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2 Pratt's J. Bankr. L. 360 (2006-2007)
New York Bankruptcy Court Holds That an IRU Constitutes an Enforceable Property Interest

handle is hein.journals/prattjb2 and id is 379 raw text is: New York Bankruptcy Court Holds That an
IRU Constitutes an Enforceable Property
A court holds that an indefeasible right of use agreement may
convey a property interest enforceable by the grantee notwith-
standing the grantor's retention of legal title to the subject facili-
ties, the grantor's bankruptcy, and the grantor's sale of its interest
in the subject facilities to a third party that does not assume the
IRU agreement.
n WorldCom, Inc. v. PPL Prism, LLC (In re WorldCom),' the
Bankruptcy Court for the Southern District of New York examined
the nature of an indefeasible right of use (IRU) in telecommunica-
tions fibers granted by the owner of the fibers and found that the IRU
before it constituted an enforceable property interest of the recipient,
notwithstanding the grantor's bankruptcy and the subsequent sale of the
grantor's interest in the fibers to a third party. This decision appears to be
the first reported case to discuss the treatment of an IRU in bankruptcy
Brian L. Holman, a partner in the Los Angeles office of White & Case LLP, repre-
sents financial institutions and other parties in bankruptcy proceedings, out-of-
court workouts, commercial litigation and lending transactions. He can be
reached at bholman@whitecase.com.

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