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'Use Clauses' and the Bankruptcy Code: A Cautionary Tale
The recent Chapter 11 bankruptcy of Trak Auto Corporation (“Trak Auto”), the retail auto parts chain, has yielded a reported decision of the U.S. Fourth Circuit Court of Appeals that offers some insights for landlords on how “use clauses” in leases will be put under the bankruptcy microscope. In re Trak Auto Corporation, 42 B.R. 255 (4th Cir. 2004).
Trak Auto filed its Chapter 11 petition on July 5, 2001 and had once operated 196 retail auto parts stores. Trak Auto sought to assume and assign certain of its leases, including one known as the West Town Lease in Chicago. The West Town Lease contained explicit use restrictions. Section 1.1(L) of the lease limited the use to “the sale at retail of automobile parts and accessories and such other items as are normally sold by tenant in its Trak Auto stores.” In Section 8.1 of the lease, Trak Auto covenanted to use the leased premises “only as a Trak Auto store” and for the uses provided for in Section 1.1(L).
None of the bids for the lease came from an auto parts retailer. The high bidder was A&E Stores, Inc. (“A&E”), an apparel merchandiser that offered $80,000 for the lease. A&E planned to open an apparel outlet in the space.
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Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?