This article focuses on a recent case from the Bankruptcy Court for the District of Delaware that allowed the debtor to assume a license agreement while simultaneously rejecting other agreements with the licensor.
Among the many tools the Bankruptcy Code provides a debtor in bankruptcy is the ability to assume and reject executory contracts and unexpired leases. This powerful tool is not without limits, however. Among other things, it is an "all or nothing" proposition—a debtor must assume or reject the entire agreement. It cannot assume or reject only portions of the agreement. This rule ensures that a debtor must assume or reject the benefits of the contract with the burdens, "cum onere."
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Originally published by Pratt's Journal of Bankruptcy Law, June 2014.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.