Che, Yeon-Koo; Schwartz, Alan - In: Journal of Law, Economics and Organization 15 (1999) 2, pp. 441-67
Section 365 of the Bankruptcy Code prohibits enforcement of the once common 'ipso facto clause.' The clause excuses the solvent party from performance of the contract when the other party becomes insolvent. We show that the ability of insolvent firms to continue bad projects is enhanced by the...