Chapter 15 of the Bankruptcy Code is designed to provide an effective mechanism to aid insolvency proceedings in foreign countries that involve a foreign debtor with assets, creditors and other parties in interest located in the foreign country as well as in United States. A foreign representative that is authorized to administer the foreign reorganization or liquidation or act as a representative of the foreign proceeding is the party who applies to the US bankruptcy court for recognition of the foreign proceeding.

On April 1, 2013, Judge Christopher Klein, Chief Judge of the United States Bankruptcy Court for the Eastern District of California, ruled that the City of Stockton, California, could proceed with its chapter 9 bankruptcy filing. Judge Klein’s decision affirmed Stockton’s status as the largest US city (population 300,000) to have successfully sought bankruptcy protection and proceed with bankruptcy.1 Judge Klein’s comments on the record may also signal that the resolution of Stockton’s chapter 9 will require the impairment of the city’s pension obligations.

On January 31, 2013, the Bankruptcy Court for the District of Delaware issued an opinion that approved the confirmation of the proposed plan in In re Indianapolis Downs, LLC.

Introduction

On November 27, 2012, Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York issued an opinion in In re Patriot Coal Corporation1 transferring the chapter 11 proceedings pending before her to the Eastern District of Missouri.

In light of the current uncertainty surrounding the rights of trademark licensees when a debtor-licensor seeks to reject the underlying license agreements in bankruptcy, licensees may wish to consider strategies to protect their rights.

In re Exide Technologies5

In 1991, Exide Technologies sold substantially all of its industrial battery business to EnerSys Delaware, Inc. (then known as Yuasa Battery (America), Inc.).

Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC20 In the Sunbeam Products case, the Seventh Circuit held that a trademark licensee could continue to use a trademark after the license was rejected by the debtorlicensor, even though the protections of section 365(n) of the Bankruptcy Code do not extend to licensees of trademarks.

Recent bankruptcy appellate rulings have addressed the issue of what rights a trademark licensee has after a debtor-licensor rejects its trademark license in bankruptcy.

To successfully reorganize in Chapter 11, a bankrupt company may need to retain key employees who understand the company’s business and who can design and implement the company’s reorganization plan. Retaining and properly incentivizing these employees during a Chapter 11 case can be challenging for a number of reasons.