Ignored License Agreements Do "Ride Through" In December 2006, I wrote about a "ride-through" case from the District of Idaho. In In re JZ, LLC, 2006 WL 3782988 (Bankr. D. Idaho). In that case, a reorganized Debtor, JZ, LLC, sued Diamond Z Trailer, Inc. for breach of a license agreement. The defendant argued that the license was terminated because it had been ignored during the bankruptcy process - that is, the Debtor neither assumed it or assigned it. The bankruptcy court held that the license "rode through" the bankruptcy process and could be enforced.

The BAP for the Ninth Circuit has now affirmed that decision, holding that the Bankruptcy Act clearly established the ride-through doctrine; the First, Second and Fifth judicial circuits have recognized the doctrine's continued application; and the ride-through doctrine would apply in the JZ, LLC case to allow the Debtor to enforce the license. Diamond Z Trailer, Inc. v. JZ, LLC, 2007 WL 1954035 (9th Cir. BAP 2007).

I'm at the beach and uninterested in discussing the matter further. Fortunately, Sheppard Mullen's Bankruptcy Law Blog has posted an excellent and thorough analysis of the case.

Labels: jz, license, ride through

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