On November 27, 2012, Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York issued an opinion in In re Patriot Coal Corporation1 transferring the chapter 11 proceedings pending before her to the Eastern District of Missouri.

Introduction

Recent bankruptcy appellate rulings have addressed the issue of what rights a trademark licensee has after a debtor-licensor rejects its trademark license in bankruptcy.

In light of the current uncertainty surrounding the rights of trademark licensees when a debtor-licensor seeks to reject the underlying license agreements in bankruptcy, licensees may wish to consider strategies to protect their rights.

In re Exide Technologies5

In 1991, Exide Technologies sold substantially all of its industrial battery business to EnerSys Delaware, Inc. (then known as Yuasa Battery (America), Inc.).

Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC20 In the Sunbeam Products case, the Seventh Circuit held that a trademark licensee could continue to use a trademark after the license was rejected by the debtorlicensor, even though the protections of section 365(n) of the Bankruptcy Code do not extend to licensees of trademarks.

The German Insolvency Code requires the management of German limited liability companies (GmbH), stock corporations (AG) and other entities without personal liability to file for the commencement of insolvency proceedings no later than three weeks after the entity has become illiquid (zahlungsunfähig) or overindebted (überschuldet).  

The trustee in the bankruptcy of an LLC member asked the Bankruptcy Court for a declaration that the LLC was dissolved pursuant to its operating agreement. The operating agreement mandated dissolution upon the bankruptcy of a member, but the court denied the trustee’s motion, relying on provisions in the Bankruptcy Act that trump contractual limitations. In re Warner, 480 B.R. 641 (Bankr. N.D. W.Va. Sept. 27, 2012).

New insolvency proceedings called “accelerated financial safeguard” (sauvegarde financière accélérée) were introduced into French law two years ago¹.

In Deere Credit, Inc. v. Cervantes Nurseries, LLC, the Court of Appeals recognized that a parallel bankruptcy proceeding involving multiple creditors is not the same “action” for purposes of RCW 61.12.120’s bar against a plaintiff foreclosing on a mortgage “while he is prosecuting any other action for the same debt or matter which is secured by the mortgage. 

BACKGROUND