Morgan Lewis on Restructuring, Fall 2006

In this Issue:

• MAC Clauses in Commercial Loan Documents- Are they Effective?:
  The "standard" borrower representations and warranties in commercial loan documents typically include a "no material adverse change" or "no material adverse effect" clasue (MAC). Specifically, the borrower will represent and warrant that, since an agreed-upon date (e.g, the date of the latest audited financial statements delivered to the lender), no MAC has occurred. The representation and warranty must be true as of the date of any borrowing, and violation of the representation constitutes an event of default.
• Jurisdictional Power Play: Bankruptcy Court vs. Federal Energy Regulatory Commission:
  Does a bankruptcy court have the power to authorize rejection of a wholesale electrical power contract that is subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC)? The answer is open and may depend on the forum deciding the issue.
• Trademark Licenses in Bankruptcy: Can you assume or not assume, that is the question:
  Unlike patents and copyrights, trademarks are not defined as “intellectual property” under the Bankruptcy Code. Yet, whether a trademark license is assignable by a debtor-licensee under the Bankruptcy Code is to be a developing story – one that appears to be following the plot from the world of copyrights and patents.

For the full story, please view the PDF.