Bankruptcy dilemma: Will the real Ellen Tracy please stand up!

Today, the U.S. Bankruptcy Court for the Southern District of New York granted a petition against Ellen Tracy LLC for a Chapter 7 involuntary petition for bankruptcy. The petition was filed by three creditors seeking nearly $4 million in claims. The creditors were manufacturers of Ellen Tracy products.

The confusing thing, however, is that the entity being forced into bankruptcy, Ellen Tracy LLC, is a former licensee of the Ellen Tracy name which ceased its operations some time ago. It has nothing to do with the brand anymore. Brand Matter LLC, on the other hand, is the entity that owns, manages, markets and licenses the intellectual property of Ellen Tracy.

Guess there's a lesson to be learned here: Never let a licensee use your brand's name in the name of its legal partnership.