In Re Texscan Corporation, Debtor. Commercial Union Insurance Company v. Texscan Corporation

OVERVIEW

Commercial Union Insurance Company (“CUIC”) appeals from the Bankruptcy Appellate Panel’s (“BAP”) ruling that the retrospective insurance premium contract between CUIC and Texscan Corporation (“Texscan”) was not an executory contract under 11 U.S.C. § 365 . We affirm.

FACTUAL AND PROCEDURAL HISTORY

CUIC and Texscan entered into a contract called a Large Risk-Loss Dividend Plan (“Plan”). The term of the contract was from January 1, 1983 until January 1, 1986. The Plan provided business coverage to Texscan through various workmen’s compensation, comprehensive liability and automobile insurance contracts.

The Plan is modeled after a retrospective insurance premium contract. Under the contract, an annual premium is estimated and paid in installments. After the contract begins, annual adjustments are made whereby actual losses are computed and analyzed to determine the actual premium for that adjustment period. Based on whether the estimated premium is too high or too low, an overpaid premium is refunded to the insured, while an underpaid premium is paid to the insurer.

In June 1986, after expiration of the contract, the first full adjustment occurred, covering the…