Guides & Studies

Surviving the Storm: An Analysis of Liquidated Damages Provisions and Business Restructuring Considerations

Learn how distressed companies and non-debtors may benefit from the certainty and efficiency these clauses provide, saving all parties time, money, and effort during critical times. Our findings include:

  • Liquidated Damages Provisions in Commercial Contracts
  • Variations in Liquidated Damages Provisions
  • Our review and analysis of language used in the contracts within our sample sets (and what that means for you or your clients)

Sign up for your free download

By submitting this request, you agree to Litera and Kira Systems using your contact information to communicate information about Kira Systems’ solutions and Litera services and offerings. We will likely need to transfer your data to locations outside the jurisdiction in which you provide it or where you are viewing our website. You may review our privacy policy or opt-out by contacting Kira Systems.

There’s no doubt that the economic impact of COVID-19 has been far-reaching with countless industries experiencing devastating downturns in their businesses. Chapter 11 filings have surged exponentially and the list of companies filing for bankruptcy only continues to grow.

As part of a Chapter 11 restructuring, a debtor may assume or reject its executory contracts, as well as any unexpired leases. And, since the remedies set forth in the contract may determine the amount of damages the non-debtor party may claim, it’s important to understand what those remedies are with respect to liquidated damages. As a result, companies that can quickly and accurately identify these clauses in their contracts will be able to make earlier, and better-informed, decisions on whether to assume or reject certain executory contracts as Chapter 11 debtors.

Because of the significance of liquidated damages in rejected executory contracts, we reviewed and analyzed 119 intellectual property, service, supply and distribution agreements to determine the prevalence of liquidated damages provisions. Using Kira’s built-in “Liquidated Damages” provision model, we were able to automatically identify which agreements included liquidated damages provisions.

Trusted by the world's largest Law, Commercial, IT and Professional Service firms
Allen & Overy
DLA Piper
Clifford Chance
Latham & Watkins