Few areas of law are as confusing—or as important to understand—as the growing
intersection of employment and bankruptcy law. In recent years, funding shortfalls
in multi-employer pension plans, which cover roughly 20 percent of U.S. workers
with defined-benefit plans, have increased pressure on participating employers
to reduce their contributions or even withdraw entirely. Although employers taking
these actions would incur withdrawal liability as a consequence, that liability can

Under the Bankruptcy Code, a bankruptcy trustee or chapter 11 debtor in possession (“DIP”) is required to satisfy postpetition obligations under any unexpired lease of commercial property pending a decision to assume or reject the lease. Specifically, section 365(d)(3) requires the trustee, with limited exceptions, to “timely perform all the obligations of the debtor . . . arising from and after the order for relief” under any unexpired lease of nonresidential real property with respect to which the debtor is the lessee.

Europe has struggled mightily during the last several years to triage a long series of critical blows to the economies of the 27 countries that comprise the European Union, as well as the collective viability of eurozone economies. Here we provide a snapshot of some recent developments relating to insolvency and restructuring in the EU.

In 1988, Congress added section 365(n) to the Bankruptcy Code, which grants some intellectual property licensees the right to continued use of licensed property notwithstanding rejection of the underlying executory license agreement by a debtor or bankruptcy trustee. The addition came three years after the Fourth Circuit Court of Appeals ruled in Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), that if a debtor rejects an executory intellectual property license, the licensee loses the right to use any licensed copyrights, trademarks, and patents.

On May 9, 2012, the English High Court, in Trillium (Nelson) Properties Ltd v Office Metro Ltd [2012] EWHC 1191 (Ch) (09 May 2012), for the first time ruled on the requirements governing the existence of an “establishment” under the EC Insolvency Regulation (Council Regulation (EC) No 1346/2000) (the “Regulation”). Under the Regulation, “main” insolvency proceedings may be commenced on behalf of a debtor only in the single jurisdiction in which the debtor’s “centre of main interests” (commonly referred to as “COMI”) is located.

InIn re Washington Mutual, Inc., 2011 WL 4090757 (Bankr. D. Del. Sept. 13, 2011), Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware denied confirmation of the debtors’ proposed chapter 11 plan and instead referred the litigants to mediation in order to move the case toward a confirmable resolution.

The ability to sell an asset in bankruptcy free and clear of liens and any other competing “interest” is a well-recognized tool available to a trustee or chapter 11 debtor in possession (“DIP”). Whether the category of “interests” encompassed by that power extends to potential successor liability claims, however, has been the subject of considerable debate in the courts. A New York bankruptcy court recently addressed this controversial issue in Olson v. Frederico (In re Grumman Olson Indus., Inc.), 445 B.R. 243(Bankr. S.D.N.Y. 2011).

Rehabilitating a debtor’s business and maximizing the value of its estate for the benefit of its various stakeholders through the confirmation of a chapter 11 plan is the ultimate goal in most chapter 11 cases. Achievement of that goal, however, typically requires resolution of disagreements among various parties in interest regarding the composition of the chapter 11 plan and the form and manner of the distributions to be provided thereunder.

The Bankruptcy Code treats insiders with increased scrutiny, from longer preference periods to rigorous equitable subordination principles, denial of chapter 7 trustee voting rights, disqualification in some cases of votes on a cram-down chapter 11 plan, and restrictions on postpetition key-employee compensation packages. The treatment of claims by insiders for prebankruptcy services is no exception to this general policy: section 502(b)(4) disallows insider claims for services to the extent the claim exceeds the "reasonable value" of such services.

A creditor’s ability in a bankruptcy case to exercise rights that it has under applicable law to set off an obligation it owes to the debtor against amounts owed by the debtor to it, thereby converting its unsecured claim to a secured claim to the extent of the setoff, is an important entitlement.