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In In re Tempnology, the First Circuit held that the debtor’s rejection of a trademark license strips the nondebtor licensee of any right to continue to use the trademarks. In so doing, the court takes the same approach as the Fourth Circuit and rejects the approaches advocated by the Third and Seventh Circuits.
In In re Tempnology, LLC, 879 F.3d 389 (1st Cir. 2018), the First Circuit held (in a 2-1 decision) that the debtor’s rejection of a trademark license strips the nondebtor licensee of any right to continue to use the trademarks. In so doing, the court takes the same approach as the Fourth Circuit in its controversial Lubrizol decision and rejects the approaches advocated by Judge Ambro of the Third Circuit in his Exide concurrence and the Seventh Circuit in its Sunbeam decision. Tempnology thus deepens the circuit split between the Fourth and Seventh Circuits over this issue, and highlights the general confusion that still remains 40 years after enactment of the present Bankruptcy Code over the effect of rejection.
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Lease Terminations As Fraudulent Transfers
By Michael L. Cook
Is an insolvent debtor’s pre-bankruptcy termination of a commercial lease a fraudulent transfer? The circuit courts seem to be split, however a close reading of cases in the Third and Seventh Circuits shows that the reasoning of both courts can be reconciled on their facts.
The Role of Third-Party Releases In Successful Chapter 11 Reorganizations
By John J. Rapisardi and Jacob T. Beiswenger
Part Two of a Two-Part Article
In Part Two, we continue the analysis by evaluating two constitutional issues arising from third-party releases: whether creditor consent to be bound by a third-party release is required to satisfy the due process clause of the Fifth and Fourteenth Amendments; and whether bankruptcy courts have constitutional authority to issue final orders granting third-party releases in a plan of reorganization under Stern v. Marshall.
Fourth Circuit: Corporate Subchapter V Debtors Subject to Discharge Exceptions Under Bankruptcy Code
By Lawrence J. Kotler and Elisa Hyder
In a matter of first impression not yet addressed by any circuit court, the Fourth Circuit addressed whether the discharge exceptions under Section 523(a) apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code.
Appellate Court Reverses Chapter 11 Confirmation Order Based on Faulty Tax Ruling
By Michael L. Cook
The Northern District of California recently issued two blistering opinions on appeals by the IRS and California Franchise Tax Board from a bankruptcy court’s Chapter 11 plan confirmation order and a tax determination order.