Document Type
Article
Media Type
text
Publication Title
Northern Illinois University Law Review
Abstract
Arguably the most convoluted concept lurking within bankruptcy law is that of the "executory contract" which may be found within section 365 of the bankruptcy code. Since its inception in 1978, this section has been dubbed one of the most "psychedelic" areas of American jurisprudence. The phantasmagoric nature of this section largely derives from Congress declining to provide a definition within the Code for executory contracts. Already rife with confusion and contradiction, the missing definition of executory contract, which comes under section 365, represents a significant "missing link" of understanding for bankruptcy courts in ruling on land sale contracts. Bankruptcy judges nationwide have struggled to make sense of this area of law with scant jurisprudential support. Sale of land contracts within bankruptcy courts thus creates a particularly unique issue wherein circuits and bankruptcy courts alternate between concluding that such sales represent executory contracts, or that they constitute land security devices immune from the reach of section 365. While benefits exist to adopting either interpretation, on balance, treating land sale contracts as security devices presents the more equitable solution. The two camps of logic that courts rely upon, however, pose a more interesting issue. Bankruptcy is under federal jurisdiction and within our Constitution, is a power granted to Congress to create, "uniform Laws on the subject of Bankruptcies throughout the United States." Treating sale of land contracts differently depending on the state in which the bankruptcy court sits is an unsatisfactory and unsustainable strategy. It also flies in the face of what our Framers of the United States Constitution intended for bankruptcies. At the same time, though preferable to the alternative, treating land sale contracts as security devices would not wholly fix the problem but would at least take the issue out of the hands of section 365. Anything less than Congress taking back the reins on section 365 and carving out a niche within the bankruptcy code for sale of land contracts would be akin to placing a Band-Aid over a bullet hole.
First Page
277
Last Page
306
Publication Date
Spring 5-1-2026
Department
College of Law
Recommended Citation
Ponder, Abby
(2026)
"The Bankruptcy Code's Missing Link: How the Undefined "Executory Contract" Quandary is Leaving Land Sales and Bankruptcy Courts in Limbo,"
Northern Illinois University Law Review: Vol. 46:
Iss.
2, Article 6.
Suggested Citation
Abby Ponder, Comment, The Bankruptcy Code's Missing Link: How the Undefined "Executory Contract" Quandary is Leaving Land Sales and Bankruptcy Courts in Limbo, 46 N. Ill. Univ. L. Rev. 277 (2026).
