The United States Supreme Court in an 8-1 decision issued on May 20, 2019, settled a split among the Circuits in holding a debtor’s rejection of a trademark license agreement under Bankruptcy Code Section 365 did not rescind the rights of the trademark licensee under the agreement. In Mission Product Holdings, Inc. v. Tempnology, LLC, the Court adopted what is known as the “rejection-as-breach” approach, which holds that post-contract rejection a trademark licensee still retains its rights under applicable state law.

In Popular Auto, Inc. v. Reyes-Colon (In re Reyes-Colon), Nos. 17-1971, 17-1972, 2019 WL 1785039 (1st Cir. April 24, 2019), the First Circuit recently ruled that “special circumstances” does not authorize a bankruptcy court to use its equitable powers to contravene the numerosity requirement for an involuntary petition under section 303(b)(1) of the Code. This twelve year dispute did not end well for the petitioning creditors.

Junior creditors are often described as holding a “silent second” under standard intercreditor agreements, which address the relative rights of senior and junior creditors and the extent to which junior creditors can seek to enforce remedies without the consent of senior creditors. The increased complexity of capital structures has led to litigation over the degree junior creditors must remain silent after the borrower has commenced a chapter 11 case.

Addressing unknown future claims in a chapter 11 bankruptcy involves two competing concerns: (a) providing a debtor with a fresh start and (b) providing an unwitting claimant with due process. These competing concerns clash when a debtor seeks to confirm its plan of reorganization, which is intended to provide remedies to all the debtor’s creditors and provide the debtor with a discharge of all pre-confirmation liabilities.

In Keystone Gas Gathering, L.L.C.v. Ad Hoc Committee of Unsecured Creditorsof Ultra Resources, Incorporated (In re Ultra Petroleum Corporation), Case No. 17-20793, –F.3d–, 2019 WL 237365 (5th Cir. Jan. 17, 2019) (Oldham, J.), the Fifth Circuit Court of Appeals recently held that a class of creditors is not “impaired” by a reorganization plan simply because it (a) incorporates the Bankruptcy Code’s restrictions on payment of unmatured interest and (b) fails to award unsecured creditors interest at the contractual rate.

In a recent significant opinion, Judge Marvin Isgur of the US Bankruptcy Court for the Southern District of Texas held that a springing lien to senior noteholders, conditioned on the amount of iHeart notes outstanding, was not triggered where an iHeart subsidiary repurchased notes and left them outstanding past maturity.1 The Court rejected various creditor arguments that the notes were canceled as a matter of law, or that actions to avoid the springing lien entitled creditors to equitable remedies.

On January 16, 2019, Gymboree Group, Inc. and 10 affiliated debtors (collectively, “Debtors” or “Gymboree”) filed chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division). On January 17, 2019, Gymboree, Inc. commenced a parallel proceeding in Canada under subsection 50.4(a) of the Bankruptcy and Insolvency Act (Canada).

On January 16, 2019, Gymboree Group, Inc. and 10 affiliated debtors (collectively, "Debtors" or "Gymboree") filed chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division). On January 17, 2019, Gymboree, Inc. commenced a parallel proceeding in Canada under subsection 50.4(a) of the Bankruptcy and Insolvency Act (Canada).  

In In re Argon Credit, LLC, et al., Case No. 16-39654 (Bankr. N.D. Ill. Jan. 10, 2019), the United States Bankruptcy Court for the Northern District of Illinois recently held that a standby clause in a subordination agreement prevented a subordinated lender from conducting discovery on the senior lender's claim, pursuant to section 510 of the Bankruptcy Code.

Facts

In In re Argon Credit, LLC, et al., Case No. 16-39654 (Bankr. N.D. Ill. Jan. 10, 2019), the United States Bankruptcy Court for the Northern District of Illinois recently held that a standby clause in a subordination agreement prevented a subordinated lender from conducting discovery on the senior lender’s claim, pursuant to section 510 of the Bankruptcy Code.