In the Red – The Business Bankruptcy Blog

In the Red – The Business Bankruptcy Blog

The Business Bankrupty Blog

Tag Archives: executory contract

Third Circuit Decision Suggests Another Way For Trademark Licensees To Protect Against License Rejection In Bankruptcy

Posted in Business Bankruptcy Issues, Recent Developments
Trademark licensees have long faced the serious risk of losing all license rights to a trademark if the licensor files bankruptcy and rejects the trademark license as an executory contract. However, a recent decision from the U.S. Court of Appeals for the Third Circuit in the In re: Exide Technologies case may give some trademark licensees … Continue Reading

Protecting IP Rights From A Licensor’s Bankruptcy: What You Need To Know About Section 365(n)

Posted in Business Bankruptcy Issues
Many companies rely on in-bound licenses of intellectual property, especially those involving patents or trade secrets, and spend millions of dollars on research, development, and ultimately commercialization of drugs or products incorporating the licensed IP. With so much at stake, licensees frequently ask a critical question: Can our license rights be terminated if the licensor … Continue Reading

U.S. Supreme Court Shows Interest In Deciding Whether The Hypothetical Test Or The Actual Test Should Be Used To Determine If IP Licenses Can Be Assumed In Bankruptcy

Posted in Business Bankruptcy Issues, Recent Developments
It looks like the U.S. Supreme Court, or at least two of the Justices, is interested in deciding whether the "hypothetical test" or the "actual test" should be used in determining whether an intellectual property license can be assumed by a debtor in possession under Section 365(c)(1) of the Bankruptcy Code. That was the clear message from the somewhat … Continue Reading

Latest Edition Of Bankruptcy Resource Now Available

Posted in Business Bankruptcy Issues, Recent Developments
The Spring 2008 edition of the Absolute Priority newsletter, published by the Cooley Godward Kronish LLP Bankruptcy & Restructuring group, of which I am a member, has just been released. The newsletter give updates on current developments in bankruptcies and workouts with the goal of keeping you "ahead of the curve" on these issues. Follow … Continue Reading

Bankruptcy Rule Amendments: New Article Reviews The Important Changes

Posted in Business Bankruptcy Issues, Recent Developments
An article my partner Adam Rogoff, associate Seth Van Aalten, and I wrote was recently published in the January 2008 issue of Pratt’s Journal of Bankruptcy Law. The article discusses the significant amendments to the Federal Rules of Bankruptcy Procedure that took effect on December 1, 2007. Those amendments covered a range of procedures from omnibus … Continue Reading

Delaware Bankruptcy Court Adopts New Local Rule For Section 363 Sales

Posted in Business Bankruptcy Issues, Recent Developments
The Delaware Bankruptcy Court has recently adopted amended Local Rules, which became effective on February 1, 2008, and they include meaningful changes to the procedures governing Section 363 sales of assets. New Local Rule 6004-1, entitled "Sale and Sale Procedures Motions," requires additional disclosure and the highlighting of certain key provisions often seen in sale … Continue Reading

Don’t Miss The Important Business Bankruptcy Rule Amendments That Just Took Effect

Posted in Business Bankruptcy Issues, Recent Developments
On December 1st of almost every year, amendments to the Federal Rules of Bankruptcy Procedure — the ones that govern how bankruptcy cases are managed — take effect to address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. Often the changes are relatively minor and of interest only … Continue Reading

A Fly In The Ointment: Sale Of Property May Cut Off Landlord’s Section 502(b)(6) Lease Rejection Claim For Future Rent

Posted in Business Bankruptcy Issues, Recent Developments
Here’s a scenario frequently seen in Chapter 11 cases. A tenant files bankruptcy and rejects a commercial real estate lease. The landlord files an unsecured lease rejection claim seeking to recover the lost future rent under the rejected lease. The claim amount is capped by Bankruptcy Code Section 502(b)(6) but may still be one of the larger … Continue Reading

The Bull Rips A Hole In The Matador’s Cape: New Ninth Circuit Decision Limits Reach Of Section 502(b)(6)’s Landlord Cap

Posted in Business Bankruptcy Issues, Recent Developments, The Financially Troubled Company
A commercial real estate lease often represents the largest single liability of many debtors. For retailers, which typically have scores or even hundreds of store leases, the liability involved is orders of magnitude larger. It’s fair to say that the management of lease obligations can be of enormous consequence to debtors, landlords, and other creditors in … Continue Reading

Are “Termination On Bankruptcy” Contract Clauses Enforceable?

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Practically every contract has a provision that makes the bankruptcy or insolvency of one contracting party a trigger for the other party to terminate the contract. These are standard fare and rarely negotiated unless they also include a provision for the reversion back of ownership of property, often intellectual property, upon bankruptcy or insolvency. This post takes a … Continue Reading

Another Court Follows The Footstar Decision On Assumption Of IP Licenses In Bankruptcy

Posted in Business Bankruptcy Issues, Recent Developments
Intellectual property licenses continue to be significant to companies across a wide range of industries. This fact makes their treatment in business bankruptcy cases a topic of keen interest.  Can A Debtor Licensee Retain IP License Rights? When the debtor in possession is a licensee under a patent, copyright, or trademark license, a key question arises: Can … Continue Reading

The “Ride Through” Doctrine Rides Again: Ninth Circuit BAP Lets A License Agreement Ride Through Chapter 11

Posted in Business Bankruptcy Issues, Recent Developments
In a June 18, 2007 decision in In re J.Z. L.L.C. (available here), the Bankruptcy Appellate Panel (BAP) of the U.S. Court of Appeals for the Ninth Circuit faced an interesting question: Did the so-called "ride through" doctrine from the old Bankruptcy Act of 1898 survive enactment of the Bankruptcy Code in 1978? The BAP’s … Continue Reading

Assumption Of Intellectual Property Licenses In Bankruptcy: Are Recent Cases Tilting Toward Debtors?

Posted in Business Bankruptcy Issues, Recent Developments
Executory contracts present a host of interesting issues in bankruptcy cases. This is especially true when the executory contract involves a license of intellectual property (or "IP"). In the past I’ve devoted several posts to the topic, including how IP licenses are treated in bankruptcy and the unique issues presented when a trademark licensee or trademark licensor files bankruptcy.  In this … Continue Reading

New Article Examines Interplay Between Bankruptcy and Intellectual Property Law

Posted in Business Bankruptcy Issues
Peter S. Menell, a Professor of Law at the University of California, Berkeley, School of Law (Boalt Hall) and the Director of the Berkeley Center for Law and Technology, is a highly regarded expert on intellectual property law. I wanted to let you know that he’s just posted a very interesting and comprehensive article on the Social … Continue Reading

Bankruptcy Asset Sales: What Parties With Contracts Should Watch For

Posted in Business Bankruptcy Issues
In many corporate bankruptcy cases, the debtor will use the bankruptcy process to sell its assets and to assume and assign valuable leases, executory contracts, and licenses (see earlier posts on what happens to leases in bankruptcy, to executory contracts, and to intellectual property licenses, a special type of executory contract).  This post discusses some mechanics of the … Continue Reading

Commercial Real Estate Leases: How Are They Treated In Bankruptcy?

Posted in Business Bankruptcy Issues
Much like executory contracts, commercial real estate leases are governed by special rules in bankruptcy. If a lease’s term has not yet expired, it is known as an “unexpired lease” (yet more clever bankruptcy terminology). This post explores how landlords and tenants are treated in bankruptcy, first in the more common situation of a tenant’s bankruptcy and then … Continue Reading

Executory Contracts — What Are They And Why Do They Matter In Bankruptcy?

Posted in Business Bankruptcy Issues
If you start talking to a bankruptcy lawyer, before long you’ll probably hear them use the term “executory contract.” Often they’ll act as though people use the term everyday.  The truth is that bankruptcy lawyers are just about the only lawyers – much less business people — who ever talk about executory contracts.  (I confess … Continue Reading