Bankruptcy estate legal responsibility for mutual real property company’s upkeep charges

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The Eastern Finland Court of Appeal these days dominated on a bankruptcy property’s legal responsibility for a mutual actual property organization’s maintenance expenses.

Facts

 

The stocks inside the mutual real estate organization owned by using the debtor conferred on the debtor a proper possession of workplace premises which the debtor had utilized in its business. The debtor’s enterprise turned into no longer continued through the financial ruin estate, but the property took measures to recognize the shares. The property contested its responsibility to pay the agency any upkeep costs that the organization’s shareholders have been obliged to pay and that have been charged to cover the organization’s prices.

The courtroom ruled that any renovation costs incurred after the financial ruin had been started could not be held as liabilities of the bankruptcy property, however as a substitute as receivables from the debtor in financial disaster (ie, the real shareholder). It applied the concepts installed in a Supreme Court precedent concerning the liabilities of a financial ruin property in a case concerning a limited legal responsibility golfing corporation’s protection fees (2015:103).

According to the Bankruptcy Act, financial disaster estates are accountable for money owed:

primarily based on a contract or dedication entered into by means of the estate or arising from the financial ruin court cases; and
for which the property is in charge beneath the Bankruptcy Act or another act.

The responsibility to pay upkeep prices to a mutual real estate company is based totally on a identity to the stocks inside the organization and the standards for the shareholder’s responsibility for the charge are supplied inside the corporation’s articles of association.

Decision

The Eastern Finland Court of Appeal first said that putting forward a debtor bankrupt does not switch the identity to the debtor’s belongings to the financial ruin estate. Therefore, a financial disaster property’s liability for upkeep prices can’t be based totally on a debtor’s identify to stocks. The court also said that, inside the present case, the corporation had not claimed that the financial disaster estate had, in particular, entered into a settlement constituting legal responsibility for the upkeep fees.

Referring to a Bankruptcy Act authorities concept, the court said that debts bobbing up from financial ruin proceedings are prices based totally on:

felony processes;
bankruptcy directors’ charges; and
different fees regarding an estate’s control.

Costs relating to an estate’s control may encompass those bobbing up from drawing up a debtor’s account. The court docket taken into consideration that preservation prices aren’t fees that may be considered as debts arising from bankruptcy court cases.

Referring to Supreme Court precedent (2015:103), the court stated that the debtor’s belongings belonged to the financial ruin property by using regulation. Bankruptcy directors ought to take control over a debtor’s assets and liquidate them. Such manipulate and control over the debtor’s belongings does not represent a financial disaster estate’s commitment to the debtor’s obligations. As the bankruptcy property had no longer actively used rights conferred by means of the shares in a way that couldn’t be considered property administration according to with its obligations supplied for in the law, it could not be held liable for the protection expenses claimed with the aid of the agency.

Comment

This selection similarly defines the scope of financial ruin estates’ liabilities and is a logical continuation of Supreme Court precedent in this location. As payments of financial ruin estates’ administrative prices are privileged compared with claims in opposition to a debtor, the definition of ‘administrative charges’ need to be interpreted carefully.

The bankruptcy of a shareholder in a mutual actual estate organization may increase the other shareholders’ liabilities as in exercise, the solvent shareholders should compensate for the lack of coins go with the flow to the mutual actual estate agency due to the financial ruin. However, the results at the solvent shareholders are not very last if the bankruptcy property realizes the stocks. The new shareholder might be liable for the debtor’s failure to pay the renovation prices.

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