If I am Merck and I want to partner with GTC on XYZ, as part of the contract I would put in some sort of Nonperformance and Breach of Contract terms.
If I am to invest say 40 million in GTC to develop XYZ drug, then what happens to my investment if GTC were to file chapter 11 or chapter 7? In my contract I would have a claim on the IP that had been developed with my money. So that in the event of the failure of GTC I would own patents, processes, etc. Ideally I could like to be able to buy out the company and compete the development internally in my company.
But if GTC's IP has been pledged to LFB as collateral for a loan, then if I wanted to proceed, at the very least I would want to have LFB sign the development contracts, and LFB would have to give up some of their rights.
The problem comes up when the general term IP has been pledged without knowing exactly what that means. The implication was that it was everything connected to GTC's IP, but maybe that wasn't exactly true. If it is true, that seems to hinder GTC from signing contracts with other companies.
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