“Assumption” is the debtor’s election to bind itself, postpetition, to continue performance of obligations under an executory contract or unexpired lease, including curing defaults as required by the Code. Assumption of an executory contract or unexpired lease is accomplished either through a court order approving the debtor’s motion to assume or by confirmation of a Chapter 11 plan providing for the assumption. Assumption enables a debtor to retain in full force those contracts and leases it believes are favorable to it.
Assumption is the opposite of “rejection” of an executory contract or unexpired lease where a debtor opts to no longer perform (see Rejection of Executory Contracts and Unexpired Leases).
Assignment enables a debtor to transfer assumed leases and contracts (subject to certain limitations stated in Section 365). If the debtor breaches an executory contract or unexpired lease after assumption, the damages claim of the non-debtor party to the contract or lease is entitled to administrative expense status.
Bankruptcy Code § 365. See also Adequate Assurance, Ipso Facto Clause/Provision, Rejection of Executory Contracts and Unexpired Leases, Shopping Center Lease Provisions.