ARMENIA Law and Practice Contributed by: Narine Beglaryan, Arianna Adamyan and Anahit Aloyan, Concern Dialog
As a general rule, in the event of a company’s liq - uidation, any previously issued power of attorney automatically terminates on the date the company is officially liquidated. 2.9.5 Other Effects of a Lessee’s Insolvency When a lessee in possession of an aircraft decides to enter into liquidation, it is required to notify all credi - tors of the commencement of the liquidation proceed - ings. Following such notification, the mutual obliga - tions between the parties must be settled, and the aircraft is to be returned to the lessor in accordance with the terms of the lease. If, during liquidation, it is established that the debtor legal entity’s assets are insufficient to fully satisfy creditors’ claims, the debt - or’s liquidation commission (or liquidator) is obligated to file a petition with the court for the debtor to be declared bankrupt. In such a case, all further legal relations between the debtor and the lessor shall be governed by bankruptcy law. When a lessee in possession of an aircraft enters an insolvency/bankruptcy process, the following princi - ples generally apply: • the lessor may apply to the court for early termi - nation of the lease agreement and seizure of the subject of the lease in connection with the early termination of the agreement; • the aircraft will not be treated as part of the les - see’s insolvency estate, as ownership remains with the lessor; and, thus • as a result, the liquidator or administrator cannot assert the rights of other creditors in priority to the lessor with respect to the aircraft, since it is not deemed part of the debtor’s property. However, any monetary claims the lessor may have under the lease (such as unpaid rent or damages) will be treated as unsecured claims and must be included in the relevant creditors’ list in the insolvency proceed - ings. 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent The key risks associated with the insolvency of a bor - rower, guarantor or security provider have been out - lined below.
In the event of the debtor’s bankruptcy, if the pledge is not a first-ranking pledgeе and there is no agreement with the first-ranked pledgee regarding the pro rata distribution of proceeds from the sale of the pledged property, there is a risk that the debtor’s assets may be insufficient to satisfy all claims. As a result, the secured creditor may not recover the full amount of the debt. If the pledged asset is subject to realisation through a public auction, even for a first-ranking pledge, the starting price is already set below the actual market value. Moreover, the price is subject to further reduc - tion during the auction process, potentially resulting in the asset being sold at a value significantly lower than its market value. In the event of the insolvency of a surety or guaran - tor, there is a risk that the secured creditor will not be included in the list of creditors. Specifically, if there has been no default under the principal obligation at the time of the surety’s or guarantor’s insolvency, the creditor’s claim is not recognised as due and therefore may not be registered in the insolvency proceedings. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings Armenian law provides for a moratorium (a temporary stay) in both the threat of bankruptcy and bankruptcy proceedings. Moratorium Under the Threat of Bankruptcy Proceedings A moratorium is imposed from the moment a court decision approving the application for threat of bank - ruptcy and the financial recovery (rehabilitation) pro - gram takes legal effect and remains in effect until the completion of the financial recovery program. Moratorium in Bankruptcy Proceedings A moratorium is imposed from the moment the court accepts the bankruptcy application for proceedings and remains in effect until the conclusion of the bank - ruptcy case. 2.9.8 Liquidation of Domestic Lessees When the debtor is declared bankrupt, they have the right to submit a financial recovery plan for approval
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