Performance Anxiety: The Nondebtor's Dilemma Under Section 365

Norton Bankruptcy Law Advisor, Issue No. 5, May 2009

5/1/2009

Robert C. Goodrich, Jr.

Robert C. Goodrich, Jr.
A current commercial warns us that "life comes at you fast." When a debtor files a Chapter 11 case, a flurry of activity ensues, part of which is often the debtor-in-possession's attempt to cajole or compel continued performance by nondebtors who have been providing goods or services to the debtor prepetition. Counsel for the nondebtor will experience "life comes at you fast" as the client responds to what ranges from friendly overtures to threats of annihilation by debtor's counsel, who is trying to keep the debtor on life support as it attempts to reorganize or at least survive until a § 363 sale.

In order to represent the nondebtor client competently in this context, counsel must, before the crisis arises, understand the law in this area and be prepared to consider a number of cross-currents without having much time.

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