{"id":636,"date":"2016-02-22T23:52:11","date_gmt":"2016-02-23T04:52:11","guid":{"rendered":"http:\/\/www.michaelsmithlaw.com\/blog\/?p=636"},"modified":"2023-11-28T13:37:31","modified_gmt":"2023-11-28T18:37:31","slug":"llc-interests-members-bankruptcy-part-iv","status":"publish","type":"post","link":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/","title":{"rendered":"LLC Interests and a Member’s Bankruptcy, Part IV"},"content":{"rendered":"

[The other articles in this seven-part series are here: \u00a0Part I<\/a>,\u00a0Part II<\/a>, Part III<\/a>, Part V<\/a>, Part VI<\/a>, Part VII<\/a>.]<\/p>\n

Although a bankruptcy debtor\u2019s contract rights are within the definition of property of the estate under Section 541 of the Bankruptcy Code<\/a>, they are different than most other property of the estate because they represent both a potential asset and a potential liability. As such, they are potentially subject to Section 365<\/a>, dealing with executory contracts.\u00a0 An executory contract is one in which some of debtor\u2019s obligations under the contract remain to be performed and<\/u> some obligations owed to the debtor by another party remain to be performed. The\u00a0unperformed obligations must be significant enough that failure to perform them would constitute a material breach of the contract.<\/p>\n

If a contract is executory, the bankruptcy trustee has two choices under Section 365:\u00a0 to assume the contract or to reject it.\u00a0 In many cases, after assuming an executory contract, the trustee will assign it to a third party in exchange for consideration (i.e., payment of money that is added to the bankruptcy estate).\u00a0 However, the trustee may assume and assign an executory contract only if two conditions are fulfilled:\u00a0 (1) any breaches of the contract on the part of the debtor must be cured and (2) the assignee who takes over the contract must be capable of performing the debtor\u2019s obligations.\u00a0 Generally, any contract provisions that prohibit the assignment are void, but there are exceptions.\u00a0 For example, if another party to the contract to whom the debtor owes obligations has the right to refuse performance by anyone other than the debtor, the contract cannot be assumed and assigned over the objection of that party.<\/p>\n

Continue reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

[The other articles in this seven-part series are here: \u00a0Part I,\u00a0Part II, Part III, Part V, Part VI, Part VII.] Although a bankruptcy debtor\u2019s contract rights are within the definition of property of the estate under Section 541 of the Bankruptcy Code, they are different than most other property of the estate because they represent […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-636","post","type-post","status-publish","format-standard","hentry","category-limited-liability-companies"],"yoast_head":"\nLLC Interests and a Member's Bankruptcy, Part IV — Indiana Business Law Blog — February 22, 2016<\/title>\n<meta name=\"description\" content=\"Although a bankruptcy debtor\u2019s contract rights are within the definition of property of the estate under Section 541 of the Bankruptcy Code, they are — February 22, 2016\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Michael R. Smith\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"LLC Interests and a Member's Bankruptcy, Part IV — Indiana Business Law Blog — February 22, 2016","description":"Although a bankruptcy debtor\u2019s contract rights are within the definition of property of the estate under Section 541 of the Bankruptcy Code, they are — February 22, 2016","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/","twitter_misc":{"Written by":"Michael R. Smith","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/#article","isPartOf":{"@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/"},"author":{"name":"Michael R. Smith","@id":"https:\/\/www.hpindiana.law\/business-blog\/#\/schema\/person\/22651dd1a387f83ca7560f7eba353e29"},"headline":"LLC Interests and a Member’s Bankruptcy, Part IV","datePublished":"2016-02-23T04:52:11+00:00","dateModified":"2023-11-28T18:37:31+00:00","mainEntityOfPage":{"@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/"},"wordCount":553,"articleSection":["Limited Liability Companies"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/","url":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/","name":"LLC Interests and a Member's Bankruptcy, Part IV — Indiana Business Law Blog — February 22, 2016","isPartOf":{"@id":"https:\/\/www.hpindiana.law\/business-blog\/#website"},"datePublished":"2016-02-23T04:52:11+00:00","dateModified":"2023-11-28T18:37:31+00:00","author":{"@id":"https:\/\/www.hpindiana.law\/business-blog\/#\/schema\/person\/22651dd1a387f83ca7560f7eba353e29"},"description":"Although a bankruptcy debtor\u2019s contract rights are within the definition of property of the estate under Section 541 of the Bankruptcy Code, they are — February 22, 2016","breadcrumb":{"@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.hpindiana.law\/business-blog\/llc-interests-members-bankruptcy-part-iv\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.hpindiana.law\/business-blog\/"},{"@type":"ListItem","position":2,"name":"LLC Interests and a Member’s Bankruptcy, Part IV"}]},{"@type":"WebSite","@id":"https:\/\/www.hpindiana.law\/business-blog\/#website","url":"https:\/\/www.hpindiana.law\/business-blog\/","name":"Indiana Business Law Blog","description":"Published by Indianapolis Corporate Attorneys \u2014 Harshman Ponist Smith & Rayl, LLC","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.hpindiana.law\/business-blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.hpindiana.law\/business-blog\/#\/schema\/person\/22651dd1a387f83ca7560f7eba353e29","name":"Michael R. Smith","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/095342975260becd46df795933b96309ce26cc246013b9675f2ebfbfb15aeb88?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/095342975260becd46df795933b96309ce26cc246013b9675f2ebfbfb15aeb88?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/095342975260becd46df795933b96309ce26cc246013b9675f2ebfbfb15aeb88?s=96&d=mm&r=g","caption":"Michael R. Smith"}}]}},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/posts\/636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/comments?post=636"}],"version-history":[{"count":1,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/posts\/636\/revisions"}],"predecessor-version":[{"id":2202,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/posts\/636\/revisions\/2202"}],"wp:attachment":[{"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/media?parent=636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/categories?post=636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hpindiana.law\/business-blog\/wp-json\/wp\/v2\/tags?post=636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}