Contracts routinely include anti-assignment and ipso facto provisions, which are typically unenforceable in bankruptcy cases. Such provisions restrict contracting parties from transferring their obligations and rights under the agreement to a third party without obtaining permission. They are known as "anti-assignment clauses." They also permit termination due to the bankruptcy financial condition, or insolvency of a party — known as "ipso facto clauses."

This article discusses exceptions to their usual unenforceability in bankruptcy, and provides drafting tips on how to avoid that result.

Click here to read the full article published by Today’s General Counsel.