We have previously written about the effects of COVID-19 on the way we currently work, as well as how businesses need to adapt to protect their trade secrets, customer goodwill, and other interests. In ordinary times, emergency injunctive relief is often the first resort for a business after discovering its trade secrets were stolen or customer relationships are at risk.

On March 31, 2020, the Rhode Island Superior Court announced the creation of its COVID-19 Receivership Program. The Program establishes a unique non-liquidating receivership calendar intended to assist Rhode Island businesses that are unable to pay their debts as they become due as a result of the coronavirus pandemic. The Program is designed to give struggling businesses time to obtain emergency funding under the CARES Act or other source, to resume paying its ongoing obligations under Court supervision, and repay its prepetition debt.

During challenging economic times, Bankruptcy Courts serve an essential governmental and financial function. The COVID-19 outbreak has forced closures of businesses and governmental entities throughout the country, resulting in a cascade of financial distress across virtually every economic sector. The nation’s courts have not been immune from disruptions. Nearly all State Courts and Federal District Courts in major metropolitan areas have suspended non-emergency civil proceedings.

Seyfarth Synopsis: As OEMs confront the impact of the COVID-19 pandemic on an already changing automotive industry, one significant issue will be the inevitable financial challenges that many dealers will face. Financially distressed or, worse, bankrupt dealers, create serious issues for manufacturers and affiliated lenders, including negative publicity, dissatisfied customers, limited or shuttered operations, out-of-trust sales, and litigation.

As the coronavirus (COVID-19) pandemic continues to shake global markets, it is likely that more companies will need to restructure to address liquidity constraints, to right-size their balance sheets, or to implement operational restructurings. In addition to a potential surge in restructurings, the spread of COVID-19 is already having pronounced impacts on companies planning or pursuing restructurings, and further market turmoil may cause even broader changes to the restructuring marketplace.

Potential Increase in Restructuring Activity

You’ve been slugging it out with your opponent in state court for years. The end of that hard-fought battle is in sight. Maybe you even hold a judgment already and are taking steps to enforce it. Then, your adversary files bankruptcy, and everything grinds to a halt. You know the automatic stay that arises on account of the bankruptcy filing prohibits you from taking further actions to recover from the debtor outside of bankruptcy court.

Introduction

The U.S. Supreme Court decided yesterday to uphold a licensee’s right to continue using trademarks despite the bankrupt licensor’s rejection of the underlying license agreement. As a result, bankrupt brand owners cannot use bankruptcy law to unilaterally revoke a trademark license. In Mission Product Holdings, Inc. v.

The U.S. Supreme Court held today in Mission Product Holdings, Inc. v. Tempnology, LLC that a trademark licensee may retain certain rights under a trademark licensing agreement even if the licensor enters bankruptcy and rejects the licensing agreement at issue. Relying on the language of section 365(g) of the Bankruptcy Code, the Supreme Court emphasized that a debtor’s rejection of an executory contract has the “same effect as a breach of that contract outside bankruptcy” and that rejection “cannot rescind rights that the contract previously granted.”

Seyfarth Synopsis: Employers increasingly find themselves in the difficult position of deciding whether to continue garnishing an employee’s wages pursuant to a garnishment order when the employee files for bankruptcy. On one hand, the employer risks penalties for failing to withhold wages; on the other hand, the employer risks sanctions for violating the automatic stay generated by a bankruptcy filing. Below we discuss this dilemma and employers’ options.