Does termination of a contract before the works are complete impact an employer’s ability to recover liquidated damages? This question was recently considered by the English Court of Appeal. The answer? It depends on the terms of the contract. However, it seems that many liquidated damages provisions, including those in currently used standard form construction contracts, may not apply at all on termination of the contract, leaving employers to prove a claim for general damages for delays suffered both before and after termination.
- Introduction
On 9 May 2019 the Airline Insolvency Review (the AIR), chaired by Peter Bucks, published its Final Report on passenger protections in the context of airline insolvencies, having been commissioned by the Chancellor of the Exchequer in November 2017 following the high-profile collapse of Monarch Airlines.
No equipment lessor wants to find itself a creditor of a lessee in a reorganization case under chapter 11 of the U.S. Bankruptcy Code (the Bankruptcy Code). However, when such a situation arises, a lessor is not without recourse – even where the facts give rise to situations not specifically addressed by the Bankruptcy Code.
It is well established that the type of recognition granted by the recognising court under the UNCITRAL Model Law will depend on whether the originating proceedings are ‘foreign main’ or ‘foreign non-main’ proceedings, which in turn hinges on the centre of main interests (COMI) of the insolvent entity.
As discussed in an earlier post called “Moving Up: Bankruptcy Code Dollar Amounts Will Increase On April 1, 2019,” various dollar amounts in the Bankruptcy Code and related statutory provisions were increased for cases filed on or after today, April 1, 2019.
In a decision with sweeping consequences for equipment lessors, the bankruptcy court (SDNY) in Republic Airways held that a liquidated damages provision in a true lease is an unenforceable penalty if it provides for the unconditional transfer of residual value risk or market risk only upon default, without a cognizable connection to any anticipated harm caused by the default itself. Importantly for lessors and lenders alike, the bankruptcy court held that the unconditional guaranties of such obligations in favor of the lessor violated public policy and were unenforceable.
The Supreme Court held oral argument earlier today in the Mission Products v. Tempnology case, on the issue of the effect of rejection by a licensor of a trademark license on the licensee’s rights.
An official notice from the Judicial Conference of the United States was just published announcing that certain dollar amounts in the Bankruptcy Code will be increased about 6.2% this time for new cases filed on or after April 1, 2019.
The Big Question. What is the effect of rejection of a trademark license by a debtor-licensor? Over the past few years, this blog has followed the Tempnology case out of New Hampshire raising just that issue.
Virtually all bankruptcy courts faced with the question of whether growers or dispensers of cannabis and cannabis products can take advantage of the protections afforded by the federal bankruptcy laws have said, no, they cannot.