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.

2017 Proskauer Annual Review and Outlook for Hedge Funds, Private Equity Funds and

Other Private Funds

2017 Proskauer Annual Review and Outlook for Hedge Funds, Private Equity

Funds and Other Private Funds

The following annual review and outlook (Annual Review) is a summary of some of the significant changes and developments that occurred in the past year and certain recommended practices that investment advisers to hedge funds, private equity funds and other private funds (collectively, private funds) should consider when preparing for 2018.

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.

Just about every year changes are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The revisions address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others.

The In re Tempnology LLC bankruptcy case in New Hampshire has produced yet another important decision involving trademarks and Section 365(n) of the Bankruptcy Code. This time the decision is from the United States Bankruptcy Appellate Panel for the First Circuit (“BAP”). Although the BAP’s Section 365(n) discussion is interesting, even more significant is its holding on the impact of rejection of a trademark license.

Accept an unpalatable offer, or reject it and risk getting much less (or even nothing)? This is the choice stakeholders in chapter 11 bankruptcies increasingly face as a result of the proliferation of “deathtrap” provisions in plans of reorganization. For example, a class of bondholders may be forced to decide between accepting 60 cents on the dollar if they vote to accept a plan, or 40 cents if they reject. A class of equityholders may have to decide between accepting equity warrants, or rejecting and getting nothing.

Before a bankruptcy court may confirm a chapter 11 plan, it must determine if any of the persons voting to accept the plan are “insiders,”i.e., individuals or entities with a close relationship to the debtor. Because the Bankruptcy Code’s drafters believed that insider transactions warrant heightened scrutiny the classification of a creditor as an “insider” can have a profound impact on a debtor’s ability to reorganize.

The UK’s Prudential Regulation Authority (PRA) has published a Consultation Paper (CP) “CP32/16 Dealing with a market turning event in the general insurance sector“. The CP attaches a draft Supervisory Statement (SS), which sets out the PRA’s expectations “in relation to significant general insurance loss events which might affect firms’ solvency and future business plans“.