Abstracts » Law

Section 365 of the Bankruptcy Code: when the words get in the way

Article Abstract:

The author discusses conflicting interpretations of the Bankruptcy Code's section 365 in regards to the assignment of executory contracts, focusing on the impact to reorganizing high technology companies.

High technology industry

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Reconciling sections 365(c)(1) and (f)(1) of the Bankruptcy Code: should anti-assignment laws prohibit assumption of contracts by a debtor in possession?

Article Abstract:

Bankruptcy Codes sections 365(c)(1) and 365(f)(1) lead to confusion and litigation by allowing debtors in possession to assume and assign executory contracts while simultaneously prohibiting assumption in the face of anti-assignment laws. The West test prevents assumption of such contracts if existing anti-assignment laws prohibit hypothetical assignments, but this decision has been heavily criticized by subsequent courts. Although several courts have attempted to reconcile the contradictions between the two sections, legislative amendments are required.

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The "new value" exception: myth or reality after Bank of America National Trust & Savings Association v. 203 N. LaSalle Street Partnership?

Article Abstract:

The authors discuss the Supreme Court's holding in Bank of America v. 203 N. LaSalle St. Partnership that old equity holders could not be the exclusive participants in a 'new value' bankruptcy reorganization plan where the creditors objected. The question of whether the 'new value' exception to the 'absolute priority rule' will survive is analyzed.

Stockholders, Priorities of claims and liens

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