Article 119. Refusal to Execute Debtor's Contracts

A court ruling on the introduction of an external management procedure cannot be a basis for suspending or refusing to execute contracts and other transactions of the debtor concluded before the initiation of an insolvency case. The external manager, except for cases provided by this Law, shall continue the execution of contracts concluded before the initiation of the debtorʼs insolvency proceedings, which are considered important for the continuation of the debtorʼs activities. In this respect, the agreement of the parties on the suspension of execution or refusal to execute contracts concluded by the debtor in connection with the introduction of an external management procedure in relation to the debtor shall be considered invalid, except for cases provided by this Law.

The external manager shall have the right to refuse to execute the debtor's agreements concluded before the initiation of insolvency proceedings, only in respect of agreements that have not been executed by all parties in whole or in part, in the existence of one of the following circumstances:

execution of the debtor's contracts will cause losses for the debtor and (or) in comparison with similar contracts concluded under comparable circumstances, violate the rights and legitimate interests of the debtor, creditors;

contract is long-term (concluded for a period of more than one year) or is designed to obtain positive results for the debtor only in the long term;

contract provides for preferential satisfaction of the claims of one creditor in comparison with the claims of other creditors;

presence of other circumstances preventing the restoration of the debtor's solvency.

In the cases provided for by part two of this article, the contract shall be deemed terminated from the moment all parties under such contract receive an application from the external manager about refusal to perform the contract.

The party to the contract, in respect of which the refusal of the debtor is declared, shall have the right to demand compensation from the debtor for real damage caused by the refusal to perform the contract.