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How to reject an executory contract in chapter 11

White Plains, NY |

My company is going to file chapter 11. Can I reject executory contracts with the filing of the petition?

Attorney Answers 4


  1. Obviously, any company in Chapter 11 needs a lawyer (and, in fact, is required to have a lawyer in virtually all courts) so that is who files the appropriate motions. The company's Bankruptcy lawyer will know what has to be done.


  2. Yes, your company can reject executory contracts at the same time as filing the voluntary petition under chapter 11. Your company's bankruptcy attorney should know which motions to file.

    The information contained in my answer is provided for informational purposes only, and should not be construed as legal advice.


  3. Although not licensed in New York, Mr. Riddle is correct.

    The right to appear pro se in a civil case in federal court is contained in a statute, 28 U.S.C. § 1654. Thus, anyone can appear pro se, and anyone who appears before the Court without an attorney is considered pro se. There are, however, certain limitations to self-representation, such as:

    - corporations and partnerships must be represented by an attorney.
    - a pro se litigant may not represent a class in a class action.
    - a non-attorney parent may not appear pro se on behalf of a child, except to appeal the denial of the child's social security benefits.

    THE INFORMATION CONTAINED IN THIS POSTING IS FOR GENERAL INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. THE FURNISHING OF THIS INFORMATION DOES NOT CREATE AN ATTORNEY CLIENT RELATIONSHIP. AN ATTORNEY CLIENT RELATIONSHIP REQUIRES THE FURNISHING, REVIEW, AND SIGNING OF A RETAINER AGREEMENT.


  4. There are a lot of variables to the assumption or rejection of an executory contract. The first of which is whether the contract in issue is actually an executory contract. The Bankruptcy Code does not define the term “executory contract” and uses it as though the meaning is patently obvious. However, most bankruptcy courts define an executory contract as one which, as of the date of the case filing, requires some form of performance still be due of both parties to the contract such that the failure to complete performance would be a breach of contract. A contract is no longer executory when the only obligation one party has is an obligation to pay money.

    Assuming a contract is executory, its assumption or rejection is governed by Bankruptcy Code §365. Special assumption rules exist in Chapter 11 for the assumption of the lease of non-residential real estate that require action on the assumption, rejection or assignment within 120 days of the filing of the case (§ 365(d)(4)). This deadline can be extended if a motion is made to the court before the expiration of the 120 day period, and the motion is granted. As to all other contracts, Bankruptcy Code § 365(d)(2) does not require action on the assumption, rejection or assignment until the confirmation of his plan. However, a Debtor may act sooner to seek rejection of a contract, subject to court approval and creditor objection, and the non-debtor party to the contract may ask the court to compel the Debtor to act earlier than confirmation.

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