Entrepreneurs’ Relief – review and reform

Entrepreneurs that sell their businesses have been able to take advantage of Entrepreneurs’ Relief since 2008. It currently allows individuals to pay only 10% Capital Gains Tax on all gains on the sale of qualifying assets up to a lifetime allowance of £10m.

The Conservative Manifesto said that ER would be subject to “review and reform”. There is increasing speculation that changes will be introduced at the Budget in March.

In May 2019, with its ruling in Mission Products Holding Inc. v. Tempnology, the US Supreme Court resolved a nationwide circuit split regarding what happens to a trademark license when the trademark owner and licensor declares bankruptcy.

This decision by the TCC provides further consideration of the right of a company in liquidation to refer a dispute to adjudication. It follows the earlier Court of Appeal decision in Bresco Electrical services Limited (in liquidation) v Michael J Lonsdale (Electrical) Ltd (“Bresco”) which we considered in an article earlier this year.

The facts

In an 8–1 decision, the Supreme Court of the United States reversed the US Court of Appeals for the First Circuit and held that rejection of a trademark license in bankruptcy constitutes a breach of the license agreement, which has the same effect as a breach outside bankruptcy. Therefore, a licensor’s rejection of a trademark license agreement does not rescind or terminate the licensee’s rights under the agreement, including the right to continue using the mark. Mission Product Holdings Inc. v. Tempnology, LLC, Case No. 17-1657 (S. Ct.

The US Supreme Court, in an 8-1 decision authored by Justice Kagan, reversed a decision of the First Circuit and held that the rejection of a trademark license agreement under Bankruptcy Code Section 365 (11 U.S.C. § 365) constitutes a breach of the license agreement that has the same effect as a breach outside bankruptcy. Therefore, the licensor’s rejection of the license agreement does not rescind or terminate the licensee’s rights under the license agreement, including the right to continue using the mark. Mission Product Holdings Inc. v. Tempnology, LLC, Case No.

The judgment also provides clear guidance on challenges to an adjudicator’s jurisdiction, which is of importance to all involved in adjudications.

Background

The case concerned two conjoined appeals, Bresco Electrical Services Limited (in liquidation) v Michael J Lonsdale (Electrical) Limited and Cannon Corporate Limited v Primus Build Limited.

Bresco

The Supreme Court of the United States granted Mission Product Holdings’ petition for certiorari to determine whether a debtor-licensor can terminate the rights of trademark licensees by rejecting its trademark licensing agreements as part of its bankruptcy case. Mission Product Holdings, Inc. v. Tempnology LLC, Case No. 17-1657 (Supr. Ct. Oct. 26, 2018). The specific question presented is:

The US Court of Appeals for the 11th Circuit affirmed the district court’s dismissal of a fraudulent conveyance claim for a “blocking right” and right of first refusal under a patent transfer agreement, addressing the district court’s proper exclusion of expert testimony on whether the debtor was insolvent at the time of the relevant transfer. In re: Teltronics, Inc., Case No. 16-16140 (11th Cir. Oct. 2, 2018) (Kaplan, J).

A recent federal bankruptcy court decision addresses important principles of fiduciary conduct (and the benefits of a state exculpatory statute) in the context of a financially distressed not-for-profit hospital. 

A recent decision in Michael J Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (In Liquidation) [2018] (TCC) has held that a company in liquidation cannot refer a dispute to adjudication when that dispute includes (whether in whole or in part) determination of any claim for further sums said to be due to the referring party from the responding party. 

Background