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.
Almost every year amendments are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. The rule amendments are ultimately adopted by the U.S. Supreme Court and technically subject to Congressional disapproval.
If you have ever been a creditor concerned about a debtor not paying debts as they become due or paying other creditors while ignoring your demands, then forcing the debtor into an involuntarily bankruptcy may be an option. An involuntary petition can be filed only under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the U.S. Bankruptcy Code.
The current, ultimate dilemma in the health care reimbursement legal arena is the catastrophically long wait for a hearing with an Administrative Law Judge (“ALJ”) with the Office of Medicare Hearings and Appeals (“OMHA”). The estimated wait time for an ALJ hearing after completing the first two levels of appeal is now more than 1,200 days, and the debt being appealed accrues interest at 10.5% the entire time. Moreover, CMS will continue to recoup against new Medicare claims during the three-year wait for a decision-maker that overturns far more decisions than the first two levels.
The South Carolina Property and Casualty Insurance Guaranty Association (the Guaranty) is an unincorporated nonprofit entity created pursuant to the South Carolina Property and Casualty Insurance Guaranty Association Act (the Act). The purpose of the Guaranty is to provide a degree of protection to insureds whose carriers become insolvent. Upon an insurer’s insolvency, the Guaranty assumes the position of the insurer to the extent of the insurer’s obligation relative to covered claim; its liability is derived from that of the insolvent carrier’s liability to the insured.
Over the last twenty years, courts have increasingly insulated transactions from avoidance as fraudulent transfers by invoking the so-called “settlement payment” defense codified in section 546(e) of the Bankruptcy Code. The safe harbor has been interpreted in the Second and Third Circuits and elsewhere as precluding debtors, trustees and creditors committees from clawing back otherwise objectionable pre-bankruptcy transfers solely because the money at issue flowed through a bank or other financial institution.
The Tempnology Trademark Saga. When it comes to decisions on bankruptcy and trademark licenses, the In re Tempnology LLC bankruptcy case is the gift that keeps on giving.
Just about every year amendments are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. As the photo above reminds us, the rule amendments are ultimately adopted by the U.S. Supreme Court (and technically subject to Congressional disapproval).
The Supreme Court recently agreed to review the applicability of the safe harbor provision in section 546(e) of the Bankruptcy Code after differing interpretations of the statute created a split among the circuit courts. The ultimate outcome on the issue currently before the Supreme Court will undoubtedly impact how parties choose to structure their debt and asset transactions going forward.
From the Bankruptcy Court for the District of South Carolina :
In McCall v. Anderson Brothers Bank (In re McCall), Adv. Pro. No. 16-80008-jw (Bankr. D.S.C. 2016), the Honorable John E. Waites held that a creditor did not willfully violate the automatic stay under the particular facts of the case where the creditor initially refused to return a vehicle to the Debtor after she filed a Chapter 13 case and demanded the vehicle’s return.