Tuesday, October 10, 2006

Executory. A bankruptcy court held that a contract to exchange certain parcels of land for which all performance had been completed except for the reimbursement of certain construction expenses could be rendered fully executory, rendering it incapable of rejection, by a bankruptcy debtor when the final payment is tendered post-petition. On appeal, the District Court affirmed on the issue that the contract was an executory contract as of the petition date, but rejected the Bankruptcy Court's holding that executory contract status should be determined as of the rejection motion date. The District Court remanded the case to the Bankruptcy Court for further proceedings consistent with its opinion. The debtor appealed.

The Second Circuit dismissed the appeal, holding that the case was not final. The ultimate issue of whether the debtor should have been allowed to reject the contract was still before the Court. Although both parties asserted that the further proceedings would be ministerial only, the Second Circuit, nevertheless, held that appellate jurisdiction was lacking for lack of finality and declined to create a new exception to the final judgment rule.

The decision in COR Route 5 Co., LLC v. The Penn Traffic Co. (In re The Penn Traffic Co.) can be found here.

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