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Stream TV Networks v. SeeCubic: Delaware court rejects “board only” insolvency exception

In Stream TV Networks, Inc. v. SeeCubic, Inc., the Delaware Supreme Court reversed the Delaware Court of Chancery’s finding that the board of Stream TV Networks, Inc. (Stream) could sell all of Stream’s assets without a stockholder vote due to Stream’s insolvency. The Delaware Supreme Court found that the sale agreement – in essence, a privately structured foreclosure transaction – constituted an “asset transfer” under Stream’s charter, triggering a class vote provision that required the approval of Stream’s Class B stockholders.

USA, Delaware, Insolvency & Restructuring, Litigation, Hogan Lovells, Insolvency, Delaware Court of Chancery, Delaware Supreme Court
Rehabilitation of Scottish Re: No per se liquidation standard for insurance rehabilitation plans

In In re Rehabilitation of Scottish Re (U.S.), Inc., C.A. No. 2019-0175-JTL (Del. Ch. Apr.18, 2022), the Delaware Court of Chancery ruled, as a matter of first impression, that in a delinquency proceeding for an insurance company under Delaware law, there is no per se requirement that a rehabilitation plan meet a “liquidation standard” to obtain court approval. Under the “liquidation standard,” a rehabilitation plan must provide claimants at least “liquidation value,” or the value they would have received in a liquidation proceeding.

USA, Delaware, Insolvency & Restructuring, Insurance, Litigation, Hogan Lovells, Receivership, Supreme Court of the United States, Delaware Court of Chancery
Supreme Court Holds Trademark License Not Terminated Upon Rejection in Bankruptcy

In an 8-1decision issued on May 20, the Supreme Court held that rejection of an executory trademark license agreement in a bankruptcy of the licensor is merely a breach, and not a termination or rescission, of the agreement. The licensee retains whatever rights it would have had upon a breach of the agreement prior to bankruptcy and can continue to use the trademarks pursuant to its contractual rights under applicable law. Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. ___, No. 17-1657 (May 20, 2019).

Background

USA, Insolvency & Restructuring, Litigation, Trademarks, Katten Muchin Rosenman LLP
Trademark licensee’s rights survive rejection of license in bankruptcy in <i>Sunbeam</i> decision

In reaction to a decision by the U.S. Court of Appeals for the Fourth Circuit, Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), in which the court held that a licensee of patents, copyrights and trademarks loses its rights if the trustee or debtor in possession rejects a license under the Bankruptcy Code under which the debtor was the licensor, Congress enacted section 365(n) of the Bankruptcy Code (11 U.S.C. § 365(n)).

USA, Insolvency & Restructuring, Litigation, Trademarks, Katten Muchin Rosenman LLP, Bankruptcy, Debtor in possession, US Code, Fourth Circuit, Seventh Circuit