical to cross border franchising.

Introduction

USA, Franchising, Insolvency & Restructuring, Foley & Lardner LLP, Title 11 of the US Code
Strict Construction: The Limitations of Administrative Expense Claims for Goods Delivered 20 Days Prior to a Bankruptcy Case

Creditors lacking liens to secure their claim can fare poorly in a bankruptcy case. The “absolute priority rule” is a bedrock principle of bankruptcy law and provides that a creditor at a particular rung of the claim priority hierarchy must be paid in full before any money flows down to junior creditors. Secured creditors reside near the top of the hierarchy, followed by administrative expense claimants, priority claimants and general unsecured creditors.

USA, Delaware, Banking, Insolvency & Restructuring, Litigation, Foley & Lardner LLP
A Landlord’s Bankruptcy Sale Could Lead to the Tenant’s Loss of a Leasehold

A recent decision by the Ninth Circuit Court of Appeals has fanned the smoldering dispute among courts regarding the scope of asset sales in bankruptcy. In the In re Spanish Peaks Holdings II, LLC decision, the Ninth Circuit affirmed a lower court’s holding that sale of commercial real estate can, in certain circumstances, be free and clear of all liens, claims, encumbrances, and interests, including a leasehold interest. In other words, a tenant of a bankrupt landlord could find itself with no interest in the property following the sale.

USA, Insolvency & Restructuring, Litigation, Real Estate, Foley & Lardner LLP, Bankruptcy, Leasehold estate, United States bankruptcy court
Seventh Circuit says violations of Wisconsin’s theft-by-contractor statute are not dischargeable in bankruptcy

The Bankruptcy Code prevents an individual debtor from discharging certain debts, including, upon request of the creditor, debts for “fraud or defalcation while acting in a fiduciary capacity.” 11 U.S.C. § 523(a)(4). The Seventh Circuit recently confirmed in Stoughton Lumber Co., Inc. v. Sveum, No.

USA, Insolvency & Restructuring, Litigation, Foley & Lardner LLP, Debtor, Default judgment, Title 11 of the US Code, Seventh Circuit
Seventh Circuit says finding of intent must be explicit for preclusive effect in non-dischargeability action

The Bankruptcy Code exempts from discharge those debts arising from willful and malicious injuries caused by the debtor. 11 U.S.C. § 523(a)(6). Because debtors have a habit of filing bankruptcy soon after a judgment for such an injury is entered against them, bankruptcy courts often give a prior (state or federal) judgment issue-preclusive effect when the creditor seeks to have the debt declared non-dischargeable under § 523(a)(6).

USA, Wisconsin, Insolvency & Restructuring, Litigation, Real Estate, Foley & Lardner LLP, Debt, Seventh Circuit
The Seventh Circuit interprets Wisconsin exemption law on college savings accounts and retirement annuities, but did it have jurisdiction? (part 2 of 2)

As we explained in a post yesterday, the Seventh Circuit in In re Bronk (Cirilli v.

USA, Wisconsin, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Foley & Lardner LLP, Seventh Circuit
The Seventh Circuit interprets Wisconsin exemption law on college savings accounts and retirement annuities, but did it have jurisdiction? (part 1 of 2)

In re Bronk (Cirilli v. Bronk), No. 13-1123 (7th Cir. Jan. 5, 2015), resolved a couple of “questions of first impression,” slip op.

USA, Wisconsin, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Foley & Lardner LLP, Seventh Circuit