A commercial tenant brought a motion under s. 37 of the Bankruptcy and Insolvency Act to reverse a bankruptcy trustee’s decision to disclaim a lease following the court-approved sale of the bankrupt landlord’s assets.
The purchaser had insisted that the trustee terminate the tenant’s lease as a condition of closing.
The court held that s. 30(1)(k) of the BIA does not authorize a trustee of a bankrupt landlord to disclaim a lease granted by the landlord; such termination rights are governed by provincial law.
Because the tenant was not in breach and provincial law provided no unilateral termination power, the trustee lacked authority to issue the termination notice.
The notice was declared void and the lease remained in force.
