                       REVISED APRIL 14, 2000


                   UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT



                            No. 98-11116




             In the Matter of NATIONAL GYPSUM COMPANY,


                              Debtor,
                        ____________________


   CENTURY INDEMNITY CO.; INSURANCE COMPANY OF NORTH AMERICA,


                             Appellees


                                 V.


  NGC SETTLEMENT TRUST; ASBESTOS CLAIMS MANAGEMENT CORPORATION,


                            Appellants,
         __________________________________________________
            Appeal from the United States District Court
                 For the Northern District of Texas
                           March 31, 2000


Before EMILIO M. GARZA and PARKER, Circuit Judges; and FITZWATER,
District Judge.1



     1
       District Judge for the Northern District of Texas, sitting
by designation.
ROBERT M. PARKER, Circuit Judge:

     Appellants,2 a reorganized Chapter 11 Bankruptcy debtor, filed

suit seeking a declaratory judgment that appellee’s claim stemming

from an assumed contract was discharged in the debtor’s earlier

bankruptcy proceedings.    At summary judgment, the bankruptcy court

determined that the claim was not discharged, but that the contract

was assumed with a binding $0 cure amount.   Both parties appealed.

The district court, sitting as an appellate court, affirmed the

discharge ruling but reversed as to the binding nature of the cure

amount.   The reorganized debtor appeals that ruling.3   We AFFIRM.

                  I.   FACTS AND PROCEDURAL HISTORY

A.   Background

     1.    The Wellington Agreement



     2
        Throughout this opinion, the court will refer to the
appellants collectively as National Gypsum Company (“National
Gypsum”).   National Gypsum is a reorganized Chapter 11 debtor.
Under its plan of reorganization, most operating assets were
conveyed to the New NGC, which assumed the name “National Gypsum
Company,” and the debtor National Gypsum changed its name to
Asbestos Claims Management Corporation (“ACMC”). ACMC, which owns
the rights under National Gypsum’s insurance policies, became a
subsidiary of the NGC Settlement Trust, created under the plan to
provide payments to holders of asbestos-related claims against
National Gypsum. Accordingly, NGC Settlement Trust and Asbestos
Claims Management Corp. are the named appellants in this appeal.
     3
      In addition to Plaintiffs/Appellants’ substantive appeal, we
have before us a pending motion -- Defendant/Appellee’s Motion to
Determine Appellate Jurisdiction. Defendant/Appellee contends that
jurisdiction is proper; in their response, Plaintiffs/Appellants
concur. Upon due consideration of the parties’ filings, the record
of the proceedings below, and the applicable law, we agree.
JURISDICTION CONFIRMED.

                                   2
     National Gypsum Company (“National Gypsum”) was a manufacturer

of asbestos-containing products, while Insurance               Company of North

America (“INA”) was one of its insurers, having issued liability

insurance policies to National Gypsum in the 1950s.                Beginning in

the 1970s, National Gypsum was sued for bodily injury and property

damage claims arising from the asbestos-containing products it

sold.    An insurance coverage dispute soon followed mirroring the

litigation taking place throughout the country between other former

asbestos manufacturers and their insurers.

     A large part of this industry-wide litigation was ended when

a number of parties reached a negotiated settlement, commonly

referred to as the Wellington Agreement.                 This accord, signed in

1985 by numerous manufacturers and their insurers -- including

National Gypsum and INA -- resolved persistent contribution and

indemnity issues, thereby allowing for joint representation in

thousands of pending asbestos-related lawsuits.                 The Wellington

Agreement provided for the creation of the Asbestos Claims Facility

to analyze, defend, and settle pending and future asbestos-related

bodily   injury   claims   referred       to   it   by    participating   former

asbestos producers.    Under the agreement, funding for the payment

of settlements, judgments, and legal expenses incurred in the

defense of asbestos-related bodily injury claims against the party-

producers was provided by the party-insurers.

     But not all insurers signed the agreement, causing gaps in



                                      3
coverage to arise where non-signatory insurer payments were called

for. Under the Wellington Agreement, party-insurers agreed to make

gap-filling payments to cover the non-signatory insurers’ share of

defense and indemnity costs.      It was recognized that this would

cause the insurers to pay out their policy limits more quickly than

they would if the non-signatory insurers were participating.      In

response, Section XX of the Wellington Agreement was designed to

compensate signatory insurers for these interim payments.      Under

Section XX, producers are required to use their best efforts to

obtain   coverage   from   non-signatory   insurers.   To   encourage

producers to pursue non-signatory insurers, interest on gap-filler

payments begins to accrue two years after payment is made.       The

producer must thereafter pay interest quarterly until the earlier

of (a) a settlement with or final judicial determination against

the non-signatory insurer, or (b) the date on which the signatory

insurer would have exhausted its policy limits if the non-signatory

insurer had been a participating party to the Wellington Agreement.

     Some of National Gypsum’s insurers did not sign the Wellington

Agreement, thus INA’s successor in interest, Century Indemnity

Company (“Century”), allegedly made gap-filling payments on behalf

of National Gypsum for amounts owed by non-signatory insurers from

October 1987 through May 1990.     According to Century, Section XX

interest accrued on the amount due to Century through March 1994,

and prejudgment interest continues to accrue.     Century claims that



                                   4
National Gypsum has never paid any portion of the now more than

five million dollars owed to Century.

     2.    The Reorganization of National Gypsum

     National      Gypsum      filed    a    Chapter    11    bankruptcy      petition

October 28, 1990.        As a part of its reorganization plan, National

Gypsum    sought    to    assume       the       Wellington    Agreement,      one    of

approximately 250 executory contracts or unexpired leases to which

National Gypsum was a party.                In accordance with Bankruptcy Code

requirements, the National Gypsum plan detailed the cost to “cure”

any existing defaults on these executory contracts or unexpired

leases.    National Gypsum’s plan represented that the company was

not in default on any payments under the Wellington Agreement, and

therefore, the cost to cure all defaults was $0.

     On March 9, 1993, the bankruptcy court entered its “Order

Confirming    the      First     Amended         and   Restated    Joint      Plan     of

Reorganization of National Gypsum Company and Aancor Holdings,

Inc.” confirming the National Gypsum plan of reorganization.

B.   Procedural History

     In October 1995, following attempts by Century to recover the

amounts   allegedly      due,    National         Gypsum     brought   suit    in     the

Bankruptcy Court for the Northern District of Texas seeking a

declaration     that     its    contract         obligations      to   Century       were

discharged in the earlier Chapter 11 reorganization.                        Following

discovery, National Gypsum moved for summary judgment claiming that


                                             5
any amounts previously due were discharged, pursuant to 11 U.S.C.

§ 1141(d) (1994), for $0 because Century failed to file timely

proof of   its   claim,   despite   having   sufficient   notice   of   the

pendency of the bankruptcy to protect its interests, and that the

bankruptcy court’s confirmation order precluded re-litigation of

this issue.   After a hearing, the bankruptcy court granted summary

judgment in favor of National Gypsum finding that Century was

provided sufficient notice to be bound by the confirmation order

which discharged Century’s claims.

     Century then moved the court to set aside the judgment and re-

examine both issues.      Ultimately, the bankruptcy court determined

that confirmation of the plan did not discharge Century’s right to

payment under the Wellington Agreement, but that Century was

precluded by res judicata from asserting that any amount other than

$0 was due. The court reached this conclusion despite having found

that there was a factual dispute as to whether Century had received

the court-ordered notices that would have alerted it to the fact

that the Wellington Agreement was being assumed with a $0 cure

amount.    In essence, the bankruptcy court determined that this

factual question was immaterial, because mere knowledge of the

pendency of the bankruptcy action was sufficient in and of itself

to bind Century.

     Both parties appealed to the District Court for the Northern

District of Texas.   The district court ruled in Century’s favor on


                                    6
all three issues -- discharge of the claim, sufficiency of the

notice, and res judicata effect of the confirmation.                       The district

court affirmed the bankruptcy court’s holding that Century’s right

to   payment    was    not   discharged,          reasoning    that    the   discharge

provision of § 1141(d) could not be so inflated as to wipe out the

requirements     of    11    U.S.C.    §    365    (1994)     (the    section    of    the

Bankruptcy Code that governs executory contracts and unexpired

leases) that all executory contracts be brought current as a

condition of their assumption.

       The district court reversed the bankruptcy court on the notice

issue, holding instead that the debtor had a responsibility to

assure that the non-debtor party was on notice of the debtor’s

specific    intent      to    assume       the    contract.          The   court      then

demonstrated that National Gypsum was unable to meet this standard

based on the summary judgment record for two reasons. First, there

existed a fact question whether Century was sent copies of crucial

notices and mailings that the bankruptcy court had ordered to be

sent to all affected parties.               Specifically, did Century receive

either the plan or the notice enumerating which executory contracts

National Gypsum intended to assume, either one of which would have

alerted Century that the Wellington Agreement was being assumed

with   a   $0   cure   amount?        Second,       the   summary     judgment     proof

demonstrated only that a representative of Century knew of the

commencement of National Gypsum’s Chapter 11 reorganization, not of



                                            7
the specific intent to assume.    Consequently, the district court

found that Century’s due process rights had been violated.

     Finally, the district court held that the confirmation order

was not res judicata as to the cure amount, because the bankruptcy

court “unambiguously anticipated disputes regarding cure amounts

and retained jurisdiction to hear them.”     National Gypsum took an

appeal from the district court’s judgment, placing all three issues

before us today.

                          II.   DISCUSSION

A.   Standard of Review

     Bankruptcy court rulings and decisions are reviewed by a court

of appeals under the same standards employed by the district court

hearing the appeal from bankruptcy court; conclusions of law are

reviewed de novo, findings of fact are reviewed for clear error,

and mixed questions of fact and law are reviewed de novo.        See

Traina v. Whitney National Bank, 109 F.3d 244, 246 (5th Cir. 1997).

We review a grant of summary judgment de novo.     See Exxon Corp v.

Baton Rouge Oil, 77 F.3d 850, 853 (5th Cir. 1996).

B.   Century’s Claims Were Not Discharged

     1.   Contentions of the Parties

     National Gypsum argues that Century is barred from recovery

because Century failed to take the necessary steps to protect its

claim prior to confirmation of National Gypsum’s reorganization

plan.   Purportedly, Century possessed a provable claim, because it

                                  8
was     owed     Section     XX     reimbursement         payments      prior   to    the

reorganization.        Under this theory, Century erred by failing to

file a proof of its claim prior to the bar date, as a result, the

claim was discharged along with all other unproven pre-confirmation

debts      by    operation    of     the    general       discharge      provision     of

Bankruptcy Code § 1141(d).             National Gypsum’s argument rests on a

belief that an amount due in default on an assumed executory

contract is        subject    to    the    claims    discharge       provisions      of §

1141(d), and thereby removed from the cure provisions of § 365 that

require prompt compensation for any default.                      Both the bankruptcy

court and the district court were correct to reject this argument.

      2.        Bankruptcy Code Sections 1141(d) and 365

      Section § 1141(d) binds some creditors to the terms of the

confirmed reorganization plan while discharging all others.                           See

11 U.S.C. § 1141(d)(1)(A) (1994) (“Except as otherwise provided for

in the plan or the order confirming the plan, the confirmation of

a plan . . . discharges the debtor from any debt that arose before

the date of such confirmation.”).               Section 1141(d) also enumerates

different types of “claims” that are excepted from discharge.                         See

§ 1141(d) (the debtor is discharged from any debt “[e]xcept as

otherwise provided for in this subsection”).                       Although National

Gypsum     correctly       points    out   that     the    list    of   exceptions     is

exclusive and makes no reference to § 365, it is incorrect to

extrapolate from this that a default amount owed on an executory


                                            9
contract is always a “claim” within the ambit of § 1141(d).

     The Bankruptcy Code provides special rules for the treatment

of executory contracts and unexpired leases during a Chapter 11

reorganization.   See 11 U.S.C. § 365 (1994).   In general, section

365 allows “the trustee, subject to the court's approval, [to]

assume or reject any executory contract or unexpired lease of the

debtor.”   Id.   Under § 365, a debtor may elect one of two options

when assessing how to treat an executory contract or unexpired

lease to which it is a party; the contract or lease may either be

rejected or assumed.4

     "[T]he authority to reject an executory contract is vital to

the basic purpose of a Chapter 11 reorganization, because rejection

can release the debtor's estate from burdensome obligations that

can impede a successful reorganization."        NLRB v. Bildisco &

Bildisco, 465 U.S. 513, 528 (1984).   The Bankruptcy Code provides

that the effect of a rejection of an executory contract is a

breach, see 11 U.S.C. § 365(g) (1994), and the breach gives rise to

a claim for damages by the non-debtor party to the contract.    See

Wainer v. A.J. Equities, Ltd., 984 F.2d 679, 684 (5th Cir. 1993);

see also Bildisco, 465 U.S. at 518.     The “claim” created by the

rejection of the contract or lease is then afforded treatment

     4
        If an executory contract is neither assumed nor rejected,
it will “ride through” the proceedings and be binding on the debtor
even after a discharge is granted, thus allowing the non-debtor’s
claim to survive the bankruptcy. See Federal’s, Inc. v. Edmonton
Inv. Co., 555 F.2d 577, 579 (6th Cir. 1977).

                                 10
similar to all other unsecured claims that are either provided for

in the plan or are discharged through § 1141(d).                      The     non-debtor

whose    lease    or   contract         is     rejected      is    then    afforded     the

opportunity, subsequent to the debtor’s decision on how to treat

the contract or lease, to protect its interests by filing a proof

of “claim” after which the non-debtor is treated as an unsecured

creditor.   See In re Parkwood Realty Corp., 157 B.R. 687, 690 (W.D.

Wash. 1993).(“[The Code] clearly contemplate[s] that a party to an

executory   contract       will      receive        notice    of   rejection     when    it

receives a copy of the Disclosure Statement and Plan, giving it a

window in which to file a proof of claim for damages.”); see also

LAWRENCE P. KING,   ET AL.,   COLLIER   ON   BANKRUPTCY § 365.09[1] (15th ed. 1999)

(hereinafter      “COLLIER     ON    BANKRUPTCY”).5          The   non-debtor,       former

contractual      partner      only      becomes     an   unsecured        creditor    after

rejection. Therefore, the non-debtor is not required to have filed

a proof of claim prior to the claims bar date, a date that in all

likelihood preceded the debtor’s decision to reject the contract or



     5
        The debtor may delay making a decision and simply provide
for assumption or rejection in the plan itself. “This is often a
useful means for the debtor to avoid binding itself to contracts or
leases before it has formulated a feasible business plan under
which it knows whether it will want the benefits and burdens of
each agreement.” COLLIER ON BANKRUPTCY § 365.04[2][a]. In sum, the
Bankruptcy Code sets forth a scheme in which the debtor maintains
almost exclusive control over the timing of its decision on
assumption or rejection to ensure that its decision contributes to
a workable plan of reorganization. In turn, the non-debtor party
is then afforded time to take steps to protect its interest after
the debtor has determined the status of the contract.

                                               11
lease.6

       Rather than reject the contract or lease, the debtor may

choose to assume it.       An assumed lease or contract will remain in

effect through and then after the completion of the reorganization.

The non-debtor party to the agreement is not released from its

duties and must continue to perform; likewise, the debtor must

continue to perform or pay for the services or other costs that are

not discharged.        “[T]he act of assumption must be grounded, at

least in part, in the conclusion that maintenance of the contract

is more beneficial to the estate than doing without the other

party’s services.”       MMR Holding Corp. v. C&C Consultants, Inc. (In

re MMR Holding Corp.), 203 B.R. 605, 612 (Bankr. M.D. La. 1996);

see In re Eagle Bus Mfg., Inc., 148 B.R. 481, 483 (Bankr. S.D. Tex.

1992). Since not all contracts are zero-sum bargains, the contract

will       not   necessarily   be   a   detriment   to   the   other   party.



       6
        It should be noted that adoption of National Gypsum’s
contrary analysis would have a perverse effect outside the scope of
this case, an effect that would be felt by non-debtor parties whose
contracts or leases are rejected.        Contrary to the explicit
statements of the Code, the act of rejection would only create a
bona fide claim for damages if the non-debtor had already filed a
preemptive, conjectural proof of claim earlier in the bankruptcy
proceedings. The decision to assume or reject would cease to be
the determining factor as to whether the debtor had a claim;
instead it would be the non-debtor’s filing of a proof of claim
that would be dispositive.     This scheme -- unappealing from a
policy perspective as it would result in a deluge of potentially
pointless preemptive proofs of claims -- is inconsistent with the
Bankruptcy Code’s more prudent approach, which is to simply permit
those non-debtors whose contracts or leases were rejected to react
to the debtor’s decision.

                                        12
Nevertheless, it is the debtor who decides whether to maintain the

contract, and this authority vests the debtor with a considerable

amount of power:

     Section 365 is intended to provide a means whereby a
     debtor can force another party to an executory contract
     to continue to perform under the contract if (1) the
     debtor can provide adequate assurance that it, too, will
     continue to perform, and if (2) the debtor can cure any
     defaults in its past performance. The provision provides
     a means whereby a debtor can force others to continue to
     do business with it when the bankruptcy filing might
     otherwise make them reluctant to do so. The section thus
     serves the purpose of making the debtor's rehabilitation
     more likely.

Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1310

(5th Cir. 1985); see RICHARD I. AARON, BANKRUPTCY LAW FUNDAMENTALS, §

9.04[3] (1999) (“The power to reject unfavorable contracts is a

potent weapon in the arsenal of unique bankruptcy powers.”).

     Not surprisingly, the Bankruptcy Code affords the non-debtor

a measure of protection, since it is possible that the contract is

not beneficial to the non-debtor, and the non-debtor lacks any

decision-making authority in the assumption process.7    Section 365

“allows a debtor to 'continue in a beneficial contract provided,

however, that the other party is made whole at the time of the

debtor’s assumption of said contract.’”   Eagle Bus, 148 B.R. at 483

(quoting In re J.W. Mays, 30 B.R. 769, 772 (Bankr. S.D.N.Y. 1983)).


     7
        The non-debtor may by motion to the court seek to have a
deadline imposed on the debtor’s assumption decision, but other
than this limited ability to prompt a decision, the non-debtor is
without     power over the assumption process.  See § 365(d)(2);
COLLIER ON BANKRUPTCY § 365.04[2][b].

                                 13
This cure requirement is set forth in § 365(b)(1):

     If there has been a default in an executory contract or
     unexpired lease of the debtor, the trustee may not assume
     such contract or lease unless, at the time of assumption
     of such contract or lease, the trustee–
        (A) cures, or provides adequate assurance that the
     trustee will promptly cure, such default;
       (B) compensates, or provides adequate assurance that
     the trustee will promptly compensate, a party other than
     the debtor to such contract or lease, for any actual
     pecuniary loss to such party resulting from such default;
     and
       (C) provides adequate assurance of future performance
     under such contract or lease.
11 U.S.C. § 365.

Thus, the debtor party must take full account of the cost to cure

all existing defaults owed to the non-debtor party when assessing

whether the contract is beneficial to the estate.                   See Three

Sisters Partners, L.L.C. v. Harden (In re Shangra La, Inc.), 167

F.3d 843, 849 (4th Cir. 1999); MMR Holding, 203 B.R. at 613

(“Assumption presumes curing all prepetition default               . . . .”).

     A non-debtor is further protected by the requirement that an

executory contract may not be assumed in part and rejected in part.

See COLLIER   ON   BANKRUPTCY § 365.03[1].    Where the debtor assumes an

executory contract, it must assume the entire contract, cum onere

– the debtor accepts both the obligations and the benefits of the

executory contract.       See Bildisco, 465 U.S. at 531.      Although this

rule can      have   broader   application,   in   the   instant    case   this

condition serves only to reinforce the cure requirement of §

365(b)(1). See Adventure Resources, Inc. v. Holland, 137 F.3d 786,

798 (4th Cir. 1998) (“That the obligations of an executory contract

                                      14
be accepted along with its benefits is made plain by the Bankruptcy

Code's    requirement    that,   as    conditions    of   the   contract's

assumption, the debtor cure any existing default and compensate all

non-debtor parties for actual pecuniary losses that have resulted

therefrom.”).

     National Gypsum asks us to find that § 1141(d)(1) can be read

to provide for discharge of amounts in default under assumed

executory contracts, thereby nullifying the cure requirement of

section 365(b)(1).      The bankruptcy and district courts, citing our

opinion in Wainer v. A.J. Equities, Ltd., 984 F.2d 679 (5th Cir.

19993), held that the discharge power of § 1141(d) does not reach

out to extinguish the need to cure existing default on executory

contracts that are assumed by the reorganized debtor.           We agree.

     3.   The Wainer Decision

     In Wainer, the lessor consented to release an existing tenant

and allow the assumption and assignment of the lease to a new

tenant.   Subsequently, the lessor filed suit against the debtor's

guarantor after the lease assignee filed bankruptcy and rejected

the lease.      We ruled that the lessor had novated the lease by

consenting to the assumption and assignment, thereby waiving its

right to require a guarantee of the assignee's obligations.            984

F.2d at 685.     Thus, a landlord, who would otherwise be free to

pursue a guarantor if the lease is rejected, cannot pursue a

guarantor if the lease is assumed.         This stems from the fact that,


                                      15
in accordance with § 365(b), the lease is brought back into

compliance with its terms, and the other party to the lease is

compensated for any interim pecuniary loss.           See COLLIER   ON   BANKRUPTCY

§ 365.05[3].     The end result is that there is no default to prompt

liability against the guarantor.

     Although our analysis in Wainer continued on from this point

to determine the validity of the novation, it is only the Court’s

treatment of § 365 that is of relevance to the case at bar.                     In

this key portion of our discussion, we noted the only instance in

which the Bankruptcy Code speaks of a claim arising from an

unexpired lease or executory contract -- when the contract or lease

has been rejected:

     A claim arising from the rejection, under section 365 of
     this title ... of an executory contract or unexpired
     lease of the debtor that has not been assumed shall be
     determined, and shall be allowed under subsection (a),
     (b) or (c) of this section or disallowed under subsection
     (d) or (e) of this section....


Wainer,    984   F.2d   at   684   (quoting   11   U.S.C.   §   502(g)     (1994)

(discussing post-petition debts))(emphasis added.).              In addition,

we noted that section 365(g) explains that the rejection of an

unexpired lease constitutes a breach of the lease, giving rise to

a claim.    See 11 U.S.C. § 365(g) (1994).

     In light of the absence of any reference to a claim arising

from the assumption of a contract and the express cure provisions

for dealing with existing defaults, we concluded that “under the


                                       16
Bankruptcy Code, a lease that has been assumed under a plan or

pursuant to section 365 does not give rise to a claim.”      Wainer,

984 F.2d at 684 (emphasis in original).    The fact that the lease in

question was both assumed and assigned was not dispositive to our

conclusion on the discharge issue.        See id. at 684-85 (“[the

debtor] did not reject the Lease and, thus, no claim arose in its

bankruptcy proceedings to bring about a debt which may have been

discharged.”).

     Despite these plain statements, National Gypsum points to a

single sentence in which we stated “[w]hen a lease is assumed and

assigned to a third party pursuant to section 365 . . . it does not

discharge a debt.”   Id. at 684.   This is a correct statement of our

conclusion in that case in which the lease at issue was assumed and

assigned.    There was no emphasis placed on “assigned” in this lone

sentence from which to conclude that the assignment was critical to

the “no discharge” conclusion.     In sum, the court affirmed that a

claim arises only from the rejection of an unexpired lease or

executory contract, not from the assumption of such a lease or

contract.8

     8
       This determination is not a new one to this court as we
discussed the issue tangentially in the context of a discussion on
voting rights under Chapter 11. See Phoenix Mut. Life Ins. Co. v.
Greystone III Joint Venture (In re Greystone III Joint Venture),
995 F.2d 1274, 1281 (5th Cir. 1991) (“A party to a lease is
considered a 'creditor’ . . . only when the party has a claim
against the estate that arises from rejection of a lease.      If,
however, the debtor expressly assumes a lease, the lessee has no
'claim’ against the debtor. . . .”).

                                   17
     If the language we employed in Wainer was inexact, even a

cursory examination of the supporting case citations and subsequent

case law dispels any confusion over the issue.   In Wainer, we made

favorable reference to Federal’s, Inc. v. Edmonton Inv. Co., 555

F.2d 577, 581 (6th Cir. 1977).    In Edmonton, also a case dealing

with an assumption and assignment scenario, our sister court

explained that a default does not give rise to a dischargeable

claim:

     [There are] two specific events that may give rise to a
     provable claim under the lease, even though the lease was
     not rejected. These events are an automatic termination
     of the lease or an actual breach and subsequent
     termination    by   the   landlord,    occurring   either
     contemporaneously with or prior to the commencement of
     the proceedings. Neither of those events occurred in the
     present case. Thus, the default of the assignee alone did
     not give Edmonton a provable claim against Federal's, and
     such default failed to alter the character of the
     executory contract between Edmonton and Federal's.

555 F.2d at 581 (emphasis added)(footnote omitted).

     Similarly in In re Marble Publ’g Co., 20 B.R. 933, 935 (Bankr.

E.D. Pa. 1982), the bankruptcy court denied a complaint seeking an

order compelling the debtor to cure an existing default on a lease

by payment of pre-petition rent.      In explaining the effects of

assumption under § 365, the Court explained:

     . . . if an unexpired lease is assumed by a debtor in
     possession under the Code, and such action is approved by
     the court, such assumption creates a new administrative
     obligation of the estate which is payable as a first


                                 18
     priority . . . . Equally important is the fact that such
     assumed obligation is a postpetition debt that is not
     discharged by a confirmation of a chapter 11 case, and it
     therefore continues to be an obligation of the
     reorganized debtor.

Marble Publ’g, 20 B.R. at 934 (emphasis added)(footnote omitted).

     National Gypsum’s argument that the “no discharge” conclusion

in Wainer hinged upon the assignment of the lease is unpersuasive;

it is unsupported by the plain language of the Bankruptcy Code and

circuit precedent.      In addition, National Gypsum’s position is

contrary to other supporting authority not cited in our earlier

opinion. Specifically, our conclusion today is in accord with that

reached by the Fourth Circuit.         In the seminal case Consolidated

Gas Elec. Light & Power Co. v. United Ry. & Elec. Co., 85 F.2d 799

(4th Cir. 1936), our sister court addressed the issue of whether an

executory   contract,     neither     assumed    nor    rejected,      remains

enforceable. The Fourth Circuit rebuffed the argument that a party

to an un-rejected executory contract had a definite interest and,

consequently, had a claim against the debtor, occupying the role of

a creditor with all its attendant duties. See Consolidated Gas, 85

F.2d at 804.      Instead, the court held that a claim under an

executory   contract    does   not   arise   within    the   meaning   of   the

Bankruptcy Act until the contract has been rejected.            See id.     The

court reasoned:

     The party to an executory contract would find it
     difficult to state a claim under the contract before it

                                      19
      had been broken; and certainly neither the debtor nor
      the trustee could set out the amount of such a claim as
      required by an order of court directing the filing of
      schedules ... and the holder of a contract would have a
      like difficulty in complying with the customary order of
      the judge with reference to the filing of claims by
      creditors[.]

Consolidated Gas, 85 F.2d at 805; see also Hotz v. Fed. Reserve

Bank of Kansas City, 108 F.2d 216, 219 (8th Cir. 1939); In re

DeVlieg, Inc., No. 93-C-20104, 1993 WL 248205, at *2 (N.D. Ill.

July 6, 1993).

      Finally, it should be noted that implementation of National

Gypsum’s theory would strip § 365(g) of any operational effect by

eviscerating the protections it offers non-debtor parties. In this

case, National Gypsum attempts to turn what is a shield for the

non-debtor party into a sword for the debtor.                      This is not the

intent     of   the   Bankruptcy   Code.        The      contention     that   a   pre-

confirmation claim, subject to discharge, was created by arrearage

on the contract is incompatible with the language of § 365 which

specifically contemplates such instances when it requires the

debtor to cure any default. Section 365(b)(1) provides a guarantee

to   the    non-debtor    party,   who        may   be    forced   to    continue    a

relationship it would rather terminate, that as condition to the

forced continuation of the contractual relationship, any losses or

defaults existing at the time will be satisfied either through a

timely cure or through reasonable assurances of future payment.



                                         20
National Gypsum would undermine this protection by imposing an

extra-statutory   requirement:   that   the    right     to   cure   must   be

preemptively protected by the filing of a proof of claim.            Failure

to make a timely filing of this theoretical claim would preclude

the non-debtor from recovery on the amounts owed.                In effect,

contracts that would otherwise not be beneficial to the estate

could become beneficial once the detrimental side of the ledger was

wiped clean.   This runs contrary to the Code’s treatment of non-

debtor parties to assumed contracts in which it acknowledges their

unusual   predicament   and   accordingly     provides    protections       not

offered to ordinary creditors subject to § 1141(d) discharge.9

     The powers of the debtor in the assumption of contract arena



     9
       National Gypsum also argues that the rejection of inquiry
notice standard will prompt non-debtor parties to executory
contracts to sit on their rights and wait to come forward only
after the contract has been assumed. Purportedly, this “lie in
wait” strategy would allow the non-debtor to avoid receiving only
“the normal 'cents-on-the-dollar’ distribution accorded to other
creditors.” The non-debtor would come forward post-confirmation
and assert a claim for the full cure amount.
     In the context of assumption of executory contracts, there is
far less to fear in the way of non-debtors waiting out the process,
than there is of creditors waiting out the discharge of unsecured
debts.   Non-debtor parties to executory contracts must be made
whole as part of the assumption; there is no point in waiting
because there will be no “cents-on-the-dollar” distribution.
Actually, the risk runs in the opposite direction: it is far more
likely that a reduced standard of notice would encourage debtors to
be careless in determining, or to intentionally understate, cure
amounts, then fail to provide ordered adequate formal notice in
order to avoid payment on contractual sums owed.      According to
Century, this is exactly what occurred in this case, where little
internal scrutiny was given to the setting of the cure amount by
National Gypsum.

                                   21
should not be so needlessly aggrandized. Accordingly, we hold that

§ 1141(d) cannot be read to provide for discharge of amounts in

default under assumed contracts in a manner that would nullify the

cure requirement of section 365(b)(1).

B.   Notice



     1.   The Contentions of the Parties

     Our “no discharge” conclusion necessitates consideration of

the lower courts’ split on the issue of notice.           The question

remains whether, due to inadequate notice, Century was deprived of

its ability to take reasonable measures to protect itself from

having the executory contract to which it was a party assumed with

a $0 cure amount.

     The bankruptcy court recognized that there was a fact question

as to the formal notice received by Century.        The court reasoned

that the same standard of notice applicable to unsecured creditors

-- mere knowledge of the pendency of the reorganization -- applied

with equal force to non-debtor parties to executory contracts.

Accordingly,   the   insufficiency    of   formal   (or   sufficiently

particularized actual) notice was not thought to be dispositive in

this case, because the summary judgment record reflected that a

representative of Century was aware of the commencement of the

National Gypsum reorganization.       The district court reversed,

concluding that formal notice was necessary, and that the fact


                                 22
question as to formal notice would have to be resolved by the

bankruptcy court on remand.          In essence, the lower courts agreed

that    unsecured     creditors    and   non-debtor   parties    to   executory

contracts in default are treated differently under the substantive

Code sections governing discharge and assumption, but the courts

disagreed as to whether the distinction was carried over into the

procedural Code sections governing discharge and assumption.

       National Gypsum contends that the bankruptcy court was correct

to dispose of this issue on constitutional due process grounds

pursuant to Sequa Corp. v. Christopher (Matter of Christopher), 28

F.3d 512 (5th Cir. 1994), rather than on statutory grounds pursuant

to § 365 and Bankruptcy Rule 6006.                 Based on this analysis,

National Gypsum concludes that Century is barred from recovery even

though a fact question remains concerning whether Century received

the formal notice ordered by the court.               We conclude that the

district court correctly rejected this analysis, because the result

is controlled by the Bankruptcy Code and Rules, obviating the need

to ascertain how constitutional due process considerations would

fill the perceived statutory lacuna.           Even if there was a gap to

fill,       the   constitutional   due   process   standard     set   forth   in

Christopher has never been extended to apply to assumption of

executory contracts.10


       10
       In Christopher, the debtor filed suit seeking a declaratory
judgment that post-petition claims made against him were discharged
through confirmation of his plan of reorganization. 28 F.3d at

                                         23
     2.   The Governing Statutory and Rule Provisions

     “As a general matter, a party seeking relief in bankruptcy

court is not entitled to achieve a fait accompli with respect to

the protectable interests of parties who did not receive notice

prior to any loss with respect to their interest.”        7 COLLIER   ON

BANKRUPTCY § 1109.06[2].   In furtherance of this end, the Bankruptcy

Code is replete with provisions requiring proper notice to all


514. The creditors’ claims arose out of the debtor’s breach of
contract for the acquisition of a subsidiary corporation. During
the negotiations of the deal, the creditors were “made aware” of
the debtor’s prior petition for Chapter 11 relief. Id. at 513-14.
Since the claims arose post-petition, the creditors were not
required to be listed. They were not listed as creditors and did
not participate in any of the bankruptcy proceedings.
     The bankruptcy court concluded that the creditors were
deprived of due process with respect to their unsecured claims, and
therefore, they were not bound by the terms of the confirmed
reorganization plan.    On appeal, we determined first that the
matter was not controlled by the statutory provisions of the Code.
Second, we addressed the constitutional requirements of due
process, in the context of unsecured creditors’ claims, expanding
on our earlier holding in Grossie v. Sam (Matter of Sam), 894 F.2d
778 (5th Cir. 1990). In Sam, we held that “all constitutional due
process requires ... is that [the creditor] have 'notice reasonably
calculated, under all the circumstances, to apprise [him] of the
pendency of the action and afford [him] an opportunity to present
[his] objections.’"    Id. at 781 (quoting      Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). Applying the
standard from Sam, the Christopher panel concluded that "it does
not offend due process to view actual notice of a debtor's
bankruptcy to a [prepetition] creditor as placing a burden on the
creditor to come forward with his claim." Matter of Christopher, 28
F.3d at 517 (stating that as to claims "due process requires only
notice that is both adequate to apprise a party of the pendency of
an action affecting its rights and timely enough to allow the party
to present its objections."). No Fifth Circuit case subsequent to
Christopher and Sam has extended the due process standard from the
discharge of debts to cure amounts of assumed contracts.



                                   24
parties affected by the proceedings.       See, e.g., B ANKR. RULE 6006.

The notice question presented by this case arises, in part, because

of the peculiar wording of Rule 6006.

     The district court based its conclusion on notice largely upon

the closely analogous case of Republic Health Corp.            v.   Coral

Gables, Ltd. (In re REPH Acquisition Co.), 134 B.R. 194 (N.D. Tex.

1991).    In REPH, the district court decided a bankruptcy appeal

involving an order denying a motion to assume an unexpired lease.

134 B.R. at 195.     The court affirmed the denial of the motion to

assume.   Id. at 202.   In so doing, the court rejected the Chapter

11 debtor's assertion that general notice of the existence of a

plan of reorganization provided sufficient notice of the debtor's

intent to assume the unexpired lease as part of the plan.           Id. at

199. Instead, the court held that the debtor had responsibility to

assure that the lessee was on notice of the debtor's specific

intent to   assume   the   lease.    See   id.   The   court   based   its

conclusion upon its reading of Bankruptcy Rule 6006 which provides:

      Assumption, Rejection or Assignment of an Executory
      Contract or Unexpired Lease
      (a) Proceeding to assume, reject, or assign
      A proceeding to assume, reject, or assign an executory
      contract or unexpired lease, other than as part of a
      plan, is governed by Rule 9014.
                                * * *
      (c) Notice
      Notice of a motion made pursuant to subdivision (a) or
      (b) of this rule shall be given to the other party to the
      contract or lease, to other parties in interest as the
      court may direct, and, . . . to the United States
      trustee.
BANKR. RULE 6006.

                                    25
     As other courts have noted, the setting of cure amounts is

"not otherwise governed by" the Bankruptcy Rules, and thus falls

under the auspices of Rule 9014.    See, e.g., O’Brien Envtl. Energy,

Inc. v. NRG, 188 F.3d 116, 123 (3rd Cir. 1999).      Bankruptcy Rule

9014 states, in pertinent part:

     In a contested matter in a case under the Code not
     otherwise governed by these rules, relief shall be
     requested   by  motion,   and  reasonable notice and
     opportunity for hearing shall be afforded the party
     against whom relief is sought.

BANKR. RULE 9014.

     National Gypsum takes the position that the      “other than as

part of a plan” language absolves the reorganizing debtor of

responsibility to provide notice of its intent to either reject or

assume the contract or lease.      Once the non-debtor party to the

contract or lease can be deemed aware that the reorganization has

been filed, the onus is on the non-debtor contractual partner to

follow the progress of the bankruptcy proceedings.    The REPH court

determined that Congress in fact adopted the contrary approach.

     Rule 6006(a) excuses the procedure that applies in
     contested matters when a proceeding to assume an
     unexpired lease is "part of a plan." Fairly interpreted,
     Rule 6006(a) does not eliminate the notice requirements
     applicable to a contested matter.      Rule 9014, which
     governs contested matters not otherwise covered by the
     Bankruptcy Rules, requires that relief be requested on
     reasonable notice to the party against whom the relief is
     sought.   The court holds that Rule 6006(a) implies a
     similar obligation upon a debtor who seeks to assume an
     unexpired nonresidential lease by means of its proposed
     reorganization plan. This means that although the plan
     itself constitutes the act of assumption contemplated by
     § 365(d)(4), the lessor, as the party against whom the

                                   26
     relief is sought, must be given reasonable notice of the
     debtor's intent. Even if Rule 6006(a) cannot be read to
     incorporate the notice requirement of Rule 9014, §
     1125(b) of the Code plainly requires that the contents of
     a proposed reorganization plan be adequately disclosed

REPH, 134 B.R. at 199 (emphasis added)(footnote omitted).          In sum,

the phrase “other than as part of a plan” was intended only to

obviate the need to file a separate motion expressing the intent to

assume or reject.    Rule 6006 was not intended to establish a two-

tier standard of notice in which formal notice is required if the

assumption is to be by motion, but if assumption is to be by plan,

the responsibilities of the debtor are radically diminished.

     The vast majority of the cases addressing the level of notice

required involve situations in which the debtor expressed its

intent to assume by motion to the court.        There is a paucity of

cases in which sufficiency of notice is considered when the debtor

expressed its intent to assume only in its proposed plan of

reorganization.     In cases where intent to assume is revealed by

motion, courts require strict adherence to the requirements of §

365 and Rules 6006 and 9014 out of “concern with protecting

unknowing   [contractual   partners]   from   the   consequences    of   an

assumption of which they had no notice and which [they] had no

opportunity to contest.”    Elliot v. Four Seasons Properties (In re

Frontier Properties, Inc.), 979 F.2d 1358, 1365 (9th Cir. 1992);

see also South Street Seaport Ltd. Partnership v. Burger Boys, Inc.

(In re Burger Boys, Inc.), 94 F.3d 755, 763 (2d Cir. 1996)(vacating


                                  27
district court’s decision to allow assumption when lessee was not

provided formal notice and was deprived of an opportunity to

contest the matter); In re Typocraft Co., 229 B.R. 685, 689 (Bankr.

E.D. Mich. 1999) (disallowing “assumption by an informal, default

method without the affirmative filing of a motion with notice to

interested parties”).

     Strict adherence to the Code provisions governing assumption

of contracts “might appear overly simplistic, [but] it is important

in that it allows a debtor in possession the flexibility intended

by the Bankruptcy Code in deciding whether or not to assume or

reject contracts or leases.”       Walat Farms, Inc. v. United States

(In re Walat Farms, Inc.), 69 B.R. 529, 534 (Bankr. E.D. Mich.

1987).    Also, the requirements of court approval and a hearing

after notice to interested parties provide necessary safeguards to

parties   forced   to   maintain     contractual   relations   with   a

reorganizing debtor.    See id.      “It is extremely important that

interested parties be notified and have an opportunity to appear

with regard to whether or not a debtor is going to assume. . . .”

Typocraft, 229 B.R. at 689 (dealing with the assumption of a

collective bargaining agreement); see Sea Harvest Corp. v. Riviera

Land Co., 868 F.2d 1077, 1079 (9th Cir. 1989)(“Thus, these rules

plainly specify that a debtor in possession must file a formal

motion and provide reasonable notice and an opportunity for a

hearing to the opposing party.”).


                                    28
     The theoretical underpinnings of these cases cannot logically

be restricted to those instances involving assumption by motion.

Notice as a procedural safeguard cannot expand or contract based

solely   upon    the   procedural     choice   of   the   debtor   when   the

ramifications to the non-debtor party are no less severe.                 Not

surprisingly, the limited number of courts that have explicitly

addressed this issue adopt the same approach taken by the district

court in REPH.

     In In re Flugel, 197 B.R. 92 (Bankr. S.D. Cal. 1996), chapter

13 debtors provided for the assumption of a non-residential real

estate lease in a special provision attached to their plan.               See

197 B.R. at 94.    Under this provision, debtors sought to assume the

unexpired   lease,     cure   the   existing   pre-petition   default,    and

provide adequate assurance of future performance.             See id.     The

Flugel court faced the question of whether the special assumption

provision in the plan was adequate to satisfy the Bankruptcy Code’s

notice requirements.      Discussing favorably the analysis of § 365

and Rule 6006 employed in REPH, the court held that notice was

sufficient because the non-debtor party was served with a mailing

“which included specific notice that the Debtors intended to assume

the lease.”     Id. at 94-95.   Once the non-debtor was served with the

notice, it had an opportunity to determine whether it needed to

contest the proposed cure provisions of the plan.

     The Flugel court noted that the same analysis had also been


                                      29
applied in Riddle v. Aneiro (In re Aneiro), 72 B.R. 424 (Bankr.

S.D. Cal. 1987).     In that case, the court arrived at the same

conclusion as the REPH and Flugel courts -- the debtor had a

responsibility to assure that the non-debtor party to the contract

or lease was on notice of the debtor's specific intent to assume

the lease so as to be able to evaluate whether the assumption

criteria were satisfactory.     See Aneiro, 72 B.R. at 427.       In

Aneiro, the non-debtor received a copy of the chapter 13 debtor’s

plan which contained a provision explaining the assumption.       In

both Aneiro and Flugel, the courts were in part attempting to

decide whether an assumption under a plan still required the filing

of a motion.   Clearly neither court would have been satisfied with

mere “pendency of the action” notice since both contemplated that

at a minimum the non-debtor would receive either the proposed plan

or some form of notice setting forth the debtor’s intent to assume.

Ultimately, the Aneiro court held that the motion to assume was

"made" when the non-debtor party to the lease was served notice of

the plan's filing.   See 72 B.R. at 428.   The identical approach has

been applied by other courts.   See, e.g., In re Hall, 202 B.R. 929,

932-33 (Bankr. W.D. Tenn. 1996)(notice requirements satisfied by

delivery of notice with plan attached).

     This result is the only course that is consistent with the

notice analysis in cases involving rejection of a contract, in

which a claim arises stemming from the rejection and the non-debtor


                                 30
is then allowed to assert an unsecured claim for damages.                 See,

e.g., In re Parkwood Realty Corp., 157 B.R. 687 (W.D. Wash. 1993).

In Parkwood, the court explained:

     These provisions read together clearly contemplate that
     a party to an executory contract will receive notice of
     rejection when it receives a copy of the Disclosure
     Statement and Plan, giving it a window in which to file
     a proof of claim for damages. A party which has not even
     had notice of the plan, let alone the debtor's intention
     to reject, is given no opportunity to file a claim. To
     hold that a claim has been discharged under these
     circumstances would clearly violate due process.
In re Parkwood, 157 B.R. at 690.

     Accordingly, we hold that the debtor had responsibility to

assure that the non-debtor party was on notice of the debtor's

specific intent to assume the contract.          Unless there is a showing

that the non-debtor possessed actual knowledge of a sufficiently

refined    degree,   the   debtor   must    demonstrate   delivery   of   the

proposed plan of reorganization or some other court-ordered notice

that set forth National Gypsum’s intent to assume the Wellington

Agreement with a $0 cure amount.           With the proper standard now in

mind, we turn to the facts of this case.

     3.     A Fact Question Exists as to Formal Notice

     National Gypsum asserts that Century received adequate formal

notice because, as the summary judgement record shows, a number of

notices were sent over the course of almost a year to attorney Lynn

Bregman.     Ms.     Bregman, who represented Century in a separate

insurance case involving National Gypsum that took place in the

Southern District of New York and was settled by June 1989, asserts

                                     31
that neither she nor any other attorney at Wilmer, Cutler &

Pickering was ever retained to represent Century in the National

Gypsum bankruptcy proceedings.          Bregman further states that a

search of the firm’s files failed to uncover any of the following

notices or documents: (1) the Notice of Assumption and Assignment

of Certain Executory Contracts and Unexpired Leases and Amount of

Cure Payment, If Any, (2) the solicitation package (consisting of

the solicitation letter, the Court’s Order Approving Debtor’s

Disclosure Statement, a ballot and ballot instructions for the

Debtor’s Plan, and the statement of position regarding the Debtor’s

Plan, nor (3) a copy of the Plan itself.          The import of these

particular notices and documents is that they are the few crucial

documents that set forth the requisite information concerning the

assumption and cure amount that would have alerted Century of

alleged error in cure amount.       On the other hand, none of the

numerous   peripheral   mailings   whose    receipt   is   not   contested

contained any material related to the assumption of the executory

contract with a $0 cure amount.11       Therefore, the bankruptcy court

correctly recognized the existence of a fact issue regarding



     11
       Neither of the lower courts truly ventured into the battle
over whether Ms. Bregman was a proper representative upon which to
serve notice in this litigation. Since Ms. Bregman’s connection to
this litigation was not central to the bankruptcy court’s analysis,
the record is somewhat deficient in that regard and therefore
precludes a definitive ruling here.     The record can be further
developed on remand if it is determined that the critical notices
were in fact sent to Century.

                                   32
Century's receipt of pre-confirmation notice of National Gypsum's

intent to assume the Wellington Agreement with a $0 cure amount.

      National Gypsum also argues that Century had sufficient actual

knowledge.   The summary judgment proof does establish that Joseph

Proko, Century’s vice-president in charge of special asbestos

matters, was aware that the National Gypsum reorganization had

commenced in 1990. Through his work as Century’s representative to

the Asbestos Claims Facility, Proko received status reports on the

Facility’s activities which often reference ongoing developments in

asbestos litigation.         National Gypsum’s summary judgment proof

contains a group of status reports dated throughout 1991 that made

brief mention of a dispute over whether the bankruptcy court would

approve National Gypsum’s continued participation in the Facility.

The reports do not discuss any other aspect of the National Gypsum

reorganization; specifically, there was no mention of bar dates,

assumption of the Wellington Agreement, default status on interest,

deadlines for objections, discussion of the solicitation package,

or the plan.       Accordingly, the summary judgment record does not

reflect that Century was sufficiently aware of National Gypsum’s

intent to assume with a $0 cure.

      In conclusion, the bankruptcy court ordered National Gypsum to

provide notice, pursuant to the requirements of the Bankruptcy Code

and   Bankruptcy    Rules,    of   its    specific   intent   to   assume   the

Wellington Agreement.        If such notice was not given, then the



                                         33
bankruptcy court erred in permitting National Gypsum to assume the

Wellington Agreement with a $0 cure amount.

     Our holding on the notice issue obviates the need to resolve

the disagreement below concerning the proper interpretation of the

bankruptcy court’s retention of jurisdiction language.   Since res

judicata can not operate to bar Century’s claim if notice was

inadequate, summary judgment in favor of National Gypsum was

inappropriate.

                        III.   CONCLUSION

     For the reasons set forth above, We AFFIRM the district

court’s decision.




                                34
