Executory Contracts and Leases in Bankruptcy: Strategies for Non-Debtors

Description

In the current economic climate, savvy counsel should begin preparing for the next cycle by taking concrete steps and developing actionable strategies to protect their clients' positions under long-term contracts against the risk that their customers, suppliers, trading partners, or other contract counterparties may face financial difficulties and file for bankruptcy during the next economic downturn.

By anticipating and preparing for the possibility of insolvency--whether in the near or distant future--non-debtor parties will be in a better position to protect their interests and maximize their recovery in any potential bankruptcy proceeding. And during each stage of the process, from the initial lease or contract drafting to the debtor's pre-bankruptcy financial difficulty and ultimate bankruptcy, various strategies are available to protect the non-debtor's interests under a lease or executory contract.

Specific drafting practices can enhance the position or improve a client's recovery if its contract counterparty ends up in bankruptcy. Similarly, if it becomes apparent that a party is facing financial difficulty and a bankruptcy filing seems likely, there are proactive and preventive measures the non-debtor can take to strengthen its position under the contract. And even during bankruptcy, the non-debtor has several innovative ways it can protect its interests during this period.

Listen as our panel of seasoned bankruptcy counsel discusses strategies, insights, and practical tips for protecting non-debtor client interests regarding executory contracts and leases with financially troubled counterparties both before and during bankruptcy proceedings.