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![]() Volume 1, Number 1 |
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| Adequate
Assurance Under Section 366 of the Bankruptcy Code: Deposit Not Required Written by Sherri Morissette Every business
is dependent upon some type of utility service — whether it be electricity
for running freezers, gas for running cooking appliances or telephones
for taking orders. Upon commencement of the bankruptcy case, the debtor
wants to ensure ongoing utility service and the utility provider wants
to ensure payment for the continuation of services, many times in the
form of a deposit. In enacting Section 366 of the Bankruptcy Code, Congress
attempted to strike a balance between the concerns of a debtor and its
utility companies. Section 366 provides a debtor with protection from
the discontinuation of utility services within the first 20 days of filing
a bankruptcy case, and the utility provider with a means to ensure that
it is provided adequate assurance of payment after the filing of a bankruptcy
case. The chart below illustrates the rapid decline in public telecommmunication bankruptcies from a peak of 33 cases in 2001 to just 1 so far in 2004. To see chart, click here. Reprinted with permission of www.bankruptcydata.com. |
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