Effective 28 Aug 2016

515.585. Contracts and leases, receiver may assume or reject — action to compel rejection — consent to assume required, when. — 1. A receiver may assume or reject any executory contract or unexpired lease of the debtor upon order of the court following notice and a hearing, which shall include notice to persons party to the executory contract or unexpired lease to be assumed or rejected. The court may condition assumption or rejection of any executory contract or unexpired lease on the terms and conditions the court believes are just and proper under the particular circumstances of the action. Such terms and conditions may include a requirement that the receiver cures or provides adequate assurance that the receiver will promptly cure any default. A general receiver's performance of an executory contract or unexpired lease prior to the court's authorization of its assumption or rejection shall not constitute an assumption of the executory contract or unexpired lease, or an agreement by the receiver to assume it, nor otherwise preclude the receiver thereafter from seeking the court's authority to reject it.

2. Any person party to an executory contract or unexpired lease may by motion seek to compel the rejection thereof at any time, such rejection the court shall order in its discretion, and as the interests of justice may require. In determining a motion to compel the rejection of an executory contract or unexpired lease, the court may consider, among other factors:

(1) Whether rejection is in the best interests of the receivership estate and the interests of creditors;

(2) The extent to which the executory contract or unexpired lease burdens the receivership estate financially;

(3) Whether the debtor is performing or is in breach of the executory contract or unexpired lease;

(4) If the debtor is in breach of a financial provision of the executory contract or unexpired lease, the debtor's ability to cure such breach within a reasonable time; and

(5) Harm suffered by the nondebtor person party to the executory contract or unexpired lease that results or may result from refusing the rejection thereof.

3. Any obligation or liability incurred by a general receiver on account of the receiver's assumption of an executory contract or unexpired lease shall be treated as an expense of the receivership. A receiver's rejection of an executory contract or unexpired lease shall be treated as a breach of the contract or lease occurring immediately prior to the receiver's appointment; and the receiver's right to possess or use property pursuant to any executory contract or unexpired lease shall terminate upon rejection of such contract or lease. A nondebtor party to an executory contract or unexpired lease that is rejected by a receiver may take such steps as may be necessary under applicable law to terminate or cancel such contract or lease. The claim of a nondebtor party to an executory contract or unexpired lease resulting from a receiver's rejection of it shall be served upon the receiver within thirty days following the date the receiver gives notice of such rejection to such person, which notice shall indicate the right to file a claim within the thirty-day period.

4. A receiver's power under this section to assume an executory contract or unexpired lease shall not be affected by any provision in such contract or lease that would effect or permit a forfeiture, modification, or termination of it on account of either the receiver's appointment, the financial condition of the debtor, or an assignment for the benefit of creditors by the debtor.

5. A receiver may not assume an executory contract or unexpired lease of debtor without the consent of the other person party to such contract or lease if:

(1) Applicable law would excuse a person, other than the debtor, from accepting performance from or rendering performance to anyone other than the debtor even in the absence of any provisions in the contract or lease expressly restricting or prohibiting an assignment of the person's rights or the performance of the debtor's duties;

(2) The contract or lease is a contract to make a loan or extend credit or financial accommodations to or for the benefit of the debtor, or to issue a security of the debtor; or

(3) The executory contract or lease expires by its own terms, or under applicable law prior to the receiver's assumption thereof.

6. A receiver may not assign an executory contract or unexpired lease without assuming it, absent the consent of the other parties to the contract or lease.

7. If the receiver rejects an executory contract or unexpired lease for:

(1) The sale of real property under which the debtor is the seller and the purchaser is in possession of the real property;

(2) The sale of a real property timeshare interest under which the debtor is the seller;

(3) The license of intellectual property rights under which the debtor is the licensor; or

(4) The lease of real property in which the debtor is the lessor;

­­then the purchaser, licensee, or lessee may treat the rejection as a termination of the contract, license agreement, or lease, or alternatively, the purchaser, licensee, or lessee may remain in possession in which circumstance the purchaser, licensee, or lessee shall continue to perform all obligations arising thereunder as and when they may fall due, but may offset against any payments any damages occurring on account of the rejection after it occurs. The purchaser of real property in such a circumstance is entitled to receive from the receiver any deed or any other instrument of conveyance which the debtor is obligated to deliver under the executory contract when the purchaser becomes entitled to receive it, and the deed or instrument has the same force and effect as if given by the person. A purchaser, licensee, or lessee who elects to remain in possession under the terms of this subsection has no rights against the receiver on account of any damages arising from the receiver's rejection except as expressly provided for by this subsection. A purchaser of real property who elects to treat rejection of an executory contract as a termination has a lien against the interest in that real property of the debtor for the recovery of any portion of the purchase price that the purchaser has paid.

8. Any contract with the state shall be deemed rejected if not assumed within sixty days of appointment of a general receiver unless the receiver and state agency agree to its assumption.

9. Nothing in sections 515.500 to 515.665 affects the enforceability of anti-assignment prohibitions provided under contract or applicable law.

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(L. 2016 H.B. 1765 merged with S.B. 578)