Ipso Facto (Financial Restructuring & Bankruptcy Glossary)

Summary

Any clause in a lease or contract that prohibits, limits, or conditions the assignment of the contract or lease, or that purports to limit or terminate (or modify key terms or declare a default) in a contract or lease based solely on the debtor’s bankruptcy filing. Generally, pursuant to section 365(e)(1) of the Bankruptcy Code, ipso facto clauses are unenforceable in bankruptcy.