One of the problems encountered by leasing companies is the option to terminate a leasing agreement in case a lessee opens a restructuring procedure. The purpose of this article is to explain any possible doubts in this respect.

First of all, it needs to be stressed that the aim of the restructuring procedure is to prevent debtor’s bankruptcy. With this end in view, a debtor (in the case of leasing - lessee) in many cases has to use services provided by its counterparties under the agreements concluded in the past. Thus, the legislator introduces the instrument of contract durability constraint, limiting counterparty’s rights (in this case - leasing company’s rights) - both statutory and contractual - to terminate the agreement with a debtor. Consequently, the ability to terminate a commercial agreement after the opening of the restructuring procedure has been significantly restricted.

Pursuant to Article 256 sec. 1 and 2 of the Restructuring Law, from the day the accelerated arrangement procedure is opened until the day it is closed or the decision to discontinue the accelerated arrangement procedure becomes final and binding, the termination of among others the leasing agreement, without the consent of the creditors’ committee, is unacceptable.

However, the Restructuring Law provides for a relevant exception in this respect (Article 256 sec. 3), namely stating that when the basis for the agreement termination is the debtor’s failure to perform, after the day of the opening of the accelerated arrangement procedure (also arrangement and recovery, as applicable), obligations which are not covered by the arrangement or the occurrence of other circumstances provided for in the agreement, then if they arose after the procedure opening day, the agreement may be terminated.

It is noteworthy that Article 256 sec. 1 of the Restructuring Law does not form, independently, the basis for terminating the agreement at the consent of the creditors’ committee. The debtor’s counterparty should therefore dispose of a valid legal basis (contractual or statutory) for terminating the agreement (its unilateral termination).

Only a debtor which after the initiation of the restructuring procedure duly performs its contractual obligations may benefit from the contract durability constraint. If the basis for the termination is the debtor’s failure to perform, after the day of the opening of the accelerated arrangement procedure, the obligations which are not covered by the arrangement or other circumstances provided for in the agreement, if they arose after the procedure opening day, the provisions on the protection of contract durability do not apply (Article 256 sec. 3 of the Restructuring Law). Consequently, it must be acknowledged that it will be possible to terminate the operating leasing agreement by the lessor (creditor) if after the opening of the restructuring procedure the lessee (debtor) ceases to repay leasing instalments, since under Article 77 sec. 2 of the Restructuring Law, the leasing instalments due after the day of the opening of the restructuring procedure are not covered by the arrangement.

Still, in the case of financial leasing the situation of the lessor will be completely different. Not only will it not be entitled to terminate the agreement if the leasing instalments are not repaid but also it will not be entitled to receive any leasing instalments whatsoever since under Article 252 sec. 1 from the day the accelerated arrangement procedure is opened until the day it is closed or the decision to discontinue the accelerated arrangement procedure becomes final and binding, the fulfilment by a debtor or administrator of any obligations stemming from claims, which under the law are covered by the arrangement, is unacceptable. Pursuant to Article 81 sec. 4 read together with Article 150 sec. 1, leasing instalments in financial leasing, as personal claims, are covered by the arrangement in whole.

The above rule will also pertain to the recovery of the lessor’s claims concerning leasing instalments in the event of termination of the leasing agreement. As regards claims arising after the opening of the restructuring procedure with regard to operating leasing, it will be possible to recover them. However, it will not be possible to recover the claims under the financial and operating leasing which were not settled before the opening of the restructuring procedure.