Memorandum of Decision Re: Executory Contract

DO NOT PUBLISH This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re WILLIAM and PAMELA NOYES,                                       No. 99-12032      Debtor(s). ______________________________________/
Memorandum
     The current law in this circuit is that an option is not rejectable as an executory contract unless both sides must still perform. Performance due only when the option is exercised does not count. In re Robert L. Helms Const. & Dev. Co, Inc., 139 F.3d 702, 706 (9th Cir. 1998).       Under the option agreement at issue here, optionee K & L Enterprises has no obligations unless and until it exercises its option or at least incurs expenses to subdivide the subject property. It has the right to seek subdivision approval, but not the obligation to do so. Therefore, under Helms, the contract is not executory and Chapter 11 debtors in possession William and Pamela Noyes may not reject it.      The court is not particularly happy with this result. The right of a debtor in possession to reject executory contracts is fundamental to the bankruptcy system. N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513, 528 (1984). By excluding most options from treatment as executory contracts, Helms establishes a rule which makes it impossible for many debtors, including William and Pamela Noyes here, to reorganize. It also seems incongruous that the Noyes could have rejected the option if only K & L had expended thousands of dollars and hundreds of hours exercising it. Nonetheless, the court is bound to follow Helms.      For the foregoing reasons, the motion to reconsider will be denied. Counsel for either side may submit an appropriate form of order.
Dated: October 26, 1999                                                                               ____________________________                                                                                                                      Alan Jaroslovsky                                                                                                                      United States Bankruptcy