Executory Contracts With Multiple Personalities

Law360, New York (November 14, 2011, 3:07 PM EST) -- Rejection of a contract in bankruptcy may not always accomplish a debtor’s goal to shed ongoing contractual obligations and liabilities, especially when dealing with employee benefit plans.

On Oct. 13, 2011, the Fifth Circuit Court of Appeals highlighted this issue in its opinion in Evans v. Sterling Chemicals Inc.[1], regarding the treatment of a pre-bankruptcy asset purchase agreement which contained a provision addressing the debtor-acquirer’s post-closing Employee Retirement Income Security Act retiree benefit plan obligations to its new employees resulting from the transaction.

Several years before...
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