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Paralegal Exam Prep

Category - Miscellaneous

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How are executory contracts treated in a Chapter 11 bankruptcy proceeding?

They are performed.
They are performed, unless they require payment from the bankrupt company.
The trustee always rejects them.
The trustee may reject them.
It they involve leases, the trustee rejects them.

Explanation

Answer: D. In a Chapter 11 bankruptcy proceeding, the trustee may reject an executory contract. If it is in the bankruptcy estate's best financial interest, an executory reject would be rejected. An executory contract is a contract that is yet to be performed.

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