Essay: Bankruptcy Provisions

Sample Essay

One more important reason for which this termination cannot be enforced is that it can only be enforceable if the bankruptcy is filed for in actual. If the contract already mentions that the contract will be terminated in case of insolvency then this termination is possible. However, if the bankruptcy is headed for and the factual clause is not made an element of the unique conformity, then the contract cannot be finished even in the case of bankruptcy.

“Parties include termination on bankruptcy provisions in contracts all the time, despite the general rule making them unenforceable in bankruptcy” (George and Chattopadhyay). Unluckily, most of them do so without understanding that the proviso may be unsuccessful, and that can lead to problem. If implementing an ipso facto clause is significant to any of the party’s agreements, particularly if you also look forward to the most difficult deterioration of intellectual assets or other privileges ahead of this execution of the contract.

Some of the very common contracts which are eligibly terminated in Chapter 11 insolvency comprise of “unsecured loans, union contracts, supply or operating contracts and real estate leases” (George and Chattopadhyay). The latter is eligible only if abandoning these agreements will be monetarily constructive to the business. After the filing of Chapter 11, it may take about a few months or maybe more than a year, for the company to get out of its insolvency.

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