Opinion ID: 423752
Heading Depth: 1
Heading Rank: 4

Heading: Requiring Debtors in Possession to Assume or Reject

Text: Executory Contract 24 Data-Link contends that because of the essential nature of the service it provided under the contract, the bankruptcy court, pursuant to Section 365 of the Bankruptcy Code, 11 U.S.C. § 365(d)(2), should have specified a period of time within which Whitcomb & Keller was required to decide whether to assume or reject the executory contract. The parties had, of course, stipulated that the computer services were essential and that the information stored in the computer included information essential to the sale of Whitcomb & Keller's accounts. Data-Link argues that time for further inquiry into the benefits and burdens of the contract was not needed. 25 Data-Link interprets the purpose of § 365(d) too narrowly. It is not enough that the trustee or debtor in possession recognize that the services provided under the contract are essential. Rather, § 365(d) allows the trustee or debtor in possession a reasonable time within which to determine whether adoption or rejection of the executory contract would be beneficial to an effective reorganization. In re American National Trust, supra, 426 F.2d at 1064 (interpreting 11 U.S.C. § 516(1) (repealed 1979), predecessor to § 365). 26 The bankruptcy court addressed this issue in its order of April 8, 1981. After discussing the purpose of allowing the trustee a reasonable time to make its decision, the court noted that Data-Link was adequately protected because (1) Whitcomb & Keller had paid for all services received during the administration of its estate, and (2) the parties had stipulated that any right, lien or other interest that Data-Link might have would attach to the proceeds of the sale of Whitcomb & Keller's assets. Accordingly, the court exercised its discretion under § 365(d) in denying Data-Link's request to require Whitcomb & Keller to assume or reject the contract forthwith. We find no abuse of the bankruptcy court's discretion. 27