“All Obligations”: The Consequences of Rejecting a Commercial Lease in Bankruptcy

11 U.S.C. § 365 grants a bankruptcy trustee or debtor in pos-session the power to reject executory contracts and unexpired commercial leases. Subsection (d)(3) specifies that, while the bankrupt party is deciding to assume or reject a lease, the trustee must “timely perform all the obligations of the debtor” under the lease. This subsection has given rise to significant litigation when a debtor opts to reject their lease in the middle of a rental period, particularly where the lease makes the entire period’s rent due in advance on the first day of the period. The landlord and bankrupt parties in this situation disagree about what a bankrupt party is obligated to pay: the entire rent for the final rental period or a prorated cost that covers the period prior to the rejection. However, the plain text of the statute only embraces the former interpretation. Beyond the clear textual basis, additional interpretive resources like the statutory purpose and preferable policy outcomes also align with this interpretation, resulting in an undeniable interpretation in favor of landlords.

Automatic Repeal? The Automatic Stay and the Federal Arbitration Act in Bankruptcy Proceedings

While the Bankruptcy Code’s automatic stay halts actions against debtors who have declared bankruptcy, the Federal Arbitration Act (“FAA”) may nonetheless require debtors to resolve disputes with their creditors in arbitration. In this Contribution, Lorenzo Villegas (’22) argues that the passage of 11 U.S.C. § 362 and related judicial code provisions does not impliedly repeal the Federal Arbitration Act (“FAA”). Therefore, arbitration agreements between creditors and debtors who have filed a Chapter 11 bankruptcy petition are valid and enforceable in the face of the Bankruptcy Code’s automatic stay in some circumstances.

Lost at (c): Making Sense of § 362(c)(3)(A)’s Ambiguous “With Respect to Debtor” Language

The automatic stay, which prevents collections against debtors, is perhaps the most important part of bankruptcy law. In 2005, Congress created a limitation on the automatic stay: 11 U.S.C. § 362(c)(3)(A). The text of the new provision is not clear, and can lead to two interpretations. The text relies on odd phrasing: “with respect to the debtor.” The minority view is that the automatic stay should terminate for both the debtor and the debtor’s estate. The majority view is that the statute terminates the automatic stay only for the estate. In this Contribution, Lucas Knoll (’22) argues that the minority view’s understanding of “with respect to the debtor” should be adopted.

One Means One: The “Per Plan” Approach to Section 1129(a)(10)

Negotiating a plan of reorganization is the most consequential aspect of a Chapter 11 bankruptcy process for both debtors and creditors. The balance of power in that negotiation process is principally defined by the requirements for voting and plan approval which are laid out in section 1129(a) of the Bankruptcy Code. Courts are divided as to whether, in a case where a class of claims is proposed to be impaired under a joint, multidebtor plan, section 1129(a)(10) of the Bankruptcy Code re-quires acceptance from at least one impaired class of claims of any one debtor (the “per plan” approach) or, alternatively, acceptance from one impaired class of claims of each debtor (the “per debtor” approach). In this Contribution, Elaine Andersen ('21) argues that the “per plan” approach better comports with the text, context, and purpose of the section.

Two Swords for Bankruptcy’s Gordian Knot: Making Sense of Section 365

Observers generally agree that the assumption of executory contracts by debtors in possession in Chapter 11 proceedings promotes the purposes of the Bankruptcy Code and accords with Congress’ intent. Yet courts have been riven by the question of whether the plain text of section 365 allows the practice. This Contribution argues that courts forbidding assumption of executory contracts by debtors in possession have misdirected the focus of their textual analysis. Close examination of an overlooked phrase within section 365 and of the interactions between sections 365 and 1107 provides two independent textual bases for courts to read the Code in keeping with congressional intent.

The Buck Stops Here: The Limits of Bankruptcy Court Jurisdiction Post-Confirmation

May bankruptcy courts assume “related to” jurisdiction under 28 U.S.C. § 1334(b) over a post-confirmation successor liability suit when the estate’s assets have already been disbursed? Michael Murray (’17) examines this question, based on his experience at the 2016 Duberstein Moot Court Competition, sponsored by St. John’s University School of Law. His Contribution analyzes the legal landscape of “related to jurisdiction” in bankruptcy courts. Ultimately, the Contribution proposes that the Seventh Circuit has adopted the clearest interpretation of the statute and reasonably limits “related to” jurisdiction to disputes in which either the debtor is a party or the dispute affects the amount or distribution of the debtor’s estate.