Incurable Default

A default by a debtor that is not subject to cure, thereby potentially preventing assumption of an executory contract or unexpired lease under Section 365. For example, if a tenant violates a use clause pre-bankruptcy, the debtor or trustee cannot travel back in time and change the fact that the property has not been used as required by the lease. Congress attempted to cure this problem in BAPCA, but the cure only extends to the assumption of real estate leases, not to personal property leases and executory contracts.

Bankruptcy Code ยงยง 365(b)(1)(A), 365(b)(2), 1124(2)(A). See also Assumption and Assignment of Executory Contracts and Unexpired Leases, Rejection of Executory Contracts and Unexpired Leases.

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