The Bankruptcy Code (“Code”) “does not limit the allowability of unsecured claims for contractual post-[bankruptcy] attorneys’ fees,” held the U.S. District Court for the District of Delaware on Nov. 26, 2018. In re Tribune Media Company, 2018 WL 6167504 (D. Del. Nov. 26, 2018). In a short and sensible opinion, the district court reversed the bankruptcy court’s disallowance of an undersecured lender’s fees.

Trademark licensing is a driving force in business relationships. One common example is where one business owns a trademark, which it licenses out to other companies who manufacture and sell the products bearing the mark. But, what happens if the trademark owner goes bankrupt? Bankruptcy law gives a debtor the right to “reject” contracts to free itself of obligations, but if a trademark owner/licensor “rejects” a trademark license agreement, how does that affect the trademark licensee?

“… Ponzi scheme payments to satisfy legitimate antecedent debts to defendant banks could not be avoided” by a bankruptcy trustee “absent transaction-specific proof of actual intent to defraud or the statutory elements of constructive fraud – transfer by an insolvent debtor who did not receive reasonably equivalent value in exchange,” held the U.S. Court of Appeals for the Eighth Circuit on Nov. 20, 2018. Stoebner v. Opportunity Finance LLC, 2018 WL 6055636 at *4 (8th Cir. Nov. 20, 2018), citing Finn v. Alliance Bank, 860 N.W. 2d 638, 653-56 (Minn. 2015).

A license agreement “deemed rejected by operation of law” could not be acquired under a court-approved asset purchase agreement, held the U.S. Court of Appeals for the Fifth Circuit on Oct. 29, 2018. In re Provider Meds LLC, 2018 WL 5317445, *2 (5th Cir. Oct. 29, 2018). Although the acquirer claimed “that it purchased a patent license from [the] debtors in bankruptcy sales of their estates,” the court explained that “a rejected executory contract … could not have been transferred by the bankruptcy sales in question … .” Id., at *1.

Following consultations on insolvency and corporate governance in 2017 and 2018, the Government recently published its response setting out some notable proposed changes to the existing insolvency and corporate governance legislation. Following the high profile failures of Carillion and BHS, the Government’s response is largely aimed at encouraging the recovery of viable companies, improving transparency and promoting responsible directorship. This article will primarily look at the proposed changes focused on facilitating a rescue culture.

Happy birthday, Aubrey Drake Graham. Most people know Mr. Graham strictly by his middle name. The Canadian rapper Drake has carved out a hugely successful career for himself. He sells lots and lots of records – or whatever it is that they sell in the music business these days. Surprise: Drake’s music isn’t exactly our thing. We still play the Beatles more than anything else, we sing along with Crosby, Stills, & Nash in the car, and we have difficulty naming songs post-dating Nirvana.

“The right of setoff … allows entities to apply their mutual debts against each other to avoid the pointless exercise of ‘making A pay B when B owes A.’” held the Seventh Circuit on Aug. 17, 2018. Berg v. Social Security Administration, 900 F.3d 864, 868 (7th Cir. 2018). But the Bankruptcy Code (“Code”) limits “a creditor’s right of setoff during the ninety-day period prior to the” date of bankruptcy, said the court. Id.

R&I Alert

Restructuring & Insolvency News

October 2018, Issue 3

In This Issue:

• What happens to committee claims when a

case is converted from a chapter 11 case to

a chapter 7 case? 1

• Equitable mootness: alive and well in the

third circuit 1

• Buyer beware: anti-assignment clauses

enforceable under delaware law 2

• Bankruptcy court finds substantive consolidation

of non-debtors not an available remedy in

seventh circuit 3

• A creditor is allowed to be “selfish” when

Obtaining a favourable arbitration award often proves to be only half of the battle. Facing obstructive counterparties refusing to honour awards, often based in jurisdictions where enforcement is slow, difficult and uncertain, is a source of regular frustration to those pursuing claims in arbitration. That is why anyone involved in international trade should be familiar with the variety of measures available to enforce their awards.