Bankruptcy Archives

Jun 18, 2020

What Happens to a Trademark License If a Licensor Files for Bankruptcy?

Retail stores and outlets feature trademark branded merchandise produced under license agreements. Millions of dollars in manufacturing costs, marketing expenses and distribution chain development are incurred in getting the branded goods from initial concept to the shelf for retail sale. The current and anticipated wave of fashion industry bankruptcies raises questions about the risk of loss by the licensee on that investment if the brand-owner/licensor files for bankruptcy. What happens when a trademark licensor files for bankruptcy? Does the licensor’s various license agreements continue as if nothing happened? Are the license agreements automatically terminated as part of the bankruptcy process?… Read more

May 28, 2020

Almost As Certainly As Night Follows Day: “Preference” Proceedings Follow Bankruptcy

The recent pandemic-induced spike of bankruptcy filings by major retail apparel chains will likely lead to a flood of “preference” proceedings in which attempts will be made to “clawback” payments to vendors. A preference is a payment to a creditor in the days leading up to a bankruptcy by which a creditor was improperly preferred over others. When this happens, the Bankruptcy Code allows the trustee (and sometimes others) to bring a preference action to recover the preferential payments for the benefit of the debtor’s estate. The Bankruptcy Code defines a preferential payment as any payment for a debt made… Read more