In the jargon of the secondary bank loan market, loans beneficially owned by participation may be "elevated" to direct assignments once requisite administrative agent and/or borrower consent is obtained. Such "elevations" customarily have been viewed as straightforward transactions -- when completed, the participant simply stands in the shoes of the grantor and becomes the lender of record of the loan on the books of the administrative agent.
The concurring opinion in a recent Third Circuit Court of Appeals case1 suggests that trademark licensees may be able to retain their rights in bankruptcy cases, even if licensors reject the license agreements. The majority did not consider whether the licensee could retain its rights. Instead, the majority held that the trademark license was not an executory contract; therefore, it could not be rejected under the Bankruptcy Code. The majority opinion applies narrowly to circumstances involving perpetual, exclusive, and royalty-free trademark licenses.
On September 30, 2010, in In re American Safety Razor, LLC, et al, Case No 10-12351 (MFW), the United States Bankruptcy Court for the District of Delaware ruled that the debtors’ proposed bid procedures for the sale of the business were unfair and unreasonable. The bid procedures, among other things, provided too much discretion to the debtors in the auction process.
363 Sales in General
On October 5, 2010, Judge Bruce Black of the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”) issued a ruling in the River Road Hotel Partner LLC, et. al. (the “Debtors”) bankruptcy cases denying the Debtors’ bid procedures motion incident to plan confirmation. The bid procedures motion, among other things, sought the denial of secured creditor’s right to credit bid.
In the wake of the recent financial crisis, the legal system continues to sort out rights and obligations of financial market participants. This is especially true for participants in the over-the-counter derivatives markets.
The tremendous growth of that largely unregulated market has been accompanied by the development of sophisticated contractual frameworks and specific bankruptcy legislation expressly intended to reduce uncertainty around the amount and type of claims that could ultimately be asserted by market participants following bankruptcy of a derivative counterparty.
T he recent surge in activity in the claims trading market in the wake of Lehman Brothers and other high-profile bankruptcies has created a backlog of open trades and heightened price volatility. This is a perilous combination. The lack of standardized trading documentation and uniform trading conventions, as well as the dramatic influx of new counterparties into the claims market, are factors that have contributed to longer settlement timeframes and increased uncertainty in the market.
Once a company files a Chapter 11 bankruptcy petition (to sell its assets, reorganize or liquidate), Bankruptcy Code § 1114 sets forth a detailed procedure for the employer to follow to modify or terminate certain retiree benefits. Among other things, § 1114 imposes on the employer the burden of showing that the elimination or modification of benefits is necessary to permit reorganization.
In our Distressed Investor Alert dated December 23, 2009, we wrote that Bankruptcy Rule 2019, an often ignored procedural rule in U.S. bankruptcies, had returned to the public eye in light of the controversial revisions to Rule 2019 (“Revised Rule 2019”)1 proposed by the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States (the "Rules Committee").
Scenario:
This paper is designed to provide a brief update of recent decisions of note that concern various ethical issues bankruptcy attorneys often encounter, focusing on conflicts of interest and privilege issues.