Can a Contract Containing an Option to Purchase Land be Disclaimed in the Context of an NOI?

When a debtor enters a restructuring process under the Bankruptcy and Insolvency Act (the “BIA”), it is usually does so in order to reduce, extend or otherwise renegotiate its debts and obligations. Frequently, debtors use insolvency proceedings to renegotiate their contractual obligations. Where a counterparty is not willing to renegotiate, debtors can shed themselves of such contract under the BIA. Pursuant to section 65.13 of the BIA, a debtor who has filed a notice of intention to make a proposal (an “NOI”) may - on notice to the other parties to the agreement and the trustee - disclaim or resiliate any agreement to which the debtor is a party on the day on which the NOI was filed.

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