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Court rejects debtor’s attempt to reject part of an integrated contract

All bankruptcy practitioners know that a debtor may choose which contracts to assume and which contracts to reject.  But may a debtor reject contracts that are part of an overall, integrated transaction?  In a recent bankruptcy decision, the court found the answer to be no, at least if the parties are careful in drafting their contracts.

USA, Insolvency & Restructuring, Litigation, Squire Patton Boggs
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Case Note: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32

Facts of the case

Cardinia Nominees Pty Ltd (Cardinia) agreed to lend Inika Pty Ltd (Inika) the sum of $750,000, in exchange for the issue of convertible bonds to Cardinia. The loan was secured by a charge in favour of Cardinia over the whole of Inika’s assets.

Australia, New South Wales, Insolvency & Restructuring, Litigation, Squire Patton Boggs, Corporations Act 2001 (Australia)