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In re B. Siegel Co.

United States Bankruptcy Court for the Eastern District of Michigan, Southern Division

July 18, 1985

Bankruptcy No. 84-04327-B


 [*160]  GEORGE BRODY, Bankruptcy Judge.


The question presented is whether an insurance contract is an executory contract and, if it is, whether the operation of an "at will" termination clause is limited by the prohibitions in section 365(e)(1) of the United States Bankruptcy Code. 11 U.S.C. § 365(e)(1).

The facts as stipulated by the parties and as developed at the evidentiary hearing are as follows:

1. Centennial Insurance Company issued a commercial insurance package policy to B. Siegel Company which provided for real and personal property, casualty, crime, business interruption and automobile insurance coverage for B. Siegel's retail women's apparel business on November 30, 1982. The policy was obtained for the debtor by its agent, Fairway Insurance Agency, Inc.

2. On December 2, 1983, Centennial Insurance Company was on the verge of cancelling B. Siegel's insurance policy because of nonpayment of premiums in the [**2]  amount of $2,975.00. However, B. Siegel made the overdue payments on or about December 21, 1983, Centennial accepted the payments, and the policy continued in force.

3. On January 1, 1984, the policy originally issued was cancelled and rewritten. The policy as rewritten was issued for a period of three years beginning January 1, 1984. The policy provided that the premium was to be renegotiated on a yearly basis. 1 [**4]  Changes in the premium rate were to be determined in accordance with a formula set forth in the policy. The policy contained a cancellation provision, which provided that it could be cancelled by the named insured at will and by the insurer upon thirty (30) days' written notice. 2 

4. On August 2, 1984, Centennial sent notice of cancellation to B. Siegel as a result of the nonpayment of premiums. On the same date, payment was received by Centennial and the policy was reinstated.

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51 B.R. 159 *; 1985 Bankr. LEXIS 5703 **; 13 Bankr. Ct. Dec. 294

In the Matter of B. SIEGEL COMPANY, a Michigan corporation, Debtor


cancellation, executory contract, executory, insurance company, premiums, insurance policy, contracts, termination, Bankruptcy Act, administrative expense, terminable at will, cancel the contract, cancellation notice, prepetition, contends