Book Deals And Movie Deals Are Not Part Of Bankruptcy Estate When Co...

One of my new bankruptcy clients is a published author. His career stagnated. He piled up a large amount of unsecured debt to pay living expenses and keep his house. He just signed a substantial book deal to write a new book. His ship is not “in”, but he can see the sail on the horizon.

He has a signed contract with the publisher. When he completes his book the publisher will pay him big bucks. There is a small advance. The man wants to file Chapter 7 bankruptcy. He wants to know whether the trustee will take the proceeds of his book contract.

The book contract is what the bankruptcy law refers to as an executory contract. The debtor has to perform personal services in order to get paid. When he completes the book his right to the money will vest; no more services will be required. Contracts which are executory- there is work that the debtor still has to do- on the date of filing are not part of the debtor’s bankruptcy estate. The trustee cannot write the book on behalf of the debtor, and the trustee cannot force the debtor to write. No slave labor in bankruptcy.

This client can file bankruptcy, write the book, and keep the money. Book deals, movie deals, and public appearance contracts are not part of the bankruptcy estate until the debtor has performed what he agreed to do.