A recent decision of the Second Circuit Court of Appeals has added an additional eligibility requirement for the filing of Chapter 15 cases. In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), ___ F.3d ___, 2013 WL 6482499 (2d Cir.
One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.
In a decision of significance to the distressed claims trading community, the US Court of Appeals for the Third Circuit in In re KB Toys Inc.[1] recently held that any risk or “cloud” of disallowance under the Bankruptcy Code resulting from a creditor’s receipt of an avoidable transfer cannot be separated from a claim, even when such claim is in the possession of a subsequent transferee.
On Tuesday, December 2, 2013, Judge Steven Rhodes of the Eastern District of Michigan ruled that the City of Detroit, which filed for Chapter 9 bankruptcy protection in the U.S. Bankruptcy Court on July 18, 2013, met the specific legal criteria required to receive protection from its creditors and thus could formally enter bankruptcy. The district court further determined that the city’s obligation to pay pensions in full was not "untouchable" while working and negotiating with creditors in restructuring its debt.
The United States Court of Appeals for the Fourth Circuit recently affirmed the bankruptcy court decision in the Qimonda AG chapter 15 bankruptcy case,1 providing that holders of intellectual property licenses based on U.S. patents are entitled to the special protections contained in 11 U.S.C. § 365(n).2 In so doing, the court bolstered the rights of U.S. intellectual property licensees whose agreements might otherwise be vulnerable to termination in a cross-border insolvency proceeding.
Background
The Court of Appeals for the Fourth Circuit, in Jaffe v. Samsung Elecs. Co., Ltd.,1 recently held that a U.S. bankruptcy court is not required under principles of comity to blindly apply foreign law to assets located in the U.S. of a foreign debtor whose principal insolvency proceeding is outside the U.S. Instead, bankruptcy courts must balance the interests of the affected U.S. parties with the those of the foreign debtor. In this case, the balancing required the application of U.S. law to the foreign debtor’s U.S. assets, not German law as applied in the foreign proceeding.
Would you know what to do if you learned that one of your franchisees had filed for bankruptcy? Perhaps more importantly, would you know what not to do? While each circumstance and franchise agreement is different, there is a general framework for dealing with a franchisee in bankruptcy. Here we’ll introduce some of the issues you are likely to encounter throughout the bankruptcy process.
The Automatic Stay
A recent ruling by US Federal Judge Rhodes has held that the city of Detroit is eligible to file for bankruptcy under US federal bankruptcy laws and can now attempt to re-organise its US$18.5b debt.
The Delaware Supreme Court recently offered new insight into a dissolved corporation’s exposure to liability for third party claims. InAnderson v. Krafft-Murphy Company, Inc.,1 the Court held as a matter of first impression in Delaware that the statutory scheme governing the dissolution and winding up of a Delaware corporation does not contain a general statute of limitations that would shield a dissolved corporation from liability.
I. Factual Background and Procedural History2