Legal advice

I took out a loan from a company for a term of 10 years. I received a letter of claim from the administrator requesting to return the loan in full. Is it lawful for administrator to request the pre-term loan repayment?

18.02.2010 Dmitrijs Sustovs, head of the Litigation department of the Law

According to Section 1828 of Civil law, if the time of performance has been specified, then the debtor must observe it without waiting for a special reminder from the creditor, but nevertheless the debtor also need not perform the obligation earlier than the expiration of the specified term. 

However, the creditor in this particular case has become insolvent and therefore it is subject to the Law on insolvency. According to Section 97, Paragraph 1, of the Law on insolvency, if the contract concluded by the debtor is not fulfilled on the date when insolvency proceedings are initiated or it is fulfilled partly, the administrator is entitled to unilaterally withdraw from the contract or request the opposing party to fulfill the contract. 

In this case the provision of the Civil law is considered general in relation to the provision of the Law on insolvency, which is considered special. General provision shall apply only insofar as it is not provided otherwise by a special provision.  

Administrator has decided to exercise his rights, therefore, his actions may be considered legal. In case if the request won’t be fulfilled voluntarily, the administrator is entitled to bring action in the court in order to recover the loan.

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