The Singapore High Court recently issued the first-ever super-priority order for debts arising from rescue financing under Section 211E(1)(b) of the amended insolvency laws in the Companies Act. The decision shows that the court is open to adopting relatively unique deal structures, and could be a benefit for more business-centric solutions.
In Part 1, we discussed how, despite widespread usage, termination in the event of bankruptcy clauses (“ipso facto” clauses) are generally unenforceable pursuant to the bankruptcy code. In this second part, we discuss why these clauses are still prevalent in commercial transactions and the exceptions that allow for enforceability in certain situations.
Why Do Ipso Facto Clauses Remain in Most Contracts?
If ipso facto clauses are generally not enforceable, then why do practically all commercial agreements continue to include them? There are several reasons.
Practically all commercial transactions, including licenses, services agreements, and supply agreements, contain a provision that triggers termination rights, without notice, to a party whenever the other party files for bankruptcy or experiences other insolvency-related event. In Part 1 of a two-part series, we discuss how the commonly used termination-on-insolvency clauses are generally unenforceable despite their widespread use.
Standard Ipso Facto Provision
In Mission Product Holdings v. Tempnology LLC, the US Supreme Court will attempt to clarify the impact of bankruptcy proceedings on trademark licenses. The court will determine whether or not the rejection of a license in bankruptcy means the licensee’s right to the trademarks is terminated.
Womble Bond Dickinson attorneys Christopher Bolen and Taylor Ey spoke with IPWatchdog on this issue, which the International Trademark Association (INTA) calls “the most significant unresolved legal issue in trademark licensing.”
Who is the real holder of a FCRA claim brought by a Chapter 7 debtor? That’s the question that confronted the Eastern District of Wisconsin recently in Kitchner v. Fiergola, 2018 WL 4473359 (E.D. Wis. Sept. 18, 2018).
Under the facts of Kitchner, Plaintiff, Megan Kitchner, (“Kitchner”) alleged that the Kohn Law Firm of Milwaukee, Wisconsin (“Kohn”), violated the FCRA and the FDCPA by disclosing her credit score and credit report in a small-claims collection action filed on March 9, 2017.
In retail bankruptcies, it is important for suppliers consigning goods to merchants to be aware of the commercial law rules governing consignments. Disputes among consignors, inventory lenders, and bankruptcy debtors have been arising frequently in retail bankruptcy cases. Disputes like these can be avoided if consignors consider the basics of commercial law rules governing consignments, particularly under the Uniform Commercial Code, and take steps to protect their rights and interests.
Many tax-exempt organizations can now change their state of organization and retain their current tax exemption.
Two key changes made to Australian insolvency law enhance restructuring efforts in Australia and could improve outcomes for US investors.
The court awarded OpCo Noteholders in excess of $320 million in Make-Whole Amount and post-petition interest, confirming that make-whole is an enforceable liquidated damage claim.
Morgan, Lewis & Bockius LLP Beijing Kerry Centre South Tower, Ste. 823 No. 1 Guang Hua Rd., Chaoyang District Beijing 100020, China T: +86.10.5876.3500 F: +86.10.5876.3501 Morgan Lewis Stamford LLC 10 Collyer Quay #27-00 Ocean Financial Centre Singapore 049315 T: +65 6389 3000 F: +65 6389 3099 Morgan, Lewis & Bockius LLP Roppongi Hills Mori Tower 24th Fl.