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Nov 16, 2018 · Clauses in contracts which permit the termination of the contract by a party due to the bankruptcy, insolvency or financial condition of another party are often described as ipso facto clauses. They can provide for an event of default such that the contract automatically terminates upon the other party becoming insolvent, or merely providing an ...
terminate the contract if some specified triggering event occurs.2 Ipso facto provisions may therefore provide for the termination of the contract with or without notice to the debtor party. These clauses may be triggered by bankruptcy proceedings, the insolvency of a party, assignments for the benefit of creditors, or other events. 3
Apr 1, 2019 · Translated from bankruptcy-ese, this statute means that a clause that terminates a contract because of the "insolvency" or "financial condition" of the debtor, or due to the filing of a bankruptcy case, will be unenforceable once a bankruptcy case has been filed. A second Bankruptcy Code provision, Section 365 (e) (1), governs ipso facto ...
Definition of insolvency. A company: entering into administration; appointing an administrative receiver or a receiver or manager; passing a resolution for voluntary winding-up; or. becoming the subject of a winding-up order. An individual or partnership: becoming the subject of a winding-up order; sequestration of the estate or the grant of a ...
Show more Parties, however, can use ipso facto clauses to preserve certain contractual rights in the event that one of the contracting parties has entered into bankruptcy or insolvency proceedings, including the right to terminate the contract. 33. 33. See Wood, Bankruptcy, supra note 27 at 163–64.
The Standard Termination on Bankruptcy Provision . A common termination clause, often known as an ipso facto clause:. This Agreement shall terminate, without notice, (i) upon the institution by or against either party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of either party's debts, (ii) upon either party making an assignment for the ...
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Contracts: termination. A practice note outlining the law on terminating a contract under a termination clause and at common law. It discusses repudiatory breach and other common termination events, including insolvency. It also considers which contracts can be terminated by reasonable notice under an implied term.
