Question
In 2016, C makes a real estate loan to L Limited Partnership (L). In 2018, L is in default. C and L agree to restructure
In 2016, C makes a real estate loan to L Limited Partnership (L). In 2018, L is in default. C and L agree to restructure the loan. The workout agreement reduces the interest rate, extends the payment period, forgives default interest that had accrued, eliminates some of the financial covenants and operational restrictions contained in the original loan documents, and provides that L will not file a bankruptcy petition for three years. L files a bankruptcy petition in 2020. C moves to dismiss the case based on the terms of the agreement. What results? Should a business be able to enter into a legally enforceable agreement that it will not file for bankruptcy?
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