Acquirors of branded businesses often acquire prepaid, perpetual, exclusive trademark licenses to use the business’s trademarks.
In the case of In re Santa Ysabel Resort and Casino, the Bankruptcy Court for the Southern District of California heard arguments on September 4, 2012, as to whether the alleged debtor, a tribal casino, was eligible for bankruptcy protection. The court concluded the casino was not an eligible debtor under the Bankruptcy Code.
The Second Circuit Court of Appeals recently heard arguments in a case that could have substantial implications on the trading of bankruptcy claims. While the court could choose to resolve the case, Longacre Master Fund, Ltd. v.
This article is Part Four in a seven-part series on how to structure sales and what to do when your customer fails to pay.
Favorable contracts are an important asset for a bankruptcy estate. If a contract is an executory contract (a contract with performance remaining by both parties), the Bankruptcy Code gives a debtor the choice of either assuming and performing under the contract going forward, or rejecting the contract and leaving the resulting rejection damages as a claim against the bankruptcy estate. Similarly, a debtor may choose to perform or not perform under a nonexecutory contract for which it has continuing obligations.
In two recent decisions,2 the United States Bankruptcy Court for the Southern District of New York denied motions by large chapter 11 debtors to approve executive bonus plans designated as key employee incentive plans ("KEIP"), finding that the proposed KEIPs actually were disguised and impermissible retention or "pay to stay" bonus plans for insiders. These are the first opinions to reject so-called KEIPs following a recent line of cases that have approved KEIPs for insiders.
In the first decision, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court decision, concluding that a defendant’s bankruptcy filing does not prevent the district court from ruling on a contempt motion for violation of a temporary restraining order protecting plaintiff’s trademarks. Dominic’s Restaurant of Dayton, Inc. v. Mantia, Case Nos. 10-3376; -3377 (6th Circuit July 5, 2012) (Batchelder, C.J.; McKeague, J.; Quist, D.J., sitting by designation).
Assignments for the benefit of creditors (ABC's as they are called) are known for their speed and flexibility. In California, the practice of an ABC occurring followed seconds later by a sale of the assignor's assets is well established. The buyer's ability to take over the failing business quickly in a seamless transition is a principal benefit of the ABC process. The speed and the seamless transition help preserve going concern values for the benefit of creditors.
In a recent decision authored by Chief Judge Easterbrook, the United States Court of Appeals for the Seventh Circuit (Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, Docket No. 11-3920 (7th Cir. July 9, 2012)) held that the licensee of a trademark does not necessarily lose the right to use the licensed marks when a debtor-licensor rejects the underlying license agreement in its bankruptcy case. In so holding, the Court rejected a contrary decision reached by the United States Court of Appeals for the Fourth Circuit in Lubrizol Enterprises, Inc. v.