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1.3 Expiration Of The Contract After Commencement Of The Case.
Courts recognize that where a debtor has an interest in a contract that may terminate due to an event such as an uncured default, but the termination event has not occurred by the date of the bankruptcy case, § 108(b) grants the debtor an additional 60 days to cure. The debtor owned an interest in a "key-man" life insurance policy insuring the life of the debtor's principal. The parties presented disputed issues of fact concerning whether the policy terminated before bankruptcy for nonpayment. If the policy was still in a grace period on the date of the involuntary bankruptcy petition, § 108(b) granted the trustee 60 days after the order for relief to cure non-payment of premium and reinstate the policy.
Other courts go further and hold that since § 365 authorizes a debtor to cure defaults, there is no time limit other than the deadline to assume or reject and provide prompt cure.
Some of a debtor's most valuable assets may be intellectual property agreements. Definitions may determine whether the estate has a valuable asset or not, particularly in the intellectual property context. Courts have disagreed whether the restrictions in § 365(c) against the trustee assuming or assigning an executory contract if applicable law would excuse the non-debtor party to the contract from accepting performance require (i) a "hypothetical" test, against which the court considers whether the contract could be assigned to any party; or (ii) an "actual" test, whether the court considers only the actual transaction at issue. Under the actual test, if the debtor simply seeks to assume, but not assign, the estate may retain more rights than in a circumstance where applicable law would excuse the non-debtor party from accepting substitute performance. In a Fourth Circuit case, the court found that the debtor's rights under a non-exclusive license of copyrighted software
