A Global Guide
This chapter describes the treatment of executory contracts under Lithuanian corporate insolvency law. After a brief introduction on the mandatory procedures and out-of-court remedies available to businesses experiencing financial or economic distress, it covers the treatment of executory contracts under the law. The chapter observes that the mere opening of insolvency proceedings does not automatically terminate contracts. Rather, the Enterprise Bankruptcy Law provides different rules for the termination of: (i) employment contracts; (ii) contracts with the management; and (iii) other contracts (for example, rental, lease, sale / purchase). These rules and those governing other contracts and contractual remedies agreed by the parties in solvent times (such as ipso facto clauses) are investigated in the chapter, alongside recent reforms in the area and the reasons behind these reforms. The chapter concludes that current Lithuanian statutory law offers a rather rudimentary set of rules for the treatment of executory contracts in insolvency proceedings (both under the Enterprise Restructuring Law and the Enterprise Bankruptcy Law). Compared to other jurisdictions (such as, for example, Germany), Lithuanian law lacks detailed rules for the treatment of for example severable contracts, retention of title, lease agreements with a differentiation of the debtor being a tenant or landlord, and contracts with continuous obligations.
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