Ann: Contract Default Notice Issued To Varm Cosmo, page-106

Can’t help but suggest that an accounting determination of “bad debt” is very different to a legal determination of the contract being no longer in existence. Someone earlier pointed out that with a mobile phone plan (contract), failure to pay could result in the phone company treating the unpaid funds as “bad debt”, but that doesn’t let the customer off the hook for payment under their contract. Similarly here, while for accounting purposes maybe the company has written off as bad debt some funds yet to be received that doesn’t, in my opinion of course, cause the contractual obligation on the other party to pay to expire nor protect it from being sued for those funds IF there has been some relevant breach of contract. I’d not be surprised to find that the $500k is just a contractually available damages sum, maybe specific damages in the (a?) contract or maybe claimed as general damages without being specified in the (a?) contract.

Bad debt accounting by one company is not, I believe, going to cause an otherwise valid contract to become void. On that basis, if there are still actions remaining to be taken under the contract, say payment of an amount in exchange for delivery of some product, I’d be surprised if either party could not still sue for specific performance of the contract should it wish to (also no doubt dependent on what jurisdiction applies to the contract(s?)). Anyway, no doubt all will be revealed in the fullness of time and all this IMO with all others suggested to DYOR.

Question for me is if a deal is done to sell off that part of MXC, will they sell with it the rights to sue for breaches of contract by VC or will they keep the VC contract out of the sale? Does the VC contract add value to the sale or not?