Warning
Info
Warning
Info
Simple English definitions for legal terms
reject, assume or
Read a random definition: hobby loss
A quick definition of reject, assume or:
Term: REJECT, ASSUME OR
Definition: When someone declares bankruptcy, they may have contracts or leases that are still in effect. They have a choice to either keep these contracts or leases (assume) or get rid of them (reject). They have to make this decision within a certain amount of time, depending on the type of bankruptcy they filed. The rules for making this decision are explained in a law called the Bankruptcy Code.
A more thorough explanation:
Reject, assume or is a term used in bankruptcy law. It refers to the decision made by a debtor-in-possession or a trustee to either accept or reject an executory contract or an unexpired lease within a specific period of time. The decision depends on the chapter of the Bankruptcy Code under which the case is proceeding and the subject matter of the contract.
The process, timing, and consequences of the election are outlined in 11 USCA § 365.
For example, if a company that rents office space files for bankruptcy, it may have to decide whether to assume or reject the lease for the office space. If the company assumes the lease, it must continue to pay rent and fulfill its obligations under the lease. If it rejects the lease, it can vacate the office space and stop paying rent.
Another example is if a debtor-in-possession has a contract with a supplier for goods or services. The debtor-in-possession must decide whether to assume or reject the contract. If it assumes the contract, it must continue to pay for the goods or services. If it rejects the contract, it can stop receiving the goods or services and may have to pay damages to the supplier.
These examples illustrate how the decision to reject, assume or can have significant consequences for both the debtor-in-possession and the other party involved in the contract or lease.