Thoughts From the BAP on How to (re)Define an “Executory Contract”January 18, 2018 – Article
Making a quiet entrance into the public realm during the final week of last year, a new opinion from the United States Bankruptcy Appellate Panel of the Ninth Circuit (the “BAP”) suggests that it is time to revisit the definition of an “executory contract” as has been applied for years by the United States Court of Appeals for the Ninth Circuit. The opinion, Carruth v. Eutsler (In re Eutsler), B.A.P. 9th Cir. December 27, 2017, is careful to follow the Ninth Circuit’s holding in Unsecured Creditors’ Comm. v. Southmark Corp. (In re Robert L. Helms Constr. & Dev. Co.), in deciding an appeal which turned on whether or not a shareholders’ agreement that contained a buy-out mechanism was executory or not. But the new BAP opinion lingers on a discussion of how and why that long-relied-on authority should be revisited.