Analyzing Bankruptcy Lawyer Fees in 2026

An executory agreement is one where both sides still have significant obligations left to perform. In other words, neither party has fully completed what they agreed to do. Typical examples of executory agreements in a business context include: Equipment leases Supply and supplier arrangements Service agreements Software application licenses Industrial real estate leases These are the kinds of arrangements that frequently become important when a company files for insolvency.

, when an organization files for personal bankruptcy, it gains the right to either assume or decline its executory agreements. Presuming a contract suggests the service agrees to continue following it going forward.

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The other celebration to the agreement does not get to decide whether the agreement is presumed or declined. The goal is to keep the company alive while restructuring its debts. That is why there is much more flexibility in how contracts are dealt with in Chapter 11 than in a liquidation.

Under 11 U.S.C. 365, the choice can typically be made at any point before the court verifies the reorganization plan. The other celebration to the agreement can ask the court to set a due date if the uncertainty is causing them harm. If the business chooses to presume a contract in Chapter 11, it needs to do so completely.

365(b), this indicates curing any missed payments or defaults, compensating the other celebration for any losses brought on by those defaults, and providing appropriate guarantee that it can carry out moving forward. The service can not choose the parts of an agreement it likes while rejecting the rest. Chapter 7 is a liquidation insolvency.

Legal Requirements to File for Bankruptcy in 2026

A trustee is appointed to offer off possessions and pay creditors. In this situation, contracts are managed very 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 contract. If the trustee does not presume the agreement within that window, it is automatically thought about turned down.

When an agreement is turned down in Chapter 7, the other party is once again entrusted to a basic unsecured claim against the insolvency estate. In a liquidation, those claims are frequently paid extremely little or absolutely nothing at all, depending upon how much is left after secured lenders are paid. Many company agreements contain provisions that say the agreement automatically ends or can be ended if one celebration declare insolvency.

Entrepreneur and their agreement partners frequently assume these stipulations will secure them. Under 11 U.S.C. 365(e), ipso facto stipulations are typically not enforceable in insolvency. A contract can not merely be terminated even if a personal bankruptcy was filed. This rule exists to provide the debtor a sporting chance to choose whether to presume or turn down the agreement without the opposite ending immediately.

Attorney Vicky Fealy is Board-Certified in Consumer Insolvency Law by The Texas Board of Legal Specialization. She has assisted countless people and businesses with financial obligation relief, and she is prepared to guide you through every step. Contact us to set up a totally free consultation with our Galveston, TX insolvency lawyer today.

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

Qualification Standards to File in 2026

NCLC encourages readers to submit (to) additional consumer law modifications reliable in 2026, specifically modifications in state consumer legislation. NCLC will add suitable submissions to this short article. Essential amendments to Insolvency Rule 3002.1 and 6 related brand-new personal bankruptcy forms entered into impact on December 1, 2025. The changes protect homeowners who use chapter 13 bankruptcies to ward off foreclosures and keep themselves present on their home loans, giving them information required to successfully finish a remedy plan and emerge from chapter 13 without surprise, concealed charges, or payment quantities due.

New Guideline 8006(g) will clarify that any celebration to an appeal might submit a demand that a court of appeals authorize a direct appeal. 26 U.S.C. 108(a) offers that specific forgiveness on a home loan is not considered income for income tax purposes, but the Qualified Principal House Indebtedness Exemption from Earnings expired at the end of 2025.