Assessing the Impact of 2026 Filings

An executory agreement is one where both sides still have significant responsibilities left to carry out. Simply put, neither celebration has actually completely finished what they agreed to do. Common examples of executory contracts in a company context consist of: Equipment leases Supply and vendor agreements Service agreements Software licenses Business real estate leases These are the types of agreements that often become important when a business files for bankruptcy.

, when a service files for bankruptcy, it gets the right to either assume or decline its executory contracts. Presuming an agreement means the business agrees to continue following it going forward.

apfsc.org

The other celebration to the contract does not get to choose whether the contract is presumed or turned down. The objective is to keep the service alive while restructuring its financial obligations. That is why there is much more flexibility in how agreements are treated in Chapter 11 than in a liquidation.

Under 11 U.S.C. 365, the decision can typically be made at any point before the court verifies the reorganization strategy. The other party to the contract can ask the court to set a deadline if the uncertainty is triggering them harm. If the business decides to presume an agreement in Chapter 11, it needs to do so in full.

365(b), this indicates curing any missed out on payments or defaults, compensating the other party for any losses caused by those defaults, and supplying adequate guarantee that it can perform going forward.

Managing Bankruptcy Statutes

A trustee is selected to sell properties and pay lenders. In this situation, agreements are handled really differently. Under 11 U.S.C. 365(d)( 1 ), in a Chapter 7 case, the trustee has 60 days from the date of filing to choose whether to presume an executory agreement. If the trustee does not presume the agreement within that window, it is instantly considered turned down.

When an agreement is declined in Chapter 7, the other celebration is again entrusted to a general unsecured claim against the bankruptcy estate. In a liquidation, those claims are typically paid very little or absolutely nothing at all, depending upon how much is left after protected creditors are paid. Many organization agreements contain provisions that state the agreement instantly ends or can be ended if one party declare bankruptcy.

Under 11 U.S.C. 365(e), ipso facto clauses are usually not enforceable in insolvency. A contract can not merely be terminated simply because a personal bankruptcy was submitted.

Attorney Vicky Fealy is Board-Certified in Customer Insolvency Law by The Texas Board of Legal Specialization. She has helped countless people and services with financial obligation relief, and she is all set to assist you through every action. Call to schedule a free consultation with our Galveston, TX insolvency attorney today.

apfsc.org

(Post Updated Jan. 6 and 8, 2026) This post notes federal and state consumer law modifications scheduled to go into impact or expire during the period from December 1, 2025, through January 1, 2027. Other customer law modifications will be enacted in 2026 and will enter into result in 2026; this post notes changes whose efficient dates have currently been arranged as of December 31, 2025.

Calculating 2026 Bankruptcy Fees

NCLC encourages readers to send (to) extra consumer law changes effective in 2026, particularly changes in state consumer legislation. NCLC will include suitable submissions to this short article. Crucial modifications to Bankruptcy Guideline 3002.1 and 6 associated brand-new personal bankruptcy types entered into effect on December 1, 2025. The modifications secure house owners who utilize chapter 13 personal bankruptcies to ward off foreclosures and keep themselves current on their mortgages, giving them info required to successfully complete a cure strategy and emerge from chapter 13 without surprise, undisclosed fees, or payment quantities due.

New Guideline 8006(g) will clarify that any party to an appeal might submit a demand that a court of appeals authorize a direct appeal. 26 U.S.C. 108(a) supplies that specific forgiveness on a home loan is not thought about income for income tax purposes, however the Qualified Principal Residence Indebtedness Exclusion from Earnings expired at the end of 2025.