In a prior blog post, “Making Sense of The Circuit Split on the Enforcement of Make-Whole Provisions in Bankruptcy,” we discussed the circuit split on the enforcement of a make-whole premium triggered by a bankruptcy petition. Shortly after that post was published, the U.S.

The enforcement of a lender’s claim for a make-whole premium in a chapter 11 case has created significant controversy among legal practitioners and the courts. Notably, the three circuit courts of appeal that have addressed make-whole claims, i.e. the Second, Third and Fifth Circuits, have issued conflicting decisions on the nature of these claims and their allowance under the Bankruptcy Code. In this post we provide a brief summary of make-whole premiums and address the controversy among the circuits.

Trademark licensees that file for bankruptcy protection face uncertainty concerning their ability to continue using trademarks that are crucial to their businesses. Some of this stems from an unsettled issue in the courts as to whether a licensee can assume a trademark license without the licensor’s consent. In In re Trump Entertainment Resorts, Inc., 2015 BL 44152 (Bankr. D. Del. Feb. 20, 2015), a Delaware bankruptcy court reaffirmed that the ongoing controversy surrounding the “actual” versus “hypothetical” test for assumption of a trademark license has not abated.

A debtor's decision to assume or reject an executory contract is typically given deferential treatment by bankruptcy courts under a "business judgment" standard. Certain types of nondebtor parties to such contracts, however, have been afforded special protections. For example, in 1988, Congress added section 365(n) to the Bankruptcy Code, granting some intellectual property licensees the right to continued use of licensed property, notwithstanding a debtor's rejection of the underlying license agreement.