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answer to the question, "what if the contract is not executory?" varies with the court and contract. For example, where the estate's real estate contract was not executory due to the non-debtor's complete performance, the trustee lacked a basis to refuse to tender a deed. But if a non-debtor seller of goods had delivered them without receiving payment, presumably the same court would have no trouble leaving the non-debtor with only an unsecured claim.
United Air Lines leased ramp space and maintenance facilities at the San Francisco International Airport. In a development authority financing, United subleased the property to the development authority for $1, which issued bonds, then sub-subleased the property to United with payments designed to match the bonds. In its bankruptcy case, United argued that the agreement was not a "lease" under § 365. The bankruptcy court determined whether the agreement was a true lease or a disguised security interest with reference to federal common law, not state law, and found the agreement was not a true lease. On appeal, the Seventh Circuit held that the bond and ground lease provisions were not severable under Colorado law, which provided that a contract could not be severed if the parties entered into the contract "'as a single whole, so that there would have been no bargain whatever, if any promise or set of promises were struck out.'" The court concluded that the parties would not have entered into the bond-related portion of the agreement in complete absence of the ground lease aspect of the transaction and, as a result, the contract could not be severed. Viewing the agreements as a whole, the court concluded that the agreement must be treated as a true lease. 28.5
