JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
ruption insurance did not cover rent payments or other costs in the event of business interruption due to the COVID-19 pandemic, but since the outbreak of the COVID-19 pandemic, a new type of insurance has appeared, which covers dam - ages resulting from business interruption caused by pandemics. 6.13 Restrictions on the Use of Real Estate There may be contractual restrictions on how a tenant uses the real estate, restrictions on the use of common areas and prohibitions on the handling of hazardous materials or explosives. 6.14 Tenant’s Ability to Alter and Improve Real Estate The extent to which, and the conditions under which, the tenant is permitted to alter or improve the real estate are entirely up to the agreement between the lessor and the tenant. 6.15 Specific Regulations In principle, there are no specific regulations or laws that apply to leases of particular categories of real estate. 6.16 Effect of the Tenant’s Insolvency In the case of a bankruptcy procedure ( hasan tetsuzuki ) or a corporate reorganisation pro - cedure ( kaisha kousei tetsuzuki ), a bankruptcy trustee, or a debtor-in-possession in the case of a civil rehabilitation procedure ( minji saisei tetsu - zuki ), has a statutory right to determine whether to terminate the lease agreement or to continue the lease by performing its obligations. If the bankruptcy trustee of the tenant or the tenant as debtor-in-possession opts for the termination of the lease, the treatment of the unpaid rents depends on when the due date arose. Unpaid rents accruing before the com -
mencement of the relevant insolvency procedure are treated, in principle, as general insolvency claims and are therefore subject to the insolven - cy procedure and subordinated to preferential claims, while rents that become due after the commencement of the insolvency procedure are paid from the insolvency estate in preference to other general insolvency claims and are not sub - ject to the insolvency procedure. If continuation of the lease is chosen instead, unpaid rents accruing before the commence - ment of the relevant insolvency procedure will be treated as general insolvency claims, although there is a different academic view that treats these unpaid rents as preferential claims. Fur - thermore, if the lease is continued, the rents that are due on or after the commencement of the relevant insolvency procedure are paid from the insolvency estate in preference to other general insolvency claims. In practice, lease agreements often provide for the lessor’s right to terminate the lease upon the commencement of an insolvency procedure on the part of the tenant. However, there are a few legal precedents that reject these contractual provisions, so their validity remains contended. 6.17 Right to Occupy After Termination or Expiry of a Lease A tenant is obliged to vacate and return the leased property on or before the expiration or termination of the lease term if the lease is not renewed. The lessor does not generally have to do any - thing to ensure that the tenant vacates the prop - erty on time, as long as the lease duly expires or terminates. However, there is a special require - ment in a fixed term building lease that the lessor must provide written notice of the expiry of the
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