• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Harvard Law School Bankruptcy Roundtable

Harvard Law School Bankruptcy Roundtable

  • Blog
  • About Us
  • Coverage-in-Depth
    • Crypto-Bankruptcy
    • Purdue Pharma Bankruptcy
    • Texas Two-Step and the Future of Mass Tort Bankruptcy
  • Subscribe
  • Show Search
Hide Search

Courts in Puerto Rico Case Adopts Alternative Test to Find Settlement Agreements Were Executory

By John Beck and Jennifer Lee (Hogan Lovells)

John Beck
Jennifer Lee

A debtor can elect to either assume or reject an executory contract under section 365 of the Bankruptcy Code. Because the Bankruptcy Code does not define “executory”, courts have historically overwhelmingly applied the “Countryman” test – which asks whether the contract parties have remaining unperformed obligations such that the failure of either party to complete performance would constitute a material breach of the agreement – to determine if a contract is executory.  In a recent decision, however, Judge Laura T. Swain, the district court judge presiding over the 2017 Puerto Rico Oversight, Management, and Economic Stability Act proceedings, declined to utilize the Countryman test and adopted the alternative “functional approach” to determine whether the agreements at issue were executory. The “functional approach” focuses on the post-petition benefit to the debtor from assumption or rejection of a contract instead of the pre-petition obligations under the contract.  The decision is the latest among a string of recent cases that have relied on non-Countryman tests to determine whether a contract is executory, with the “functional approach” emerging as the prevailing alternative. Read the full article here.

Written by:
Editor
Published on:
September 28, 2021

Categories: Statutory InterpretationTags: 365, Bankruptcy, Chapter 11, Hogan Lovells, Jennifer Lee, John Beck

Primary Sidebar

Categories

Recent Posts

  • Chapter 15 Case Demonstrates Its Effectiveness as an Expedient Judicial Solution for Singaporean Insolvencies in the United States May 13, 2025
  • Do Rights Offerings Reduce Bargaining Complexity in Chapter 11? May 6, 2025
  • Rockville Centre Case Offers a Framework for Settling Mass Tort Bankruptcy Claims Post-Purdue April 29, 2025

View by Subject Matter

363 sales Anthony Casey Bankruptcy Bankruptcy administration Bankruptcy Courts Bankruptcy Reform Chapter 11 Chapter 15 Claims Trading Cleary Gottlieb Comparative Law Corporate Governance COVID-19 cramdown David Skeel Derivatives DIP Financing Empirical FIBA Financial Crisis fraudulent transfer Jared A. Ellias Jevic Johnson & Johnson Jones Day Mark G. Douglas Mark Roe plan confirmation Priority Purdue Pharma Purdue Pharma bankruptcy restructuring Safe Harbors Schulte Roth & Zabel Sovereign Debt SPOE Stephen Lubben Structured Dismissals Supreme Court syndicated Texas Two-Step Trust Indenture Act Valuation Weil Gotshal Workouts

Footer

Harvard Law School Bankruptcy Roundtable

1563 Massachusetts Ave,
Cambridge, MA 02138
Accessibility | Digital Accessibility | Harvard Law School

Copyright © 2023 The President and Fellows of Harvard College

Copyright © 2025 · Navigation Pro on Genesis Framework · WordPress · Log in