EXECUTORY CONTRACTS

that the debtor had an alternative to rejecting the license. Numerous courts have allowed debtors to avoid the assumption/rejection issue by letting an executory contract "ride through" chapter 11 plan confirmation. So, the court denied the licensor's request for relief premised upon the debtor's intention to file a plan providing for the license to ride through, unaffected by the plan.

The issue is not limited to non-exclusive copyright licenses. Contracts with federal government entities often prohibit assignment, as does the Anti-Assignment Act. Courts disagree whether the Anti-Assignment Act prevails under § 365(c)(1) and § 365(e)(2)(A)(i) to cut off the debtor's rights. The issue may not arise, however, until the government seeks relief from the automatic stay to enforce its rights or the DIP seeks to assume and/or assign the contract. A purported termination of an executory contract, even one that arguably may not be assumed, violates the automatic stay. The government in Mirant sought stay relief to use an ipso facto clause to terminate a contract requiring future performance, even though the debtor was ready and able to perform. If the contract were terminated, the debtor would owe about $1 million. If the contract were not terminated and the assumption or rejection decision deferred the government might owe the debtor about $1 million. Not surprisingly, the bankruptcy court denied the government relief from the stay. More surprising is the court's failure to discuss the Catapult debate in its opinion finding that the Anti-Assignment Act does not allow invocation of an ipso facto default clause by the government to prevent the debtor or debtor in possession from assuming a government contract.