Last year, the Supreme Court issued its decision in Merit, unanimously ruling that a buyout transaction between private parties did not qualify for “safe harbor” protection under Bankruptcy Code section 546(e), on the basis that a “financial institution” acted as an intermediary in the overarching transaction.

On May 20, 2019, United States Supreme Court settled a circuit split, deciding that a bankrupt company’s decision to reject an existing contract does not revoke a trademark licensee’s right to continue using the licensed mark.

Earlier today, the Supreme Court finally answered the question of whether a trademark licensee is protected when the trademark owner/licensor files a bankruptcy petition and rejects the trademark license in accordance with section 365 of the Bankruptcy Code. To cut to the chase, trademark licensees won.

On Monday, May 20, 2019, the United States Supreme Court issued an 8-1 decision holding that a bankrupt company’s decision to reject an existing license of its trademarks does not terminate a licensee’s right to continue using the licensed trademarks.

Mission Product Holdings, Inc. v. Tempnology, LLC, No. 17-1657

Today, the Supreme Court held in an 8-1 decision that when a debtor, acting under Section 365 of the Bankruptcy Code, rejects a contract licensing its trademarks, the contract is not rescinded and the debtor thus cannot revoke the trademark license.

Chapter 11 Debtor, Tempnology, LLC (“Tempnology”) is feeling the heat today, May 20, 2019, as the United States Supreme Court held that Mission Product Holdings, Inc., (“Mission”), a licensee of Tempnology’s “Coolcore” products, can continue to use Tempnology’s trademarks to sell and distribute its products in the United States. The Supreme Court’s decision resolved a significant circuit split, at least for trademark licensing agreements, as to whether Section 365 of the Bankruptcy Code can shield a debtor-licensor from its licensees continued use of licensed trademarks.

Bankruptcy is meant to provide a fresh start for the honest but unfortunate debtor.

On April 29, New Jersey’s governor signed into law bill A4997, known as the Mortgage Servicers Licensing Act. As the title indicates, the Act creates a licensing regime for servicers of residential mortgage loans secured by real property within New Jersey. As with many state licensing regimes, the Act exempts most banks and credit unions from licensing.

When it comes to offsets, bankruptcy law provides for two distinct remedies: (1) setoff and (2) recoupment.

Setoff allows a creditor to reduce the amount of prepetition debt it owes a debtor with a corresponding reduction of that creditor’s prepetition claim against the debtor. The remedy of setoff is subject to the automatic stay, as well as various conditions under § 553 of the Bankruptcy Code — including that it does not apply if the debts arise on opposite sides of the date on which the debtor’s case was commenced.

The legalization of marijuana and the Bankruptcy Code continue to proceed on a crash course. A majority of states have legalized marijuana for medical use, and a growing number have legalized recreational use as well. As a result, the industry is rapidly expanding – national sales in legal markets have increased 34 percent in 2018 to $10.8 billion.