Executory Contracts
| ID | Name | Group | Other | Code
Sec |
Cross
Ref | Problem
Referenced | Proposed
Solutions |
NBRC-
0223 | Frank R. Kennedy | Professor, Michigan
Law School; former Executive Director, Commission on the Bankruptcy Laws
of the United States (1973) | Cover letter
discussing various areas of concern |
|
| Author provides a list of 30 "Topics for Consideration by
Commission on Bankruptcy Laws." The recommended topic relating to
executory contracts was:
Revision of treatment of executory contracts and leases in light of NBC
recommendations. | None. |
NBRC-
0301 | National Bankruptcy Conference | National Bankruptcy Conference (NBC), Bernard Shapiro -
Chair |
|
|
| National Bankruptcy Conference believes that the following issue
merits study by the NBRC: whether the law of executory contracts should
be "totally reconsidered." | NBC
concludes that executory contract law should be
"reconsidered." (No additional details are provided. The NBC
Report, however, which discusses this position more thoroughly, has been
"refined" and will be available to the NBRC.) |
NBRC-
0303 | Commercial Law League of America | Commercial Law League of America (CLLA) |
|
|
| The Commerical Law League of
America believes that the following issue should be considered by the
NBRC: Should § 365 be amended to clarify the effect of
"rejection" Should the courts be given specific authority to
exercise more procedural control over debtors' decisions to assume or
reject contracts What duties should be imposed on the non-debtor party
to an executory contract pending assumption or
rejection | The CLLA believes that these
issues should receive top priority (no additional details are provided).
Discussion of these issues should include clarification of § 365
as to the definiation of an executory contract. |
NBRC-
0320 | Robert M. Zinman, on behalf of the Bankruptcy
Institute | American Bankruptcy Institute
("ABI") | Numerous position papers,
memoranda and research material | 365 |
| None. | "Section 365 should be
amended to clarify the effect of rejection, which really means that the
debtor has breached the contract and the contract should be terminiated
by the order approving the rejection. The debtor should be allowed to
reject the contract after approval by the court. During the period
pending the assumption of rejection of the contract the non-debtor party
can be assured of payment for the goods or services provided during the
case" (no additional details provided). |
NBRC-
0357 | David Epstein | National Bankruptcy
Conference |
| 365 |
| In these preparatory materials for the December 18, 1996 plenary
session on Chapter 11, the author outlines on behalf of the National
Bankruptcy Conference issues relating to the operation of 11 U.S.C.
§ 365. | The author submits this issue
outline for the NBRC's consideration. |
NBRC-
0518 | George A. Hahn | Attorney |
|
|
| Author discusses the need for the Code to be amended to provide
for temporary orders governing performance of prebankruptcy contracts by
the estate and the counter party during the period prior to the estate's
election to perform or breach the contract. | Author "strongly endorse[s] the views expressed in Professor
Westbrook's memorandumof 2/27/97. "Temporary performance orders
would provide all counter parties with a dimensionof fairness and
certainty presently lacking by requiring a better balancing of the
interests of the parties." |
NBRC-
0545 | Kurt F. Gwynne & Linda M. Zimmermann | Attorneys |
| 365 | 362, 108 | Authors submit a 47 page memorandum discussing suggested areas of
study for proposed amendments to § 365 of the Bankruptcy Code
regarding Executory Contracts and Unexpired Leases. |
|
NBRC-
0633 | Leslie J. Polt | Attorney |
| 365(b)(2)(D) |
| A question of interpretation
exists with regard to § 365(b)(2)(D), which provides an exception
to the need to cure defaults in an executory contract before the debtor
or trustee can assume or assign an executory contract. The question is
whether the language of the provision exempts the debtor from having to
perform only "penalty provisions" or whether it relieves the
debtor of the obligation to cure all defaults that do not involve the
payment of money. The latter interpretation has been adopted by at
least one court, and it is this interpretation that the author objects
to as being unfair, in that it gives the debtor the right to resurrect a
contract that was, for all intents and purposes, cancelled prepetition
due to the debtor's nonmonetary, noncurable
defaults. | Author requests that the
Commission give serious consideration for a greater balancing of the
equities between debtor and non-debtor parties to executory contracts
in the application of §365(b)(2)(D). |
NBRC-
0668 | International Council of Shopping Centers |
|
|
| 365 | ICSC feels that the suggested deletion of
"executoriness" and the "material breach" tests
would "completely resontruct the fundamentals of bankruptcy
contract law" and would not help matters, but in fact cause further
confusion. | Do not delete the test of
"executoriness" and "material breach" from section
365. |
NBRC-
0668 | International Council of Shopping Centers |
|
|
|
| ICSC objects to the proposed substitution of the new concept of
"election to breach" in place of the concept of
"rejection". ICSC feels that such a change would not
materially clarify the concept expressed. Instead of reducing the
amount and complexity involving a debtor's decision to reject a
prepetition contract, which at the present plays out against a backdrop
of fairly well-developed case law, the suggested revieion will
necessarily result in a glut of new litigation as the courts struggle to
delineate the consequences of a debtor's election to
breach. | Do not substitute the concept of
"election to breach" for the current concept of
"rejection". |
NBRC-
0668 | International Council of Shopping Centers |
|
| 365 | 544, 547,
548 | "Professor Westbrook rightly
eschews a debtor's use of the rejcetion power to avoid a pre-petition
grant of "dominion over a specific asset," where the avoidance
of the transfer could not be achieved under sections 544, 547 or 548 of
the Bankruptcy Code, and certainly most bankruptcy participants would
agree that contract rejection may not be employed in bankruptcy to avoid
rights in property created by the contract. ICSC believes, however,
that the vast majority of the opportunities to use rejection as an
acoiding pposer have been foreclosed by sections 365(h) and (n), and
that any revision to clarify that rejection is not an avoiding power
should leave untouched such "special interest" remedial
provisions." | "Rejection is clearly
not an avoiding power and section 365 might prudently be amended to so
state but the "Special Interest" provisions of that Section
should not be deleted." |
NBRC-
0668 |
International Council of Shopping Centers |
|
|
|
|
"Although Professor Westbrook believes that
temporary performance and interim protectin orders will somehow make the
assumption/rejection process more"fair," it is clear that any
such orders will most surely involve the revision of contact [sic} terms
to the detriment of the non-debtor party. ICSC would object to any new
provision of the Bankruptcy Code which would undermine the protections
afforded non-debtor parties to executory contracts and unexpired leases
under sections 365(d) (3) and 365(d) (10) of the Bankruptcy
Code. |
|
NBRC-
0668 |
International Council of Shopping Centers |
|
|
|
|
ICSC has "no particularly strenuous
objection" to clarifying the option of "assumption" if
the intent is to clarify that an "election to perform" and
subsequent assignment releases the debtor of the continuing obligations
under the assigned contract, or that the "election to perform"
is not contingent upon an additional finding that the contract would be
assignable under nonbankruptcy law. "ICSC does, however, echo the
concerns set forth in the "Competing Considerations" section
of the proposal that the concepts of "assumption" and
"assignment" have been less problematic than the concept of
"rejection" and that the change in terminology will almost
inevitably result in additional and unnecessary
litigation." |
"ICSC submits that the concepts of
"assumption" and "assignment" are not so far broken
as to compel a legislative fix at this time." |
NBRC-
0838 |
Howard S. Harris |
Representative of American Automobile Manufacturers
Association from Ford |
Copy of In re Claremont Acquisition Corporation, Inc.,
1997 WL 236, 282 at p. 3 (9th Cir. Cal.) |
365 |
| AAMA is not pleased with legislation proposed in
the House because they would allow the assumption of executory contracts
upon the cure of monetary defaults only. Contracts between automobile
manufacturers and their dealers include many other provisions, and
dealers may be in breach of non-monetary clauses which could render them
incapable of operating under law, or which could harm the reputation of
the manufacturer if they were allowed to continue doing business. AAMA
prefers the holding of the 9th Circuit Court of Appeals in In re
Claremont Acquisition Corporation that "in genreal, a debtor must
cure all defaults, both monetary and non-monetary, prior to the
assumption and assignment of an executory contract." |
The NBRC should: a) recommend at the earliest possible
date that Congress not take action on the changes to § 365(b)(2)
that are currently pending before the House; and b) include in its final
recommendations to Congress a recommendation that in addition to
providing adequate assurances of future performance, a debtor must cure
all non-monetary defaults under an executory contract before that
contract can be assumed. |
NBRC-
1132 | William J. Perlstein | Attorney,
Wilmer, Cutler & Pickering | "The
Progress of Executory Contracts in Bankruptcy: Countryman to Andrew to
Westbrook" |
|
| Author is forwarding a short
paper which he prepared for a seminar he did in September, 1994, which
discusses the evolution of executory contract theories from Professor
Countryman to Mike Andrew to Professor Westbrook. | N/A |
NBRC-
1174 | Preston T. Towber | Attorney, Hirsch
& Westheimer |
| 365(d)(3) |
| Author writes to Judge Jones to express his problem with the
proposed revisions to §365. Author is particularly concerned with
how it affects residential real property leases. "This section has
not been interpreted consistently by the bankrutpcy courts and needs
more teeth put into it." | "I think
the statute should be written as requiring timely performance,
specifically stating that the monthly rate is presumed valid and
requiring the Debtor to go to court to relieve it of this requirement
within ten days of the filing date." |