Issue link: https://mbozikis.ufcontent.com/i/1422521
99 According to Section 365(b) of the Bankruptcy Code, a trustee may not assume an executory contract or lease on which there has been a default unless the trustee: (i) cures the default or provides adequate assurance that the default will be promptly cured; (ii) compensates or provides adequate assurance that the trustee will promptly compensate the other party for any actual pecuniary loss to the party resulting from the default; and (iii) provides adequate assurance of future performance under the contract or lease. 11 U.S.C. § 365(b). Section 365(b)(1)(A) provides, however, that a trustee need not cure, prior to assumption, a nonmonetary default under an unexpired lease of nonresidential real property if it is impossible for the trustee to cure such default at and after assumption, unless the default relates to a failure to operate in accordance with the lease. Furthermore, the cure requirements of Section 365 do not apply to defaults relating to the debtor's insolvency or financial condition or to penalty provisions triggered by nonmonetary defaults. 11 U.S.C. § 365(b)(2)(A)–(D). c. Rejection If a trustee determines that assumption of an executory contract or unexpired lease is not in the debtor's best interest, it may instead decide to reject such contract or lease. If a contract or lease is rejected, such rejection is generally considered a prepetition breach, and the non-breaching party will obtain an unsecured claim for damages arising as a result of the breach. 11 U.S.C. § 365(g). However, rejection, under Section 365(g), is not deemed to cause a termination of the contract. See, e.g., Doral Commerce Park, Ltd v. Teleglobe Commc'ns Corp. (In re Teleglobe Commc'ns Corp.), 304 B.R. 79 (D. Del. 2004). 51 51 The Supreme Court affirmed the notion that a debtor cannot use rejection as means to unilaterally terminate an agreement, holding that "a debtor's rejection of an executory contract in bankruptcy has the same effect as a breach outside bankruptcy." Mission Prod. Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652, 1666, 203 L. Ed. 2d 876 (2019) (while the case dealt with a trademark license, the Court made clear that the holding applied to rejection of all executory contracts.)