Troutman Pepper's Creditor’s Rights Toolkit is a series that provides practical insights to help creditors confront the challenges of commercial bankruptcy.

An executory contract is a contract where both parties have significant ongoing obligations. In a bankruptcy case, the debtor can either retain the contract (and cure any default) or reject it, with rejection treated as a pre-petition breach and any damages becoming a general unsecured claim. It’s crucial for the contract counterparty to work with experienced bankruptcy counsel to understand leverage points, review cure claims, demand clarity for adequate assurance, and file a timely claim in case of contract rejection.

This article discusses what may happen to your executory contract during a bankruptcy case.