O’Melveny Worldwide

New York Law Journal: SDNY Clarifies Availability of Administrative Priority for Postpetition Contract Breaches

November 2, 2022

O’Melveny partner John J. Rapisardi and counsel Matthew Kremer co-authored this article discussing the US District Court for the Southern District of New York’s recently provided guidance on what the court observed as the “psychedelic confusion” surrounding the intersection of Bankruptcy Code §365, governing the assumption and rejection of executory contracts, and Bankruptcy Code §503, governing administrative priority. “The District Court’s holding reverses some of the potentially harmful consequences of the lower court's decision—which, if affirmed, would have undermined the Bankruptcy Code’s statutory protections intended to encourage parties to transact with debtors in bankruptcy,” the authors wrote.

Read the full article here.