Potential Risks and Lessons for Debtor-Licensors in Chapter 15 Cases Based on Recent Fourth Circuit Decision

International Bar Association: Insolvency and Restructuring International
September 2014

"Recent US cases regarding chapter 15 of the US Bankruptcy Code and semiconductor patent licences have raised questions as to whether certain US law protections for nondebtor licensees (specifically set forth in 11 USC section 365(n)) will and should be held applicable to foreign debtors and foreign representatives, notwithstanding potentially contrary foreign insolvency law. Based on the purportedly fundamental US public policy of technological innovation and a balancing of debtor’s and creditors’ interests, these courts determined US law to trump otherwise applicable foreign law, which should concern some foreign debtors, foreign representatives and practitioners and may impact the relief, if any, sought by such parties in the US courts."

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