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Vol 15, Num 2 l May 2016

Business Reorganization An ABI Committee Newsletter - Spnsored by The Wall Street Journal

► In This Issue:

Taxing Legal Marijuana: A Hazy Issue for Municipalities Seeking Relief in Chapter 9


Katherine T. Lewis
University of Michigan
Law School
Environmental Law Clinic

Editor’s Note: The following article, “Taxing Legal Marijuana: A Hazy Issue for Municipalities Seeking Relief in Chapter 9,” won the prize for second place in the Eighth Annual ABI Bankruptcy Law Student Writing Competition. Ms. Lewis is a recent graduate of the University of Michigan Law School in Ann Arbor, Mich. She is currently a student attorney in the university's Environmental Law Clinic, and will begin working in New York as an associate in Weil Gotshal & Manges’ Business Finance & Restructuring group this fall.

Bankruptcy Code § 365(n) provides significant protections to licensees under intellectual property licenses that are rejected by debtor-licensors. Section 365(n) permits a licensee to retain its rights in licensed intellectual property post-rejection in exchange for the continued payment of royalties. Where the licensee elects to retain its rights, the debtor-licensor has no continuing obligations under the license.

The definition of “intellectual property” in Bankruptcy Code § 101(35A) does not reference trademarks or trade names. This omission raises the question: Does § 365(n) protect trademark licensees, or can licensees be stripped of their trademark rights by rejection of the license? Courts are split on this issue. Some have ruled that the plain language of § 101(35A) bars trademark licensees from the protections of § 365(n). Others have ruled that trademark licensees can retain their rights post-rejection.

» Read More

Predicting Municipal Bankruptcies: A Proposed Model from Corporate Finance


Andrew J. Sherbo
University of Denver
Daniels College of Business


David Merz
University of Denver
Daniels College of Business

Editor’s Note: For more on this topic, purchase Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, available in the ABI Bookstore ( Members must log in first to obtain reduced pricing.

A review of past research on municipal bankruptcies took the authors to a basic conclusion: There are some major gaps. This article attempts to fill in at least some of those gaps to assist current and future mayors, city councils, city managers, city chief financial offers, credit-ratings agencies (e.g., Standard & Poor’s), fixed-income investors, etc., in their responsibilities for the management and/or evaluation of any city. Moreover, although municipal chapter 9 bankruptcies are not as common as corporate chapter 11s, the annual trend over the last 34 years shows a definite increase in chapter 9 filings (see the graph).

Our basic approach will be to apply a methodology used in the prediction of corporate bankruptcy as developed by Prof. Edward Altman of New York University nearly 50 years ago. His Z-score model has stood the test of time and was evaluated in a previous issue of the ABI Journal.

» Read More

Chapter 7 Asset Sales in the Digital Age: Suggested Process Improvements to Maximize Estate Values


Michael Mikikian
Inforuptcy LLC
Los Angeles


The current process for administering chapter 7 cases was established at a time when paper documents had to be hand-delivered to the courts for processing. It was an era of “runners.” Over the decades, the proliferation of filing and case-management software has increased efficiency for trustees with respect to administrative tasks, and runners have been replaced by point-and-click.

However, the dissemination of information, a key component to maximizing returns on sales of assets, has not seen the benefits of the technology age. Many trustees administering chapter 7 cases have not taken advantage of technological advancements that could be utilized with minimal effort to improve their day-to-day processes for the purposes of disclosing asset-liquidation information earlier and in more detail.

» Read More

Experts Discuss Supreme Court's Ruling in Husky International Electronics Inc. v. Ritz

The U.S. Supreme Court on May 16 ruled (7-1) in the case of Husky International Electronics Inc. v. Ritz (No. 15-145) that the term “actual fraud” in §523(a)(2)(A) encompasses fraudulent conveyance schemes, even when those schemes do not involve a false representation to a creditor. On May 18th, experts lead a webinar to discuss this important decision. Speakers included ABI Editor-at-Large Bill Rochelle as Moderator; G. Eric Brunstad, Jr. (Dechert LLP; Hartford, Conn.); and Prof. Anthony Casey (University of Chicago Law School).

Click here to view this complimentary webinar.

Annual Spring Meeting Recording Available Online

ASM 16 UTC Committee SessionThe Business Reorganization and Legislation committees paired at ABI’s recent Annual Spring Meeting in Washington, D.C. to present a session titled “Public Securities and the Bankruptcy Plan Process: What Not to Do.” Speakers for this session were Dan Besikof, Moderator (Loeb & Loeb LLP; New York); Jasmine Ball(Debevoise & Plimpton LLP; New York); Patricia Casimates (FINRA; Washington, D.C.); Peter Finkel (Wilmington Trust; Minneapolis); Mark F. Hebbeln (Foley & Lardner LLP; Chicago); and Jane Sullivan (Epiq Systems, Inc.; New York).

Materials for this session can be found online.

Click here to review the educational session recording.

23rd Annual Central States Bankruptcy Workshop


Southeast Bankruptcy Workshop

66 Canal Center Plaza, Suite 600, Alexandria, VA 22314 |
Tel. (703)-739-0800
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