Trump Wins Relief From Stay – No More Trump Casino In AC?

In a 21 page opinion (the "Opinion") released February 20, 2015, in the Trump Entertainment Resorts, Inc bankruptcy (Case No. 14-12103), Judge Gross, granted the motion of Trump AC Casino Marks, LLC ("Trump AC") to modify the automatic stay to allow litigation to proceed, which could result in termination of their license with the Debtors. The Opinion is available here. Seeking relief from the automatic stay is a topic which frequently appears on this blog. A couple of posts written by my colleagues that summarize the law are here:

Seeking Relief from the Automatic Stay in Delaware

How does the "automatic stay" of the bankruptcy code apply to landlords?

Background

The Debtors used the Trump name pursuant to a license agreement with Trump AC, and their use required them to comply with certain "standards of quality". Opinion at *3. On August 4, 2014, Trump AC initiated a state court lawsuit seeking to terminate the trademark license for failing to meet the standards of quality. Opinion at *5. On September 9, 2014, the Debtors filed for bankruptcy protection, which had the effect of stopping the state court litigation pursuant to the automatic stay of bankruptcy. The Debtors current plan is for the equity holders of the Debtor to be wiped out, and for current debt-holders to assume all of the equity of the reorganized company, including assumption of the trademark license. Opinion at *6.

The Opinion

While the analysis is extensive, and I encourage all readers of this blog to review it for themselves, it boils down to one simple concept: Agreements not assignable absent consent under non-bankruptcy law are not assignable under the Bankruptcy Code. Opinion at *2. As explained by Judge Gross, "the substantial weight of authority holds that under federal trademark law, trademark licenses are not assignable in the absence of some express...