3 Collier on Bankruptcy P 365.10
Summary
- [1] Other Party Becomes General Unsecured Creditor
Section 365(g) provides that rejection of a contract or lease that has not previously been assumed in the case constitutes a breach immediately before the date of the filing of the petition. By placing the time of the breach prepetition, section 365(g) makes any claim that the contract or lease counterparty may have a prepetition claim that is not entitled to priority as an expense of administration of the estate. Section 502(g) provides much the same, by specifying that any claim arising from rejection of a previously unassumed contract or lease must be determined and allowed or disallowed the same as if the claim had arisen before the date of the filing of the ...
Section 365(g) deals generally with the effect of a rejection of an executory contract or unexpired lease. When the contract or lease has not been previously assumed, rejection constitutes a breach immediately before the date of the filing of the petition.1