Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Bankruptcy Court Rules Limited Partnership Agreement Is Not an Executory Contract

By Andrew C. Kassner and Joseph N. Argentina Jr.
May 01, 2023

The events of the past months and rapid increase of interest rates will put further pressure on certain sectors of the economy, including the real estate sector. While it is difficult to predict where all of this will lead, talk of capital calls and review of partnership interests brings back memories of recessions past when partnerships and their constituent general and limited partners were forced into bankruptcy. Certain types of agreements, such as real estate leases, clearly are executory contracts subject to assumption or rejection in bankruptcy cases. But what about the partnership agreement itself, or an option to purchase, or a right of first refusal contained in a partnership agreement? What happens to a limited partner's interest in a partnership when the limited partner files a bankruptcy case?

These issues were recently addressed by the U.S. Bankruptcy Court for the District of Idaho in In re Duncan (Case No. 16-40205-JMM), in a case where a limited partner in a partnership filed a Chapter 7 liquidation bankruptcy case. In an opinion issued on Feb. 24, 2023, the court concluded that the partnership agreement was not an executory contract and, consequently, had not been rejected when the Chapter 7 trustee appointed in the limited partner's bankruptcy case did not assume the agreement within 60 days of the bankruptcy case filing.

The Partnership and Chapter 7 Proceeding of a Limited Partner

According to the opinion, Duncan Limited Partnership was created in 1985 under Idaho law. A partnership agreement was executed in 2004. Jason Hepworth Duncan was one of the limited partners and held approximately a 10% interest in the partnership when he filed a Chapter 7 liquidation bankruptcy case on March 18, 2016. The Chapter 7 trustee did not assume the partnership agreement within 60 days of the filing, as required by Section 365 of the Bankruptcy Code to assume an executory contract in a Chapter 7 case.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.