When a franchisee files for bankruptcy, a franchisor naturally has concerns over how the process will affect the parties’ relationship. Of particular concern is the possibility that the franchisor will be forced into a relationship with an unacceptable successor as a result of a bankruptcy judge’s decision to authorize assumption and assignment of the franchise agreement over the franchisor’s objection.

Act 14/2013, of September 27, 2013, favoring entrepreneurs and their internationalization (the “Act”), introduces a wide range of reforms on insolvency, corporate, tax and labor matters. Regarding insolvencies, it takes a more flexible approach to the quorum of financial creditors required for court-sanctioned refinancing agreements and it regulates out-of-court agree-ments for payment as mechanisms for out-of-court negotiation with creditors.

REFINANCING AGREEMENTS

The economic impact of forced budget cuts from the sequester and other government funding crises—ranging from a government shutdown to the federal debt limit—and congressional gridlock place disproportionate pressure on smaller- or second tier-government contractors.  Business partners of a  financially infirm contractor must prepare for when a contract business partner, co-venturer, or teaming partner falls over the fiscal cliff and files for bankruptcy protection.  In this article, we will provide an over

The United States Court of Appeals for the Tenth Circuit, applying Oklahoma law, has held that a bankruptcy or insolvency exclusion may bar coverage for the insured broker’s claim, where the broker’s actions were connected to the bankruptcy of its client’s former insurer.  C.L. Frates & Co. v. Westchester Fire Ins. Co., 2013 WL 4734093 (10th Cir. Sept. 4, 2013).

Applying Pennsylvania law, the United States District Court for the Eastern District of Pennsylvania has held that an insured’s failure to notify its insurer of a potential claim violated the notice provision of the policy.  Pelagatti v. Minn. Lawyers Mut. Ins. Co., 2013 WL 3213796 (E.D. Pa. June 25, 2013).  In  so doing, the court held that the insurer was not required to show that it was prejudiced by the late notice and that whether the insured’s failure to provide timely notice negates coverage is determined under a “hybrid subjective/objective test.”

I ARTICLE 233(5) OF THE CODE OF INSOLVENCY AND RECOVERY OF COMPANIES

Under the Bankruptcy Code, a lawsuit to recover avoidable preference payments must be filed prior to the expiration of the statute of limitations. Specifically, such lawsuits must be commenced before the later of 1. two years after the commencement of the case or 2. one year after the appointment or election of the first Trustee, provided that the two-year period has not already expired.

The United States District Court for the Middle District of Pennsylvania has held that an E&O policy issued to a now-bankrupt credit counseling company did not cover claims arising under unfair trade practices statutes, but did cover claims arising under fair debt collection statutes. Hrobuchak v. Fed. Ins. Co., 2013 WL 2291875 (M.D. Pa. May 24, 2013). The court also held that carve-outs from the policy’s definition of loss did not preclude coverage for statutory damages or damages representing the return of fees paid to the insured.

RENTA CORPORACIÓN: CENTRE OF MAIN INTERESTS IN SPAIN

On the advice of Cuatrecasas, Gonçalves Pereira, RENTA CORPORACIÓN REAL ESTATE S.A. (“Renta Corporación”) applied for a declaration of insolvency jointly with three of its Spanish subsidiaries (RENTA CORPORACIÓN REAL ESTATE ES S.A.U., RENTA CORPORACIÓN REAL ESTATE FINANCE S.L.U. and RENTA CORPORACIÓN CORE BUSINESS S.L.U.).