What happens if you are a trademark licensee and your licensor files for bankruptcy protection?
On February 25, 2019, the U.S. Court of Appeals (2nd Circuit) ruled that the trustee in the Chapter 11 case for Madoff Investment Securities, LLC could use the U.S. Bankruptcy Code to recover payments made between foreign entities. Previously, the Bankruptcy Court for the S.D.N.Y. and the U.S. District Court for the S.D.N.Y ruled that the trustee could NOT sue the foreign entities based on principles of international comity and the presumption against extraterritoriality of U.S. Laws, including the U.S. Bankruptcy Code.
We’ve all heard it said a million times - if it sounds too good to be true, it probably is. But does that age-old maxim apply to a bankrupt customer offering to pay you 100% of your unsecured claim through a “prepackaged” bankruptcy or under a critical vendor program? The answer can be complicated.
This article explores what it means to be “unimpaired” and paid in full in prepackaged bankruptcies and under critical vendor programs and outlines some of the potential pitfalls that can be faced by unsecured creditors under these scenarios.
In determining the legal standard for holding a creditor in civil contempt for attempting to collect a debt in violation of a bankruptcy discharge order, the Supreme Court of the United States adopted an “objectively reasonable” standard, and held that a court may hold a creditor in civil contempt if there is “no fair ground of doubt” as to whether the order barred the creditor’s conduct.
Accordingly, the Supreme Court reversed the Ninth Circuit’s ruling, which had applied a subjective standard for civil contempt.
Clients sometimes ask whether filing bankruptcy can protect them from Federal Trade Commission scrutiny. The saga of Joseph Rensin and his company BlueHippo provides an opportunity to review the limited protection bankruptcy provides from the FTC.
New York Bankruptcy Judge Sean Lean recently denied a Rule 2004 request because the movant sought documents for use in an unrelated litigation. In re Cambridge Analytica LLC, No. 18-11500, 2019 Bankr. LEXIS 1824 (Bankr. S.D.N.Y. Jun. 14, 2019).
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.
Abstract
The Supreme Court recently held that if a bankrupt trademark licensor rejects a trademark licensing agreement during bankruptcy proceedings the licensee does not lose its right to continue using the licensed trademark post-rejection.
Background
In May, the United States Court of Appeals for the Ninth Circuit issued a much anticipated decision in Garvin v. Cook Investments NW, SPNWY, LLC, 922 F.3d 1031 (9th Cir.
This past May, in a highly-anticipated decision, the Supreme Court held in Mission Product Holdings, Inc. v. Tempnology, LLC that a debtor’s rejection of an executory contract under Section 365 of the Bankruptcy Code has the same effect as a breach of contract outside of bankruptcy.