Document Type
Research Memorandum
Publication Date
2025
Abstract
(Excerpt)
Under section 365 of Title 11 of the United States Code (the "Bankruptcy Code"), a trustee or a debtor in possession may "reject" an executory contract. Rejection results in a breach of contract. Courts consider non-bankruptcy contract law to determine the impact of the breach on the executory contract. In general, rejection does not undo a party’s past performance or exercise of rights under the contract. Instead, it relieves a debtor from its future obligation to perform.
Part I of this Article explains the different approaches to defining "executory contract." Part II of this Article elaborates on a trustee and debtor in possession’s power to reject an executory contract in a bankruptcy case. Part III of this Article discusses the consequence of rejection. Part IV of this Article addresses rejection’s impact on past performance and exercise of rights under the contract