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No longer need all that space? Termination of Leases in Bankruptcy

[vc_row triangle_shape="no"][vc_column][vc_column_text]What happens to a lease agreement after filing for bankruptcy? Does it automatically terminate or must the obligations in the agreement be upheld?[/vc_column_text][vc_empty_space][vc_column_text] THE AUTOMATIC STAY [/vc_column_text][vc_empty_space][vc_column_text] Immediately upon the filing of a bankruptcy petition, an “Automatic Stay” goes into effect which prevents creditors such as landlords from commencing eviction proceedings, continuing an eviction proceeding, or collecting past due rent. [/vc_column_text][vc_empty_space][vc_column_text] TENANT PROTECTIONS [/vc_column_text][vc_empty_space][vc_column_text] In addition to this protection, a debtor may also “assume” or “reject” an unexpired lease with court approval. Under a Chapter 11 or a Chapter 13 bankruptcy proceeding, there is no fixed amount of time in which the debtor must reject a...

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NEWS : Guitar Center Files for Chapter 11, Ironically as Sales of Guitars Soar

[vc_row triangle_shape="no"][vc_column][vc_column_text] NEWS : Guitar Center Files for Chapter 11 Bankruptcy Protection As Sales of Fender, Taylor, Gibson Guitars Boom The Filing Comes One Week After a Massive Debt-Restructuring Agreement [/vc_column_text][vc_empty_space][vc_column_text] A week ago, Guitar Center announced a debt restructuring agreement which is planned to slash $1.3 billion debt by nearly $800 million.  The Chapter 11 filing indicates that the company seeks to obtain $375 million in Debtor-In-Possession financing from existing note holders and lenders, and an additional $335 million in new secured loans. The company says it will continue operating as normal (as normal as it was in 2020 -- with a majority of its 300...

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The Absolute Priority Rule and the “New Value” Exception

[vc_row triangle_shape="no"][vc_column][vc_column_text]In a Chapter 11 bankruptcy proceeding, if a company or individual filer (the “debtor”) is unable to pay its creditors in full, the absolute priority rule bars owners from retaining their interests unless the owners contribute “new value” to the business.[/vc_column_text][vc_empty_space][vc_column_text] The Absolute Priority Rule [/vc_column_text][vc_empty_space][vc_column_text] The absolute priority rule is codified in section 1129(b)(2)(B)(ii) of the Bankruptcy Code. This section requires that for a reorganization plan to be fair and equitable “the holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim...

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Guidance on the Supreme Court’s Decision in USPTO v. BOOKING.COM

[vc_row triangle_shape="no"][vc_column][vc_column_text] The United States Patent and Trademark Office (“USPTO”) has issued Examination Guide 3-20, which provides guidance on “Generic.com Terms after USPTO v. Booking.com” In June 2020, the Supreme Court reversed decisions of USPTO, rejecting a rule that a mark which consists of the combination of a generic term and a generic top-level domain (like “.com”) is automatically generic.  The USPTO had held that the proposed mark BOOKING.COM was generic as applied to the identified hotel reservation services, or, in the alternative, was merely descriptive and had not acquired distinctiveness.  The USPTO had been affirmed by the Trademark Trial and Appeals...

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NEWS : Tyler Armes v. Post Malone – Court GRANTS in part and DENIES in part Motion to Dismiss

[vc_row triangle_shape="no"][vc_column][vc_column_text] NEWS : Tyler Armes v. Post Malone Judge Dismisses Copyright Case in Part, Allows it to Continue in Part [/vc_column_text][vc_empty_space][vc_column_text] Central District of California.  Judge Otis D. Wright found that plaintiff Tyler Armes (part of Murda Beatz' Murda Gang) has sufficiently set forth a case for copyright infringement against Post Malone regarding the song "Circles."  This case is at the preliminary stage, and the Judge's ruling does not indicate that he (and/or a jury) will ultimately find copyright infringement, just that there is enough alleged to allow it to proceed. The Court found that Armes could proceed with his copyright infringement claim regarding the...

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The CARES ACT and Chapter 11 SUBCHAPTER V

[vc_row triangle_shape="no"][vc_column][vc_column_text]Subchapter V of the Bankruptcy Code (the “Small Business Reorganization Act of 2019”) was passed to make small business bankruptcies faster and less expensive. On March 27, 2020, Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to aid U.S. businesses following the economic impact of COVID-19. The CARES Act amends Subchapter V, and is effective for cases commenced within the twelve months following March 27, 2020.[/vc_column_text][vc_empty_space][vc_column_text] Temporary Increase in Debt Limit for Small Business Debtors [/vc_column_text][vc_empty_space][vc_column_text] The CARES Act revised the definition of “small business debtor” to include a person engaged in commercial or business activities that has aggregate,...

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The Chapter 11 SINGLE ASSET REAL ESTATE DEBTOR

[vc_row triangle_shape="no"][vc_column][vc_column_text]The Bankruptcy Reform Act of 1994 added sections to the Bankruptcy Code specifically affecting single asset real estate (“SARE”) cases. The definition of SARE was revised by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and is now defined as “real property constituting a single property or project, other than residential real property with fewer than 4 residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real...

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RESTAURANT AND BAR INSOLVENCY & REORGANIZATION

[vc_row triangle_shape="no"][vc_column][vc_column_text]One in four restaurants won’t reopen after the coronavirus pandemic, according to OpenTable’s CEO.[1] Indeed, businesses within the hospitality industry such as restaurants and bars are especially vulnerable in the current economic crisis caused by COVID-19. Even in times of fairer weather, opening and maintaining a successful restaurant or bar is no easy feat. Chapter 11 protections allow struggling businesses to take a step back and reorganize. By filing for Chapter 11 protections a struggling business may take advantage of the following benefits.   [1] https://www.marketwatch.com/story/1-in-4-restaurants-wont-reopen-after-the-coronavirus-pandemic-opentable-ceo-warns-2020-05-15?mod=article_inline[/vc_column_text][vc_empty_space][vc_column_text] The Business May Operate Normally During Proceedings [/vc_column_text][vc_empty_space][vc_column_text] An “automatic stay” goes into effect as soon as a...

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THE “SEVEN YEAR RULE” : CA LABOR CODE §2855 & THE ENTERTAINMENT INDUSTRY

[vc_row triangle_shape="no"][vc_column][vc_column_text]California, home to Hollywood, remains the epicenter of the entertainment industry. It is no surprise that an extensive number of contracts in the industry are governed by California law. For an industry that is based on the services of actors, actresses, musicians, and other artists, any change in the State’s labor laws are pivotal. Over the years, one such law has been of great concern to the industry: California Labor Code Section 2855 (the “Seven Year Rule”), which limits the length of time for a personal service employment contract to seven years.[/vc_column_text][vc_empty_space][vc_column_text] What is Section 2855 of the California Labor...

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A BRIEF OVERVIEW : TRADEMARK COEXISTENCE AGREEMENTS

[vc_row triangle_shape="no"][vc_column][vc_column_text]One of the primary purposes of having trademark protection is to avoid consumer confusion. Trademarks, including names, logos, and other branding, are the reason one can distinguish a Nike shoe from a Puma shoe. However, some brands have similar branding, and still manage to protect their goodwill while coexisting in the market.  To “coexist” in the market, companies with trademarks that may be confused by consumers sometimes enter into trademark coexistence agreements.[/vc_column_text][vc_empty_space][vc_column_text] What exactly is a Trademark Coexistence Agreement? [/vc_column_text][vc_empty_space][vc_column_text] The International Trademark Association defines a coexistence agreement as "an agreement by two or more persons that similar marks can coexist without...

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