On May 20, 2019, the Supreme Court held in Mission Products Holdings, Inc. v. Tempnology, LLC that a debtor-licensor's rejection of a trademark license agreement does not "deprive the licensee of its rights to use the trademark." This holding resolves a longstanding circuit split in the Federal Courts of Appeal about the effects of bankruptcy on trademark licenses.

Background

In a unanimous, and perhaps unsurprising, decision, the Supreme Court determined that a creditor may be held in civil contempt for violating the discharge injunction if there is “no fair ground of doubt” as to whether the creditor’s conduct was barred by the order placing that injunction. The Supreme Court declined to adopt the standard of either of the courts below – the bankruptcy court’s strict liability standard or the Ninth Circuit’s good faith belief “even…if unreasonable” standard.

The Supreme Court reminded bankrupt debtors on Monday that mere rejection of a contract does not turn back the clock to avoid contractual obligations. This was the thrust of its holding in Mission Product Holdings, Inc. v. Tempnology, LLC, which held that a rejection of an executory contract—in this case, a trademark license—under Section 365(a) constitutes a breach of the contract, not a rescission.

Presented as a major measure of the five-year French presidential term, the law “on growth and business transformation”, also known as the PACTE Act, came into force on May 24th, 2019. Amongst the changes that were brought, some of them deserve a particular focus.

Two phases of the reform. The PACTE Act revises the insolvency legal framework and mainly empowers the executive to directly implement the EU insolvency directive and to reform the law on security interests within a period of two years.

The first phase of the reform

After an individual debtor receives a bankruptcy discharge, a creditor may not seek to recover the discharged debt. Under section 524(a)(2) of the Bankruptcy Code, a discharge injunction permanently enjoins creditors from trying to collect discharged debts and prohibits a creditor from collecting any debt where the debtor has been discharged of personal liability.

A recent decision by a federal appeals court appears to open the doors of United States Bankruptcy Courts nationwide… or does it? The Ninth Circuit’s decision from Garvin v. Cook Investments provides a helpful roadmap for understanding the challenges and opportunities for marijuana-related businesses considering their access to bankruptcy courts.

Marijuana Businesses Generally Violate Federal Law

A Singaporean construction company in liquidation has successfully sued one of its former directors for failing to act in the best interests of the company, highlighting the importance of directors being aware of, and protecting against, potential personal liability for breach of duty.

Directors’ liability – the risk

The intersection of Chapter 13 bankruptcy and escrow accounts is complicated and confusing. Since 2011, various bankruptcy rule and form changes have occurred in an effort to eliminate perceived problems with Chapter 13 escrow issues. This article explains how one of these changes – a revised version of a proof of claim attachment form – actually added to the confusion instead of alleviating it, and how that confusion can be costly to servicers.

Official Form B410A

Creditors and credit furnishers often find properly reporting a payment status to Credit Reporting Agencies (CRAs) during, and after, bankruptcy a challenge. The recent Report of the American Bankruptcy Institute on Consumer Bankruptcy recognizes those challenges, and looks to convene a forum to provide better guidance and clarity as to proper credit reporting once a borrower goes into bankruptcy.

Challenges

We previously provided you with some of the American Bankruptcy Institute’s Commission on Consumer Bankruptcy’s recommendations to improve the consumer bankruptcy system. As the commission noted, changes in bankruptcy law occur slowly. The last major amendments to the Bankruptcy Code were in 2005, and the last major amendments to the Bankruptcy Rules were in 2011.