Research On The Right Of Termination Of The Bankruptcy Administrator To Executory Real Estate Lease Contract

This article starts with a proper understanding of the institutional value and conditions under which the bankruptcy administrator’s right to terminate is exercised and the purpose of its establishment,and discusses the particularity of the executory real estate lease contract and the requirement to coordinate the relationship between the bankruptcy law and non-bankruptcy law requirements,and further explores the need to restrict the administrator’s right to terminate.On this basis,a distinction is made between the bankruptcy of the lessor and the bankruptcy of the lessee to specifically explain the path to restrict the right of termination.Finally,the legal effects of the bankruptcy administrator’s exercise of the right to terminate are analyzed from the perspectives of repayment of prepaid rent,confirmation of debts for arrears of rent,and damage compensation after termination of the contract.Article 18 of the Bankruptcy Law gives the administrator the right to terminate the executory contract.The direct requirement is to maximize the debtor’s property,and the principle underlying it is to pursue the unification of legal policy objectives.In combination with the continuity of the real estate lease contract,the contract law’s special protection of the lease of creditor’s rights and the preemptive right of the lessee,this kind of right shall be restricted.Therefore,the bankruptcy law must be coordinated with the non-bankruptcy law.The exercise of such right of termination shall be in line with the principle of “buying and selling without breaking the lease”,which shall meet the criteria of commercial judgment and balance of interests,and the term in which the parties to the contract agree to exclude this kind of right to terminate shall be deemed invalid.The bankruptcy administrator is authorized by the court to manage and dispose of the bankruptcy property on behalf of the debtor.Although the continuation of the contract before the first creditors’ meeting requires the permission of the court,the bankruptcy administrator’s right to terminate cannot be effectively restricted but remains free and broad space to exercise.The object of the exercise of the right to terminate shall be the executory contract,and the judgment criterion is that the primary payment obligation and the secondary payment obligation related to the realization of the fundamental purpose of the contract which has not been fulfilled.Under the influence of its continuity characteristics,unexpired real property lease contracts belong to the executory contract because the lessor’s maintenance and repair obligations,the lessee’s rent payment and proper storage obligations are still in the unfinished state.The bankruptcy administrator shall exercise the right of terminate or decide to continue to perform the contract within a statutory period,otherwise the contract will be terminated by default at the end of the period.When a lessor goes bankrupt,the laws of major countries in both the civil law system and the common law system adopted the attitude of restricting the bankruptcy administrator’s right to terminate.Through explaining with Contract Law and other kind of civil law as a system and in a reasonable purpose,restrictions on the right to terminate can be classified according to whether there is a clear lease term as a standard.For scheduled lease contracts,restricting the bankruptcy administrator’s right to terminate should be the principle;For non-scheduled lease contracts,both parties can terminate the lease contract at any time.When a lessee goes bankrupt,the lessor’s statutory right of termination should be restricted to ensure the debtor’s continuous production and operation and provide greater possibilities for its reorganization;but under the conditions of liquidation,the bankruptcy administrator can consider the exercise of the right to terminate in order to avoid excessive rental losses and increase the settlement rate of bankruptcy claims.In terms of the legal effects of the exercise of the right to terminate the executory contract:(1)When the lessor goes bankrupt,the return of the prepaid rent shall be recognized as a mutual benefit debt,and the costs incurred during the period of good faith use after the termination of the contract shall be deducted;(2)When the lease goes bankrupt,the creditor’s right to unpaid rent shall be judged according to the time point.Before the court’s acceptation of the case and during the time when bankruptcy administrator is deciding to release or continue to perform the,it shall be recognized as a bankruptcy creditor.But after administrator’s decision is made,the creditor’s right to unpaid rent shall be seen as a mutual benefit debt;(3)The debtor’s liability for damages according to law is limited to the actual loss suffered by the counterparty due to the termination of the contract,and should be reported by the counterparty according to bankruptcy law and confirmed by the administrator as a bankruptcy claim.