In Morning Mist Holdings Limited v. Krys (In re Fairfield Sentry Limited), Case No. 11-4376, 2013 WL 1593348 (2d Cir.

The 7th Circuit has again left a disappointed creditor with no recourse because of the creditor's failure to do basic investigation or take steps to protect itself. (On Command Video Corporation vs. Samuel J. Roti, Nos. 12-1351 and 12-1430, January 14, 2013). This case follows other cases in which the 7th Circuit has shown itself decidedly unfriendly to creditors who sought compensation through the courts in failed business ventures but could have, but failed, to prevent their unfortunate situation.

In a corporate system based in part on the separation of ownership and control, the relationship between principals and agents is riddled with agency problems: Among them are potential conflicts of interest where agents may abuse their fiduciary position for their own benefit as opposed to the benefit of the principals to whom they are obligated. Delineating the agents' fiduciary duties is thus a central focus of corporate law, and the dereliction of those duties often comes under scrutiny in the bankruptcy context.

In a recent decision, the 7th Circuit Court of Appeals was faced with a situation that is the bane of any commercial and business attorney. A legal document contained an error. But in this case, the error was so extreme and obvious that the court was willing to reform the document to correct the error, in the face of other cases where courts refused to let parties escape from their mistakes. In re: Equipment Acquisition Resources (7th Cir., No. 1103905 decided on August 9, 2012)

In a recent important decision, the 7th Circuit Court of Appeals held that a trademark licensor could not use its bankruptcy to deny the rights of a licensee to use the trademark pursuant to a pre-bankruptcy agreement. (Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 7th Circuit Court of Appeals, No. 11-3920, decided July 9, 2012) This decision creates a conflict among the federal circuits, which often means the U.S. Supreme Court must eventually decide the issue.

One of the benefits to a corporate form of entity is the protection of shareholders from liability for obligations of the corporation. Of course, as we all know, there are still legal claims which could impose liability on a corporate shareholder for obligations of the corporation. In a recent case, a former executive of a corporation tried to assert a tortious interference claim against a majority shareholder, when it terminated severance payments that were owed to the executive. (Nation v. American Capital, Ltd., 7th Circuit Court of Appeals, Case No.

A recent 7th Circuit Court of Appeals decision shows the risks of dealing with an entity known to be insolvent and demonstrates that claimants, however deserving, can expect little sympathy from the courts. (Fusion Capital Fund II, LLC v. Richard Ham and Carla Aufdenkamp No. 09-3723 decided August 2, 2010)

Merger and acquisition transactions frequently have included ongoing obligations of the parties to each other. In a recent decision by the Third Circuit Court of Appeals, a trademark licensee in a 1991 acquisition survived an effort by the bankrupt licensor to overturn the license. (In re: Exide Technologies, U.S. Third Circuit Court of Appeals, No. 08-1872 filed June 2, 2010) The case illustrates that the time in which agreements in a merger and acquisition transaction remain at issue can be longer than would be expected.  

The U.S. Court of Appeals for the Third Circuit, in In re Philadelphia Newspapers LLC,1 has ruled that secured creditors do not have a right, as a matter of law, to credit bid their claims when their collateral is sold under a plan of reorganization. The Third Circuit held that secured creditors may be barred from credit bidding where a debtor's reorganization plan provides secured creditors with the "indubitable equivalent" of their secured interest in the assets. The court's ruling follows a similar ruling last year by the U.S.

In our update of October 20, 2008, we reported on whether "negative equity" can be part of a purchase money security interest. (http://www.masudafunai.com/showarticle.aspx?Show=3093) "Negative equity" is the excess of the amount owed on a trade-in item over the market value of the item.