BELGIUM SUSPENDED THE BANKRUPTCY PROCEEDINGS

The bankruptcy proceedings of the enterprises, connected with the spread of coronavirus, have been suspended by a royal decree in Belgium until May 17. According to the information, published in local media, the normative act extends to the organizations that suffered from the crisis, but did not have any signs of insolvency until March 18.

Thus, the decree should protect such companies from the risks of loss of property through sale at the auctions, as well as from the possibility of bankruptcy due to the claims of the creditors. At the same time, the decree allows initiating the bankruptcy proceedings in a lawsuit, filed by the general prosecutor's office (when the interests of the state as a creditor are affected) or by the debtor enterprises themselves.

The Minister of the Belgian Government, responsible for the activities of small and medium-sized businesses, Denis Ducarme called this decree “a breath of fresh air”. To put it simply, current commercial contracts, according to the adopted document, will not be canceled in case of a non-payment until May 17.The debtors, who have previously been required to file for bankruptcy under certain conditions, are now temporarily relieved of their duties. Can the debtor enterprises benefit from the suspension of bankruptcy if they invoke the royal decree as a part of their defense? This is proposed to be decided by the judges of the arbitration (in Belgium they are called “commercial”) courts.

“This reform,” states Denis Ducarme in a press - release, “will allow the companies to be protected from the possibility of compulsory bankruptcy, if they have not had time to pay the loan obligations, approved by the judges.”

According to the minister, this will allow Belgian entrepreneurs to get a kind of respite in the context of cash transactions. Thus, they will be able to survive the current crisis more calmly. Moreover, the decree does not apply to the bankruptcy of those companies that have previously undergone the relevant procedure. As it was noted by the office of Minister Ducarme, the "fraudulent bankruptcies will continue to be investigated in the courts."

We should recall that the Belgian law provides for the existence of two main systems, related to the recognition of insolvency: bankruptcy and concordat.

The bankruptcy proceedings are regulated by a special Bankruptcy Law, adopted on August 8, 1997. In case of a bankruptcy, the debtor loses the opportunity to manage and dispose of his property, and a special person - the manager - is appointed by the court. The bankruptcy procedure ends with the liquidation of the company, and the manager himself actually turns into a liquidator.

The second procedure is concordat. The debtor company reserves the right to manage the property. Practically, the sanation of the enterprise takes place, and when developing a program of rehabilitation measures, the court appoints the administrators (one or several) who should submit the reports to the judge.

The current royal decree, as the experts note, will only deal with the issues, related to the bankruptcies.