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§ 365(f) as a prohibition, condition or restriction on assignment. The court found that restriction that is not denominated as a restriction on assignment, may be avoided in the court's discretion upon consideration of whether it "hampers a debtor's ability to assign, whether the provision would prevent the bankruptcy estate from realizing the full value of its assets, and the economic detriment to the non-debtor party." On balance, because the restriction prevented one of a number of uses, it was enforceable.
Subsection 365(b)(2)(D) (added by the Bankruptcy Reform Act of 1994) excepts from the cure required under § 365(b)(1) a default that is a breach of a provision relating to "the satisfaction of any penalty rate or provision relating to a default arising from any failure by the debtor to perform nonmonetary obligations under the . . . unexpired lease." There is ambiguity in the statute.
The "or" clause of section 365(b)(2)(D) has prompted at least two alternative interpretations of that section. The first interpretation reads section 365(b)(2)(D) as containing two exceptions to section 365(b)(1). The first excepts the "satisfaction of any penalty rate." The second excepts the cure of any "provision relating to a default arising from any failure by the debtor to perform nonmonetary obligations" (regardless of whether the "provision" is a "penalty provision" or not). This "dual exception" interpretation has some support.
In a case arising out of the lease of computer equipment, the debtor lessor had breached the leases pre-petition by failure to deliver certain equipment. The non-debtor parties argued in bankruptcy that the leases could not be assumed because these non-monetary defaults were historic facts that
