An executory contract can create havoc for the unsuspecting counterparty.
Most businesses are (reluctantly) required to deal with customers, suppliers and counterparties to agreements that enter bankruptcy proceedings, yet there is a great lack of knowledge as to how the concept of an executory contract can create havoc for the unsuspecting creditor/counterparty. Recent litigation in Delaware involving the sporting goods retailer Eastern Outfitters LLC (Eastern Mountain Sports and Bob’s Stores) points to some of the issues.
Virtually no attention has been paid to what will soon be a big problem
While much has been written about the future of brick-and-mortar retailing as a result of the large number of retail bankruptcies during 2016 and even during the first weeks of 2017, virtually no attention has been paid to what will be a significant problem for creditors of those retailers that have sought bankruptcy court protection—even if some of the retail locations remain open.