Business In Financial Difficulty: How Can You, The Creditor, Safeguard Your Rights As Much As Possible When You Have To Deal With A Business That Is In Financial Difficulty?

• Published date: 29 March 2023
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Financial Services, Insolvency/Bankruptcy
• Law Firm: Monard Law
• Author: Ms Sofie Souvereyns

No one has yet given their last word yet (orally or in writing) about the current financial environment. It is clear that virtually everyone has been impacted by it one way or another. Naturally, when one undergoes financial problems, it creates the risk of a snowball effect on another. It is this very reason that you, the business owner, should explore what other options are out there to safeguard your rights in respect of your co-contracting party.

How can you, as a buyer or supplier, protect yourself as much as possible from your co-contracting party's financial problems or even in the event that your co-contracting party goes bankrupt?

1. RETENTION OF TITLE

Moveable goods - If you are a seller or supplier of moveable goods, you should agree on a retention-of-title clause with your co-contracting party. In particular, the clause should stipulate that the transfer of the title to the goods in question is suspended until the buyer pays the full purchase price. A retention-of-title clause gives you the possibility to recover the moveable goods if the buyer continues to default in paying the purchase price or, alternatively, if the buyer goes bankrupt.

Prior agreement - Retention of title is valid only if parties agreed upon it in writing before the goods are delivered. It can be based not only on an agreement concluded before the cooperation but also on your general conditions. If these conditions are printed on the back side of the invoices, you should mention this on the front side, directing the recipient to read the reverse. The general conditions on the back side apply in such scenario if there is a sustainable commercial relationship whereby the co-contracting party in question would have already read the conditions and would have never opposed them.

Goods become immoveable from use or because of its nature - When agreeing on title retention, you don't have to fulfill any validity requirements or register it unless it concerns goods that could become immoveable from use or because of its nature. These would be goods that are incorporated into or linked to an immoveable property, such as, for example, the sale and installation of windows, roller shutters, built-in closets, staircases, etc.

For these types of goods, your can continue to keep your right to their title only if you register this right in the National Pledge Register and this is done before the goods becomes immoveable. Registering this right is not mandatory, but it significantly offers...