All items from In The (Red) Business Bankruptcy Blog

 
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It seems that most bankruptcy decisions by the U.S. Supreme Court involve individual debtors, and the Supreme Court’s latest opinion is no exception. Even though the decision is not in a business bankruptcy case, it examines the bankruptcy court’s powers under Section 105(a) of the Bankruptcy Code. Section 105(a) is commonly invoked in business bankruptcy cases to prevent business disruption through “first day” motions and orders, as part of a Section 363 sale of assets free and clear of liens, and in granting other relief to facilitate a debtor’s reorganization. This fact makes the Supreme Court’s most recent decision, discussed below, of interest for both individual and business bankruptcy cases.



Posted 7 weeks 11 hours ago

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I’m pleased to let you know that the Corporate Restructuring and Bankruptcy Group at Cooley LLP, of which I am a member, has just launched the new Absolute Priority blog, the new format going forward for our group’s popular Absolute Priority newsletter. Follow the link in the prior sentence to visit the new Absolute Priority blog and, while there, be sure to enter your email address at the “Follow Blog via Email” sign-up to receive notification emails when new posts are added.
I hope you’ll enjoy the new Absolute Priority blog, as well as this In The (Red) blog, to which you can also subscribe using the links on the right side of the page.



Posted 13 weeks 12 hours ago

I hope you had a wonderful holiday season and Happy New Year everyone.
To start the new year off, the Winter 2014 edition of the Absolute Priority newsletter, published by the Bankruptcy & Restructuring group at Cooley LLP, of which I am a member, has been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the newsletter
This edition of Absolute Priority covers a range of cutting edge topics, including:



Posted 15 weeks 6 days ago

It isn't law yet, but on December 5, 2013, the U.S. House of Representatives passed a significant patent reform bill known as the "Innovation Act." Although the focus of the legislation is on patent infringement litigation and other patent law revisions, the Innovation Act, H.R. 3309, would also make major changes to Section 365(n) of the Bankruptcy Code. Follow the link in the prior sentence for a copy of the Innovation Act in the form passed by the House and received in the Senate last week. It would also address the interplay between Section 365(n) and Chapter 15 cross-border bankruptcy cases, the subject of my last post, on the Qimonda AG decision from the U.S. Court of Appeals for the Fourth Circuit.



Posted 18 weeks 1 day ago

My how time flies in protracted bankruptcy litigation. More than four years ago, as I reported back at the time, the Bankruptcy Court in the Chapter 15 cross-border bankruptcy case of Qimonda AG issued its first decision on the application of Section 365(n) in that case. After an initial appeal, a four-day trial on remand, and another appeal, last week the U.S. Court of Appeals for the Fourth Circuit issued a major decision that may bring the litigation to a close.
Even if you are not a Chapter 15 bankruptcy aficionado, this decision has important implications for licensees of intellectual property, especially when the IP owner is a foreign entity.
Before diving into the Fourth Circuit's decision and examining where the decision leaves licensees, let's first take a look at Section 365(n), Chapter 15, and the long and winding road that led to the Fourth Circuit's decision. Or, if so inclined, you can just jump to the discussion of the Fourth Circuit's decision and where it leaves licensees, found toward the end of this post.



Posted 19 weeks 1 day ago

My how time flies in protracted bankruptcy litigation. More than four years ago, as I reported back at the time, the Bankruptcy Court in the Chapter 15 cross-border bankruptcy case of Qimonda AG issued its first decision on the application of Section 365(n) in that case. After an initial appeal, a four-day trial on remand, and another appeal, last week the U.S. Court of Appeals for the Fourth Circuit issued a major decision that may bring the litigation to a close.
Even if you are not a Chapter 15 bankruptcy aficionado, this decision has important implications for licensees of intellectual property, especially when the IP owner is a foreign entity.
Before diving into the Fourth Circuit’s decision and examining where the decision leaves licensees, let’s first take a look at Section 365(n), Chapter 15, and the long and winding road that led to the Fourth Circuit’s decision. Or, if so inclined, you can just jump to the discussion of the Fourth Circuit’s decision and where it leaves licensees, found toward the end of this post.



Posted 19 weeks 1 day ago

Almost every year, changes are made to the set of rules that govern how bankruptcy cases are managed -- the Federal Rules of Bankruptcy Procedure. The changes address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others.
Rule Amendments. This year the rule amendments mainly affect bankruptcy cases filed by individuals. There are also some revisions to Rules 9006, 9013, and 9014, which govern motions in individual and business bankruptcy cases, but they are minor and not too exciting this time. So you can keep up-to-date, a copy of the amendments, in both clean and redline, is available by following the link in this sentence. The new amendments will take effect on December 1, 2013, barring unlikely action by Congress.
"Free And Clear" Motion Filing Fee. Also taking effect on December 1, 2013, is a new, $176 filing fee each time a motion is filed under Section 363(f) of the Bankruptcy Code to sell assets "free and clear" of liens, interests and other encumbrances. Given the frequent use of Section 363 asset sales in Chapter 11 bankruptcy cases, this new fee may well generate some much needed revenue for the courts.



Posted 22 weeks 1 day ago

Cash Is King. An army may march on its stomach, but for companies, it's liquidity that keeps the business going. For many companies, typical sources of liquidity, beyond cash flow from sales or other revenue, are (1) financing from banks or other secured lenders, (2) credit from vendors that can reduce immediate liquidity needs, and (3) when needed, loans from owners, investors, or other insiders.
When A Liquidity Crisis Hits. Companies in financial distress often find that their need for liquidity goes up just as the availability of traditional financing goes down. The borrowing base may shrink, the ability to get further advances may be cut off, and loans may go into default. Worse, new lenders may be unwilling to make loans given the distress. For many distressed businesses, revenues may also be declining and insufficient to cover expenses without additional financing. A liquidity crunch can quickly snowball into a liquidity crisis.



Posted 24 weeks 1 day ago

It's well-established that a corporation has an attorney-client privilege and can assert it to keep communications between the corporation and its attorneys confidential. When a corporation is solvent, its officers and directors maintain the right to assert -- or waive -- the attorney-client privilege on behalf of the corporation, and control who has access to privileged communications.
The Attorney-Client Privilege In Bankruptcy. This raises a question: what happens if the corporation files bankruptcy? The answer depends on the type of bankruptcy filed and whether a bankruptcy trustee is appointed.



Posted 38 weeks 2 days ago

It’s well-established that a corporation has an attorney-client privilege and can assert it to keep communications between the corporation and its attorneys confidential. When a corporation is solvent, its officers and directors maintain the right to assert — or waive — the attorney-client privilege on behalf of the corporation, and control who has access to privileged communications.
The Attorney-Client Privilege In Bankruptcy. This raises a question: what happens if the corporation files bankruptcy? The answer depends on the type of bankruptcy filed and whether a bankruptcy trustee is appointed.



Posted 38 weeks 2 days ago