14 July 2021

Flexible insolvency rules extended to 16 July 2022

By Royal Decree dated 24 June 2021 the federal government has extended these provisions until 16 July 2022.

It is the intention to avoid a peak in bankruptcies, since there is still a need for flexibility within the procedure of judicial reorganization (“gerechtelijke reorganisatie”).

The law dated 21 March 2021 for the amendment of Book XX of the Code of Economic Law and the Income Tax Code (hereinafter: the “Law”) introduced a number of flexible insolvency provisions.

The relevant provisions can be summarized as follows.

Firstly the Law made the formalities for opening a procedure of judicial reorganization more flexible.  In principle, the required documents must be attached to the request, this under the sanction of inadmissibility of the procedure. At present companies are temporarily allowed to file documents up to two days before the court hearing.

Also, the possibility of concluding a “preparatory agreement” (“voorbereidend akkoord”) has been introduced.  Based on the foreign model of a pre-packaged insolvency, the possibility was created to pursue a preparatory agreement prior to starting a formal procedure of judicial reorganization.

Finally, the Law has extended the duration of the commercial investigation (“handelsonderzoek”) from 4 to 8 months (with the possibility of extension to 10 months) in case a judge-reporter has been appointed. In case the investigation is conducted by the chamber for enterprises in difficulties itself, the duration of the commercial investigation is extended from 8 to 18 months.

The corresponding articles of the Law have now been extended until 16 July 2022.

This date was chosen because on 17 July 2022 the European Directive on Restructuring and Insolvency (Directive 2019/1023) will enter into force in Belgium. This directive contains new rules for increasing the efficiency of proceedings for restructuring, insolvency and debt cancellation.

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