Is A Franchise Agreement An Executory Contract

Since the time between the filing of the case and the confirmation of a Chapter 11 plan is several months or even years, the non-custodian party of the contract of performance may apply to the court for the debtor or agent to be compelled to accept or refuse the contract of performance. Where proceedings have been ongoing for a long time, particularly where there is no direct prospect of confirmation of a plan, the court is more inclined to compel the debtor to decide whether or not to accept a contract of performance. Although a Chapter 11 debtor is required to pay all operating costs incurred in carrying on its business after the filing of the case, the court is more likely to impose a decision if the debtor is not kept informed of the costs incurred under the agreement since the case was filed. Your franchisee goes bankrupt; Is this good news or bad news? This may depend either on whether the debtor wishes to maintain the deductible or whether he plans to release it. The Bankruptcy Code contains specific rules on how a debtor can deal with this type of agreement where it was concluded before the declaration of insolvency and remains in force at the time the case is filed. Bankruptcy law contains many different provisions of federal insolvency law, including preferences, fraudulent transfers, debt priorities, asset sales, and reorganization plans. However, it is also routine for matters in an insolvency case to be governed by national law or by federal non-bankruptcy law, such as infringement, fiduciary duties, deposit priorities and trademark law, as provided for in the Federal Lanham Act. The main actors in a Chapter 11 insolvency case are the debtor (the party filing the bankruptcy), the United States agent (a member of the Department of Justice responsible for enforcing bankruptcy law), the official committee of unsecured creditors (a group of five to seven unsecured creditors appointed in major to medium cases and intended to speak for the entire unsecured class of creditors), and secured and unsecured creditors. As noted at the beginning of this chapter, bankruptcy and insolvency issues in the United States can be confusing for those who are not yet familiar with these concepts. However, a handful of snacks can provide a practical guide to everyday life. First, and very simply: bankruptcy changes things. Rights and remedies, which are fully permissible and enforceable outside bankruptcy, may be delayed or even unenforceable as soon as insolvency proceedings have been filed. In addition, non-debtor parties should comply with the automatic suspension.

Automatic suspension applies to the debtor`s assets that are located anywhere in the world and bankruptcy courts have little patience for parties who ignore the restrictions….