Pre-Petition Settlement Agreement Not An Assumable, Assignable, Executory Contract

In Svenhard's Swedish Bakery v. United States Bakery, Bk. No. 19-15277, 2023 WL 5541420 (9th Cir. Aug. 29, 2023), the Ninth Circuit held that a settlement agreement that resolved an employer's withdrawal liability to a multiemployer pension fund was not an executory contract that could be assumed and assigned to a third-party when that employer subsequently filed for bankruptcy. The decision is instructive for multiemployer funds and employers that negotiate settlement agreements to resolve these types of liabilities.

Background

Svenhard's Swedish Bakery ("Svenhard's") entered into a settlement agreement (the "Settlement") to make $3 million in monthly payments over 20 years to resolve almost $50 million in withdrawal liability it owed to the Confectionery Union and Industrial Pension Fund (the "Fund"). Under the terms of the settlement agreement, if Svenhard's failed to make those payments, the Fund retained the right to declare Svenhard's in default and