>Tip: Bankruptcy — The Economy Says You Can’t Ignore It

>Ok… who remembers this: Up, Up, Down, Down, Left, Right, Left, Left, B, A, Start? The hard-core (old-school) gamers should instantly spot the typographical error in this classic Contra cheat code. Many legal commentators believe section 365 of the United States Bankruptcy Code contains such a mistake, as well, which could have significant ramifications on intellectual property licenses entered into between developers and publishers. Section 365 permits bankrupt companies to (i) assume contracts (meaning to retain the benefits and obligations as if the bankruptcy never occurred); (ii) assume and assign contracts to third parties or (iii) reject most types of contracts. The ability to pick and chose which contracts to keep, which to sell, and which to dismiss is a critical element of most successful reorganizations. A potential problem arises with Section 365 with respect to contracts that are not assignable under non-bankruptcy law (and one major category of such… Continue Reading