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| vol 16, num 1 | November 2020 |
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| Fifth Circuit Holds that Contracts Are Deemed Rejected After 60 Days and No Longer Salable Estate Property Regardless of Whether the Trustee Knew of Their Existence |
| Matter of Provider Meds L.L.C. involved contract rejection and related issues the Fifth Circuit stated it and most circuits had not previously considered. Tech Pharmacy Services (TPS) held a patent on methods involving remote pharmaceutical dispensing (the IP). The OnSite entities provided dispensing machines for use in health facilities. In 2010, TPS sued OnSite in the Eastern District of Texas for infringement, which was resolved by agreement (the “Settlement License”) confirming the validity of TPS’s IP and granting OnSite a nonexclusive, perpetual license to use the IP in exchange for (1) a $4,000 fee for each
machine thereafter placed into service, and (2) quarterly reports identifying the new machines. The parties also agreed to mutual releases of all claims “which relate to or could have been claimed in the Litigation, or that relate to the [Patents] or any alleged infringement.” The Settlement License was referenced on the court’s docket (which later would become important to the Fifth Circuit’s decision on appeal). |
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| Spinning Studio Operator Flywheel Sports to Liquidate, Citing Mandatory Closures and Abandonment of In-Home Streaming Platform |
| On Sept. 15, 2020, Flywheel Sports Inc. and its affiliates filed chapter 7 petitions with the U.S. Bankruptcy Court for the Southern District of New York. Flywheel’s filing continues the trend of gym and personal fitness companies, including venerable national chains Gold’s Gym and 24 Hour Fitness, seeking bankruptcy protection during the COVID-19 pandemic. But while many of its peers are, at least presently, pursuing chapter 11 restructuring plans, Flywheel has ceased its operations entirely and anticipates liquidating its assets. Notably, this decision to liquidate, as opposed to restructure, appears partially to be the consequence of
Flywheel’s dubious effort to enter the “internet-linked” or “fitness-streaming” space. |
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| In re Way to Grow and the Impact on Downstream Businesses with Marijuana Connections |
| It is a commonly accepted rule across the country that if a debtor has direct connections with marijuana – for example, cultivating the plant or leasing space to a dispensary or grow facility – that the debtor cannot seek relief under the U.S. Bankruptcy Code. In instances where the debtor has direct contact with marijuana, “the [d]ebtor’s operations constitute a continuing criminal violation of the [federal Controlled Substances Act (“CSA”)], and a federal court cannot be asked to enforce the protections of the Bankruptcy Code[.]” However, when a business lacks direct contact with marijuana but still profits from the
marijuana industry, it is unclear whether that business can seek the protections afforded by the Bankruptcy Code. |
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| WLC 2020 Panel: Navigating Distressed Investing, Sales and Technology: Protecting Your Sale Process, Your Investments and Your Hide |
Being presented by the Emerging Industries and Technology and Secured Credit Committees, this panel will explore and navigate distressed-investing issues relating to sales of technology and IP under § 363, and buyer identification in a virtual landscape.
Speakers for this session include:
- Dylan Trache, Moderator - Nelson Mullins Riley & Scarborough LLP | Washington, D.C.
- Solamar Castillo-Morales - Goldman Antonetti & Cordóva, LLC | San Juan, P.R.
- Louis T. DeLucia - Ice Miller LLP | New York
- Prof. Harvey Rishikof - Temple University Beasley School of Law | Philadelphia
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