About the Course
Introduction
This CLE course will consider the rights, obligations, and negotiating posture of a contract counterparty following the rejection of that contract under Bankruptcy Code Section 365. The panel will also offer practical guidance for structuring and drafting agreements to maximize leverage in the event of a future insolvency or bankruptcy by one of the parties to the contract.
Description
It is not always clear whether a contract is in fact executory for purposes of Section 365. Although the Countryman test predominates, it is not the only way to determine "executoriness." Settlement agreements and options can be particularly thorny. In re Svenhard's Swedish Bakery, 154 F.4th 1100 (9th Cir. 2025), expanded the definition of the statutory exclusion for "financial accommodations." Applying these tests may produce unexpected results.
It is now well-settled that the debtor's rejection of an executory contract under Bankruptcy Code Section 365 operates as a breach, not a termination, of the contract and that "all the rights that would ordinarily survive a contract breach ... remain in place." Mission Prod. Holdings Inc. v. Tempnology L.L.C., 139 S. Ct. 1652 (2019). The non-debtor contracting counterparty can decide whether to continue performing and maintain the vested property rights granted under that contract, or stop performing and give up or return to the debtor those vested property rights. How this plays out in IP-related contracts, options, oil and gas leases that convey real property rights, contracts involving restrictive covenants, and more is not always straightforward.
Listen as this experienced panel reviews how Section 365 operates when the non-debtor party has vested rights and strategies for maximizing them.
Presented By
Mr. Gotaskie represents individuals, partnerships and companies in diverse legal matters including complex commercial litigation, bankruptcy litigation and franchising issues. He represents both franchisors and franchisees in litigation and general corporate matters, including advice respecting franchise disclosure documents, franchise agreements and related contracts. Mr. Gotaskie is the editor of the firm's Franchise Law Update blog, which highlights not only the regulatory aspects of franchising but also diverse topics such as business finance, employment, litigation and the protection of IP. He also regularly speaks on a variety of legal topics.
Mr. Tractenberg is a skilled international litigator who handles complex business disputes involving intellectual property, licenses, business torts and insolvency issues. He regularly structures new franchise programs, many of which are international. Mr. Tractenberg also defends and enforces franchise agreements. He has also served as special counsel to franchise companies.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Monday, August 3, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. Overview of statutory framework for contract rejection under Section 365(g)
II. How the principle of “rejection as breach" operates
A. Options
B. Oil and gas
C. Debtor as licensee or grantee
D. Debtor's post-rejection obligations
III. Strategies for counterparties
The panel will review these and other pivotal issues:
- What types of vested rights and options do counterparties have?
- How can counterparties improve their positions in bankruptcy?
- Could the breaching party (the debtor) use "rejection as a breach" to enable the debtor to retain benefits without assuming contracts?
- Does the analysis change if the debtor is the party that holds the vested right, such as being the licensee and not the licensor?
