The principal debtor’s authority to hire, assign or reject leases and performance contracts that have not expired prior to plan approval cannot be derived. A person who is not a lease or contract debtor may fix a time prior to confirmation during which the hire, assignment, or abandonment must take place. The filing of an Order of Confirmation by the Bankruptcy Court will constitute an injunction against approving hypotheses, hiring, and appointments or rejecting expired executive agreements or leases, as provided in the plan, on the list of rejected executive and non-expired leases.
The Bankruptcy Code provides that a contract can only be entered into or rejected if it is a performance contract or a lease that has not yet expired, subject to the approval of the bankruptcy court, and subject to certain limitations1. If the contract or lease was terminated prior to the Bankruptcy Filing Date, otherwise referred to as the Effective Date, she will have no executive powers and cannot be hired or rejected. When a debtor files for bankruptcy, certain enforceable contracts, such as expired real estate leases, may be entered into or rejected as part of the bankruptcy proceedings.
Although bankruptcy powers to accept or deny leases on the expired property are not unlimited, these powers serve the primary purposes of bankruptcy law, which is to give the debtor a fresh financial start and maximize the value of the estate for the benefit of creditors. If the lease on immovable property has not expired and is, in any event, enforceable, the debtor holding the property or the trustee in charge of managing the bankruptcy estate may hire or refuse him.
If the Chapter 7 bankruptcy trustee declines a personal property lease, you will have the right to accept it yourself, provided you give the creditor written notice and the creditor agrees. If the lease or contract will generate funds for your unsecured creditor (creditor whose debt is unsecured) and the court agrees to hire him, the Chapter 7 bankruptcy trustee will hire him; otherwise, after 60 days, it will be deemed a refusal.« Back to Glossary