Assigning An Executory Contract In A Chapter 11 Business Bankruptcy

There are times in a Chapter 11 case when the debtor wishes to assign a contract or lease to a third party.  The debtor, for example, may not be able to continue performing on the contract but may want to continue to see the contract or lease honored.  The first step in this process is for the debtor to assume the contract in accordance with Chapter 11 procedure.

Once this has been done, the debtor would need to provide some assurance of future performance of the contract by the person to whom the contract has been assigned.  This may be done by providing financial information about the assignee that demonstrates the ability to perform the contract, or, in the case of a default, the ability to compensate the other party to the contract in some meaningful way.

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