As we have reported previously over the years, a key provision in the Bankruptcy Code is Section 365, a lengthy provision that addresses the disposition of executory contracts between the debtor and nondebtors in bankruptcy proceedings. Over many decades, Section 365 has been amended myriad times to address special contracts from real estate leases to equipment to aircraft leases. But the threshold issue that must be addressed by the court remains: Is the agreement at issue an executory contract that is subject to assumption or rejection in bankruptcy cases? In an era when the unprecedented real estate sector boom may be finally coming to an end given rising interest rates and a possible recession, the treatment of surety performance bonds and related agreements may become an area of focus. Surprisingly, until now, no federal circuit court of appeals had adjudicated whether a surety bond agreement is an executory contract. In an opinion issued by the U.S. Court of Appeals for the Fifth Circuit dated Aug. 11, in a case styled In re Falcon V, case no. 21-30668, the court held a surety bond is not an executory contract, and the debtor's obligations under the bonds could not be enforced.