Are intellectual property (royalties) considered a priority claim?

[mauka]

I receive royalties for a musical composition being sold by a company, they filed for bankruptcy and sent me a form to fill out to get paid...it ask me if its a secured or non secured debt...and it ask if its a priority...I gather its non secured...but I don't know if it's a priority and what paragraph it pertains to...they have written near "other" a 507 (a)____... I suppose I would need to add in what it pertains to if it's a priority...Can anyone please help?

[AngelinaCat]

Do you have a written contract for this? How much does this company owe, and how are you being paid?

[mauka]

yes I do have a written contract (mechanical license for musical composition) and I get paid by check quarterly.
They owe $682


Thanks!

[AngelinaCat]

Put in a claim for that amount when you are notified of their BK. Now it depends on what this company is claiming as debts that they wish to discharge, as to how likely you will get paid.

If you are aggrieved enough with them, you can file an Adversary Proceeding against their BK, which is a mini-lawsuit--apart from, yet attached to--the BK that only affects the debt they owe you.

HOWEVER, it is expensive to pursue, and you most likely will want to talk to a BK attorney. After you get and understanding of what that involves, only you can determine if the $682.00 you are owed is worth going after.

I do feel for you with money that is owed to you. We are all hurting in this economy.

My Best~~~

[mauka]

Thanks for your reply, I am going to put the amount in, what I'm not sure of was if it is considered a "Priority Claim" or not. That's my main problems in a nutshell.

Put in a claim for that amount when you are notified of their BK. Now it depends on what this company is claiming as debts that they wish to discharge, as to how likely you will get paid.

If you are aggrieved enough with them, you can file an Adversary Proceeding against their BK, which is a mini-lawsuit--apart from, yet attached to--the BK that only affects the debt they owe you.

HOWEVER, it is expensive to pursue, and you most likely will want to talk to a BK attorney. After you get and understanding of what that involves, only you can determine if the $682.00 you are owed is worth going after.

I do feel for you with money that is owed to you. We are all hurting in this economy.

My Best~~~

[DeadManCrawling]

It will most likely NOT be a priority claim.

I have had similar situations, and I do contract work for audio/visual. The icensing arrangements are similar to what you describe.

In the 3-4 situations where my clients, who license my work for a period of time, filed BK, I was at the bottom of the food chain. I DID, however, get paid in full, in two cases. So it is worth staking your claim.

I doubt it would be worthwhile to file an AP or make any other move, since the company is already BK. doubtful, even if you won, that there would be much to collect.

Place the claim and hope for the best. Since it is a mechanical license, I would take steps to make sure YOU are released from your obligation and are free to re-license the composition. I am not sure what steps you need to do, though. It may be as simple as asking the licensor to sign an agreement so you can use the work with another client.

I once had a client file BK and ended up receiving about 2k in back payments. I was stunned. During the process, I filed my claim and waited. It took two years to settle out, during which time I received dozens of packages full of legal documents. They probably spent 200 bucks on mailing me stacks of paper that ran thousands of pages by the time it was all done.

Good luck!

[AngelinaCat]

I can't say whether it is secured or not.

'Secured' usually means that the money involved is 'secured' by a piece of tangible property such as a car or piece of property that can be seized if the debtor defaults on the loan.

I do have some contact information regarding copyright law. I can send a link via PM if you wish.

My best~~