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By: Kenneth Pasquale

A debtor seeking to reorganize will, during the course of its bankruptcy case, often seek to reject unfavorable contracts in order to ensure that the debtor obtains the fresh start that the chapter 11 process is intended to provide.  Rejection of prepetition contracts is governed by section 365 of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), with a significant exception.  A collective bargaining agreement between a debtor and an employee union can only be rejected or modified in a chapter 11 case pursuant to the stringent requirements set forth in section 1113 of the Bankruptcy Code.

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