Non-Debtor Contract Counterparties in Bankruptcy

What happens when a counterparty seeks protection from the risks in continued performance under a contract with a debtor in bankruptcy.

34 minute read February 25, 2013 at 10:28 AM

Adam L. Rosen And Christopher J. Rubino

Non-Debtor Contract Counterparties in Bankruptcy

Bankruptcy Code section 365 primarily concerns whether a debtor-in-possession or trustee may assume or reject executory contracts and unexpired leases (collectively, the “Contracts”) for the benefit of the estate, but the section often places the counterparties to those Contracts in the precarious position of being required to perform while running the risk that a debtor or trustee might not do so.

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