Enterprises in difficulty after Corona - new insolvency rules on the way

Friday, 03 July 2020

The economic consequences of the Corona crisis are profound and a particularly large number of enterprises are facing liquidity and / or solvency problems. The Belgian legislator wishes to respond to this by making a number of amendments to insolvency legislation, which includes judicial reorganisation and bankruptcy (Book XX Belgian Economic Law Code).

In particular, on 10 June, a bill was introduced in the Chamber of Representatives setting out a number of interesting new features. This is still a proposal but the request to treat the legislation under an urgent procedure has already been approved.

The proposed amendments are important for both debtors and creditors.

Some of the most notable new features are the following:

  • The possibilities of having a judicial attorney-in-fact appointed at the debtor have been extended considerably. Demonstration of a manifestly gross error is no longer a requirement. It is sufficient that the proper functioning of the debtor has been compromised. The request can come from the debtor or any interested party, such as a creditor.

  • A completely new mechanism has been proposed whereby a debtor can request suspension of one or more debts, outside of a judicial reorganisation (new Article XX.35 / 1 Belgian Economic Law Code). The request for such suspension will be decided on by the court using a swift procedure, such as summary proceedings. This mechanism would also cover new debts arising from a judicial reorganisation. Suspension is limited to the enforceability of the debt. This is without prejudice to the debt itself and the exceptio non adimpleti contractus, set-off and the right of retention would remain possible.

  • The obligation to declare bankruptcy within one month of the conditions being met would be suspended as long as the requirement of extraordinary circumstances affecting the economy in general within the meaning of Article XVIII.1 is satisfied.

In addition, there are a number of more technical amendments to the rules on judicial reorganisation.

We will of course keep you fully informed as soon as the final text of this proposal is known.

If you have any questions regarding enterprises in difficulty, judicial reorganisation or bankruptcy, please contact Mr. Simon Deryckere (s.deryckere@athenalaw.be) and Mr. Jonas Deryckere (j.deryckere@athenalaw.be).