LITHUANIA Law and Practice Contributed by: Gintautas Šulija and Eduard Plešak, Šulija & Partners
2.9.8 Liquidation of Domestic Lessees A domestic lessee may be liquidated through volun - tary or involuntary insolvency proceedings (see 2.9.2 Overview of Relevant Types of Voluntary and Invol- untary Restructurings, Reorganisations, Insolven- cies and Receivership ), under the decision of the shareholders of the lessee, a court’s decision, or the decision of the Register of Legal Entities. A domestic lessee may be placed in administration by court order, law, or transaction. In the cases pro - vided for by the Civil Code 2001, administration may be determined by an administrative act. 2.9.9 Ipso Facto Defaults The enforceability of ipso facto default clauses may be subject to limitations imposed by the insolvency laws of Lithuania. In particular, lessors may be pro - hibited from terminating the lease and repossessing an aircraft during the restructuring proceedings until a court order approving the restructuring plan takes into effect. 2.9.10 Impact of Domestic Lessees’ Winding-Up After the initiation of insolvency proceedings, repos - sessing the aircraft may require court approval or co- ordination with the insolvency administrator. Lease rentals, maintenance reserves, and any other payments due from the lessee to the lessor may be subject to moratoria (see 2.9.7 Imposition of Mora- toria in Connection With Insolvency Proceedings ), permanent termination (in the case of bankruptcy proceedings), or payment under a restructuring plan approved by the court (in the case of restructuring proceedings). The ability to set off any of the lessee’s obligations against the lease security deposit may be affected by the limitations imposed by the insolvency laws. 2.10 Cape Town Convention and Others 2.10.1 Conventions in Force In June 2024, the Lithuanian Parliament passed a law ratifying the Convention on International Interests in Mobile Equipment (the “Cape Town Convention”). The law came into force on 1 July 2025.
The aircraft will not be deemed part of the lessee’s property simply owing to the initiation of insolvency or restructuring proceedings. Claims of the mortgagees, employees, and the State will have priority in insolvency proceedings over the lessor’s claims (lease rentals, other payments due to the lessor, etc). 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent The main risk for a lender if a borrower, a guaran - tor or an entity providing security becomes insolvent is related to the lender’s reduced ability to recover any due and unpaid sums. A mortgage as a mean of security should grant the highest level of security in such cases. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings After the court accepts an application on the initiation of an insolvency case, the assets of the legal per - son may be seized according to the already-issued executive documents. However, the realisation of these assets and/or collection is suspended, except when the court allows the bailiff to complete the sale of property. If the court refuses to start the insolvency case, the recovery and sale of property is renewed from the date of the respective court ruling coming into force. From the date of entry into force of the court order to open a bankruptcy case, the deadlines for the fulfilment of all obligations of a legal entity are considered to have expired. The insolvency administrator may inform the lessor that the lease agreement will continue if they find it economically reasonable for the company and its creditors. If restructuring proceedings are initiated, the law prohibits creditors from terminating or changing the terms of an essential agreement to the detriment of the company until a court order approving the restruc - turing plan takes into effect. If the court terminates the restructuring or bankruptcy proceedings, the calcula - tion of interest and penalties, as well as the recovery proceedings are resumed.
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