The European Restructuring Directive 2019: Redrawing the Belgian insolvency landscape again

Since September 1th 2023, the new insolvency rules apply. These new insolvency rules follow the implementation of the European Restructuring Directive 2019/1023 of the European Parliament and the Council. However, the Belgian legislature did not limit itself to implementation. In addition, a number of profound changes were made. As a result, the Belgian insolvency landscape is being thoroughly redrawn again, after a significant change already occurred in 2018. Below we explain the main changes that affect the business owner, as creditor or debtor.

Early intervention through the Chamber for Companies in Difficulty (“CCID”)

Whereas until recently the CCID had primarily an investigative function, it is now possible through the CCID to summon certain creditors (not only private but also public such as tax authorities or the NSSO) to negotiate a settlement with them. If an agreement is reached, it is converted into an executable record.

Easier access to a judicial reorganization?

The inadmissibility penalty for a defective petition is permanently removed. This also allows a debtor to now limit the list of known creditors to what is feasible to chart. If this information cannot be communicated, the reasons must be justified.

From now on it will also be possible to file a list of creditors who are holders of “limited” claims, which are paid immediately, so that they can be excluded from the reorganization to avoid unjustifiable administrative and financial burdens. The practice will show whether this facilitates access to a judicial reorganization for small self-employed persons, sole proprietors,… who often no longer have the required resources to obtain professional and administrative assistance in a judicial reorganization.

Rescheduling of the reorganization procedures.

An amicable agreement can now be made with only one creditor (previously at least two).

Judicial reorganizations (amicable or collective agreement) have a public or private character. In the latter case, no publicity is given to the proceedings. Moreover, it can also be requested by a creditor or a shareholder.

In judicial reorganizations by collective agreement, a distinction will now be made between SMEs and large companies. For large companies, among other things the procedure becomes more complex due to further categorization of creditors. The homologation of the reorganization plan will be less evident. The control by the insolvency court is being broadened, the so-called “best creditors interest” test, to include whether non-consenting creditors are treated better than if the normal creditors ranking order were to apply in the case of concurrence. Also, for large companies, shareholders should be involved in the collective agreement.

The required majorities of creditors become more complex. The maximum suspension is shortened to 4 months (instead of 6 months) and in exceptional cases to 12 months (instead of 18 months).

The transfer under judicial authority is no longer a judicial reorganization primarily to safeguard continuity. In essence, it has become a procedure for the liquidation of the company.

Bankruptcy

A debtor can now request, when filing for bankruptcy, the prior transfer of part or all of its assets or activities in full seclusion. A so-called “pre pack” as already known in the Netherlands. With this, the legislator wants to offer the debtor the possibility of not losing the full value of the company in a bankruptcy settlement.

Discharge

In the event of bankruptcy, the debtor no longer has to request discharge . This will follow automatically at the conclusion of the proceedings, provided that a discharge is not contested.

Bart Brunet and Sara Burm
De Langhe Attorneys