Circuit Court Ruling on Nonmonetary Defaults Sets Up Conflict Over Bankruptcy Code

A recent circuit court decision regarding the interpretation of section 365 of the Bankruptcy Code has set up a conflict between two circuits. On March 15, 2004, the Court of Appeals for the First Circuit issued an opinion regarding whether bankruptcy debtors are required to cure nonmonetary defaults prior to assuming unexpired leases under section 365 of the Bankruptcy Code, 11 U.S.C. &sect;365. <i>In re Bankvest Capital Corp. (Eagle Insurance Co. v. Bankvest Capital Corp.)</i>, 360 F.3d 291 (1st Cir. 2004). The First Circuit found &mdash; expressly contrary to a holding of the Ninth Circuit Court of Appeals &mdash; that debtors are not required to cure such defaults, resulting in a split in the circuits over a very widely used section of the code.

22 minute read May 01, 2004 at 04:21 PM

By

Jay L. Gottlieb And Arianna Frankl