28 Jan The possibility not to perform a current rental agreement in the framework of the Act on the Continuity of Enterprises (Continuity Act)
In a recent judgement the Court of Appeal of Antwerp has ruled about the possibility for a tenant in judicial reorganization to put a premature end to a rental agreement.
In the case which gave rise to the judgment, a tenant in state of judicial reorganization had sent a termination letter to the landlord regarding its current lease on the basis of article 35§2 of the Continutiy Act.
The landlord disputed the validity of the termination.
There is a considerable debate amongst scholars regarding the interpretation of Article 35§2 of the Continuity Act.
In its judgment, the Court of Appeal of Antwerp has set the modalities of article 35 sharply: 1) to invoke this article, the tenant has to send the notice of termination to the landlord within 14 days after the opening of the judicial reorganization, on penalty of nullity of his right; 2) the tenant also has to prove that the termination is necessary to successfully achieve the judicial reorganization procedure.
In this case, the Court held that the notification was beyond the deadline. Moreover, the Court held that the tenant did not prove the necessity of the termination. Indeed, the Court took into account that the rental agreement was concluded at market conform conditions and that contract provided a termination option.
The consequences of this decision are important, as this means that the lease contract should be carried further and the rental fees payable to the landlord are not covered by the suspension.
This judgement is a principle-judgement which may also be of great importance for other types of agreements concluded with a company in judicial reorganization.
For more information about this topic, do not hesitate to contact M. Jonas DERYCKERE (jonas.deryckere@cairnlegal.be)
Best regards,
The Cairn Legal team
Partners Frédéric de Patoul | Frank Weinand | Didier Chaval | Bernard Vandenkerckhove | Carl Vander Espt | Arnaud Massart | Guillaume Rue | Jonas Deryckere
Associates Dorothée Cardon de Lichtbuer | Virginie Schoonheyt | Bojana Salovic | Stoffel Werbrouck