Contents
I. Tenancy and rent claims
1. Preliminary insolvency proceedings
2. Main insolvency proceedings
II. Termination rights
1. Termination right of the landlord
2. Termination of the tenant-insolvency administrator
III. Obligation to return the property
IV. Rental security
I. Tenancy and rent claims
1. Preliminary insolvency proceedings
Outstanding rents from the period of the preliminary insolvency proceedings are only insolvency claims in the later opened proceedings and are (unless covered by the rent security, see below under section IV.) only with the insolvency quota (cf. Section 108 (3) German Insolvency Code (InsO). Only in rare cases in which a so-called "strong preliminary insolvency administrator" is appointed to take possession of the leased property on behalf of the insolvent tenant company do higher ranking liabilities of the estate (Masseverbindlichkeiten) arise. Ideally, landlords can work to ensure that the rental claims are upgraded by the insolvency court as liabilities of the estate.
If tenants pay the rent claims in preliminary insolvency proceedings, these are generally not contestable if they are for short periods of time (e.g., monthly). This constitutes a privileged cash transaction (Section 142 InsO).
2. Main insolvency proceedings
The opening of insolvency proceedings initially has no direct impact on the tenancy. This continues to exist (section 108 (1) sentence 1 InsO). The landlord's rent claims for the period after the opening automatically have the quality of liabilities of the estate, which means that they have priority and must be paid in full (section 55 (1) no. 2 InsO). The risk of insufficiency of the insolvency estate remains, i.e., if the assets are not sufficient to satisfy all liabilities of the estate, there is also a default here (if the collateral is insufficient). If the insolvency administrator continues to make use of the leased property after notification of insufficiency of the insolvency estate, the claims for payment of rent for these months are a new liabilities of the estate (section 209 (2) no. 3 InsO), which must be satisfied by the insolvency administrator with priority.
II. Termination rights
1. Termination right of the landlord
A landlord's contractual and statutory termination rights are partially blocked in the event of the tenant's insolvency. After filing for insolvency, the landlord may not terminate the lease agreement (1) due to a default in payment that occurred before the insolvency application was filed or (2) due to a deterioration in the debtor's financial circumstances (section 112 InsO). This explains why, in practice, the latest rent is often not paid by the tenant before the application for insolvency is filed. However, if the rent is not paid during the preliminary insolvency proceedings, this again leads to a regular right of termination for the landlord, e.g., extraordinary termination in accordance with section 543 (2) no. 3 German Civil Code (BGB) (i.e., in particular late payment of two consecutive rents). Extraordinary termination for other reasons, e.g., breach of duty to protect, remains possible at all times and is not affected by insolvency.
2. Termination of the tenant-insolvency administrator
The insolvency administrator of the insolvent tenant, on the other hand, has extended termination rights when insolvency proceedings have been opened. He can terminate the tenancy with three months' notice to the end of the month regardless of any agreements to the contrary (section 109 (1) InsO, shorter contractual notice periods remain unaffected by this). Potential claims for damages of the landlord due to the premature termination of the lease agreement are only insolvency claims that may not be satisfied with the help of an existing landlord's lien (section 55 (2) sentence 1 InsO, see also below under IV.). This termination does not have to be excercised on the first date on which it would be possible; the insolvency administrator can theoretically exercise it at any time during the insolvency proceedings. If several tenants are party to the lease agreement, the German Federal Court of Justice (BGH) has ruled that the agreement ends for all parties if the insolvency administrator of the insolvent tenant terminates the agreement (BGH, judgment of 13.03.2013, IX ZR 34/12). This follows from the principle of the unity of the tenancy and the indivisibility of the landlord's obligation to transfer the property to all tenants. However, the lease agreement may stipulate otherwise. Landlords should pay attention to this when drafting the contract.
III. Obligation to return the property
Disputes often arise over the question of the return of the leased property by the insolvency administrator when the agreement is terminated. A distinction must be made here between two legally separate claims. It is assumed here that the termination occurs when insolvency proceedings have already been opened.
On the one hand, the landlord has a legal claim to surrender the leased property (Herausgabepflicht). This is a so-called claim for separation (section 985 BGB, Aussonderungsanspruch), which must be fulfilled by the insolvency administrator of the tenant. However, the object of this claim to surrender the property is merely to (re)procure possession for the landlord in the condition in which the property currently is. This alone will generally not satisfy the landlord – depending on the condition of the rented property.
On the other hand, the landlord also has a contractually agreed right to the return of the rented property (section 546 (1) BGB). This claim is indisputably directed towards the return or eviction in the condition agreed by law or contract, but in any case without major soiling and free of the tenant's own objects. The question that arises for landlords, however, is whether this claim is a liability of the estate or an insolvency claim.
As the right to the return arises as a condition precedent to the termination of the rental property upon conclusion of the rental agreement, i.e., the "legal ground" for the claim was laid at a pre-insolvency point in time, it is generally an insolvency claim. This does not apply only to the extent that the insolvency administrator himself (or the strong preliminary administrator or within the framework of a court order to establish liabilities of the estate) is responsible for the changes or contamination of the property.
IV. Rental security
The landlord is entitled to separate satisfaction from the proceeds of the landlord's lien (section 50 (1) InsO). In addition to rental claims, it also secures claims for payment of ancillary costs or claims for damages. However, the proceeds from the statutory lien may only be used to cover rental payment claims for the last twelve months prior to the opening of insolvency proceedings (section 50 (2) InsO). Landlords have a comprehensive right to information from the insolvency administrator of the tenant regarding the assets that are subject to the lien.
Whether the landlord himself or the insolvency administrator of the tenant may sell the items that are subject to the lien depends on the item in question. The insolvency administrator may sell inventory or other movable items brought in if he or she is in possession of these items (section 166 (1) InsO).
Disputes often arise between landlords and financing banks, in favour of which there is a security transfer agreement regarding the items that lie on the premises. The order in which the rights arise is decisive for the ranking. Relevant for the landlord's lien is the time at which the item belonging to the tenant is brought into the rented premises. A security transfer agreement concerning the items that is entered into after the items are brought in has no effect on the lien (BGH, judgment of 15.10.2014 - XII ZR 163/12 para. 20). If an item is brought into the rented property with an existing security transfer agreement, the landlord's lien nevertheless takes precedence according to the BGH (BGH, judgment of 04.12.2003, IX ZR 222/02).
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