The issue in this bankruptcy proceeding is whether a debtor who was under a personal service contract is entitled to reject the contract after filing bankruptcy. In this case, the debtor, a movie and television actress, was under a contract to appear in a soap opera. She also entered into a separate agreement to appear in a different television program, "The A Team," for more money. The second agreement was in the nature of an option. The actress subsequently filed bankruptcy and requested release from the first, binding contract. Under bankruptcy law, the trustee may assume contracts that are advantageous to the estate and reject contracts that are not. The bankruptcy court found that under bankruptcy law, personal service contracts are not part of the bankrupt estate. Furthermore, in this case, the court was concerned with the good faith issue.
1. Why did Carrere file bankruptcy?
2. What is a personal services contract?
3. Under bankruptcy law, what is meant by the term "estate"?