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A provision in an executory contract that prohibits a debtor-inpossession from rejecting the contract pursuant to the Bankruptcy Code is:

a. Unenforceable
b. Illegal
c. Voidable
d. Enforceable

1 Answer

2 votes

Final answer:

A provision in an executory contract preventing a debtor-in-possession from rejecting the contract per the Bankruptcy Code is unenforceable. The Bankruptcy Code gives debtors-in-possession certain rights to assist in the management of their bankruptcy estate.

Step-by-step explanation:

A provision in an executory contract that prohibits a debtor-in-possession from rejecting the contract pursuant to the Bankruptcy Code is generally considered unenforceable. Under Section 365 of the U.S. Bankruptcy Code, a debtor-in-possession or a bankruptcy trustee has the right to assume or reject any executory contract, subject to the court's approval.

This right is designed to allow the debtor or trustee to make decisions that are in the best interest of the bankruptcy estate, which may include rejecting contracts that are financially burdensome. Therefore, any clause that attempts to limit this right is typically seen as contrary to the purpose of the bankruptcy law and is not enforceable in court.

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