THE SUPREME COURT ALLOWED THE TERMINATION OF LEASE AGREEMENT WITH A BANKRUPT DEBTOR

A case of challenging the termination of a lease agreement with an insolvent company by was considered by the Supreme Court of Russia. At the same time, three instances did not support the position of the lessor, who terminated the agreement, indicating that the lease right was included in the bankruptcy estate, and the termination of the agreement would violate the rights and interests of creditors.

The reason lies in the fact that upon termination of the lease agreement, it will be difficult to sell the property owned by the debtor, since there will be no right to use the land plot under it.

However, the Supreme Court of the Russian Federation reminded colleagues that, according to the terms of the agreement concluded between the parties, the lease relations were to last for three years. After this time, the tenant continued to use the property, which means that the contract was extended indefinitely.

In such a situation, either of the parties has the right to terminate it in the notification procedure, informing the counterparty of its intention.

What is more, the highest court indicated that the introduction of bankruptcy proceedings against the lessee does not automatically deprive the lessor of the right to abandon the contractual relationship with the debtor.

The Economics Board emphasized that there is often a clash of multidirectional interests in bankruptcy and that the task of the disputing parties is to prove the fact of abuse of the right by the opponent, which was not done with respect to the lessor (determination No. 303-ES16-19972 (2) dated November 5, 2020).