In In re Interstate Bakeries Corporation, ___ F.3d ___ (8th Cir. 2012) (IBC), the Eighth Circuit Court of Appeals ruled that a perpetual, royalty-free trademark license was an executory contract and therefore subject to assumption or rejection by a bankruptcy debtor. This decision is at odds with a recent decision from the Third Circuit Court of Appeals, In re Exide Technologies, 607 F.3d 957 (3d Cir. 2010), which found that such a license under similar circumstances was not an executory contract and could thus not be assumed or rejected by the bankruptcy debtor.

The Eighth Circuit Court of Appeals recently held in Lewis Brothers Bakeries Incorporated and Chicago Baking Company v. Interstate Brands Corporation (In re Interstate Bakeries Corporation), 690 F.3d 1069 (8th Cir. Aug.

In Shelton v. CitiMortgage, Inc. (In re Shelton), --- B.R. --- (B.A.P. 8th Cir. Sept. 24, 2012), the Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals determined that a secured creditor’s lien cannot be avoided simply because the creditor’s claim was disallowed as being filed after the proof of claim bar date.

Commercial real estate foreclosures present a number of significant challenges to lenders, special servicers and their counsel that residential foreclosures do not.  But residential foreclosures make up the vast majority of state courts’ foreclosure dockets, so the court system – including Judges and Master Commissioners – is often unfamiliar of the challenges associated with commercial foreclosures.  This can result in delays, unnecessary expense and the associated frustration that invariably follows when a commercial real estate asset is tied up in Court. 

The United States Court of Appeals for the Eighth Circuit held on Aug. 3, 2012, that equitable considerations could not prevent a creditor's recouping amounts owed to it by a chapter 7 debtor. Terry v. Standard Ins. Co. (In re Terry), 2012 WL 3139364, *4 (8th Cir. Aug. 3, 2012). Reversing the bankruptcy court and the Bankruptcy Appellate Panel ("BAP"), the Eighth Circuit explained that "once a party meets the same-transaction test . . . a court should not impose an additional 'balancing of the equities' requirement" on the doctrine of recoupment. Id.

While bankruptcy law and tort law may not seem related, it is important to know if your client has ever gone through a bankruptcy and, if so, the terms of its plan of reorganization. A recent Eighth Circuit decision confirmed the importance of knowing the ins and outs of a client’s bankruptcy and the terms of the applicable plan.

Heide v. Juve, (In re David L. Juve and Mona L. Juve), No. 11-6006, (8th Cir. BAP 09/16/2011) (Judges Schermer, Federman, and Nail).

In Green Tree Serv., LLC v. DBSI Landmark Towers LLC,1 a case that is significant for landlords and leasing attorneys, the Eighth Circuit recently held that a subtenant of commercial office space was permitted to vacate its leased premises after the rejection of the master lease and sublease by the debtor-sublandlord, notwithstanding an attornment provision in the sublease requiring the subtenant to attorn2 to the landlord when the landlord either terminates the master lease or otherwise succeeds to the interest of the sublandlord under the master lease.

The U.S. Bankruptcy Appellate Panel for the Eighth Circuit recently affirmed an order of the bankruptcy court granting a debtor’s motion to avoid a judgment creditor’s lien on the debtor’s residence held in tenancy by the entirety with his non-debtor spouse, holding because the lien “fixed” under the Bankruptcy Code and thus impaired the debtor’s claimed exemption, it was avoidable.

A copy of the opinion is available at:  Link to Opinion.

The Ninth Circuit Court of Appeals has now joined the Courts of Appeals from the Fourth, Fifth, Sixth and Tenth Circuits, and the Eighth Circuit Bankruptcy Appellate Panel (BAP) in holding that the absolute priority rule found in 11 U.S.C. § 1129(b)(2) (“the Absolute Priority Rule”) applies to limit individual debtors’ rights to retain prepetition property of their estate where their Chapter 11 plans propose to pay unsecured creditors less than the full amount of their allowed unsecured claims.  Zachary v.