Supply Contract Trumps Preference

more+
less-

Almond Products, Inc. A Supply contract may be an absolute defense to a preference claim. A supply contract is an “executory contract”, a bankruptcy term meaning a contract where both parties to the contract owe material performance obligations. In furtherance of the Chapter 11 policy of restructurings, the Bankruptcy Code provides that a debtor may, in its discretion, assume or reject an executory contract.

If the debtor elects to reject an executory contract, the resulting damage claim, including the unpaid pre-petition invoices, are deemed to be a general unsecured claim. Experience indicates that such claims often have little value, so rejecting a contract is a cheap and easy for the debtor.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Shumaker, Loop & Kendrick, LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×