The New Belgium Insolvency Law

The reformed Belgium Insolvency Law adopted in 2017 eventually came into force on 1 May 2018. The law entitled Book XX of the Economic Law Code includes most of the 1997 Bankruptcy Law; the 2009 Law on the Continuity of Enterprises, which deals with the reorganisation of financially troubled enterprises; and the EU Regulation 2015/848 on insolvency proceedings (EIR Recast).1

These changes keep Belgium in line with its neighbours and compliant with both the EIR Recast and the Proposed Directive on Preventive Restructuring, Second Chance, Insolvency and Discharge amending Directive 2012/30/EU2.

Seeking to comply with leading international standards such as the UNCITRAL model law on cross-border insolvencies, the Belgian legislator has introduced a transparent and effective system, which should increase predictability for all interested parties.

Application of the new law

The scope of application of Book XX of the Economic Law Code ratione personae has been extended to include all enterprises - the debtor being defined as (i) any individual who independently exercises a professional activity, (ii) any legal entity and (iii) any organisation without legal personality. This extends the application to include independent liberal professionals, farmers, not for profit organisations, foundations and trusts. Public law entities and consumers remain excluded. De facto organisations are only considered enterprises in so far as they distribute benefits to their members or to individuals who have control of the organisation.

A specialised insolvency section of the Commercial Court of the place where the company has its registered seat or COMI shall have jurisdiction. A Belgian court is able to open secondary procedures on the basis that a foreign debtor has assets such as a bank account in Belgium and an establishment is no longer required. This amendment should have a positive impact on international finance transactions where Belgian credit institutions are involved as often cash account agreements are opened in Belgium.

Measures to increase the efficiency of the law

The insolvency and the restructuring procedures are more streamlined and the grounds for appeal have been restricted to avoid delays for procedural reasons. Furthermore, judges have specific powers to order that relevant documents be added to the court file where this might increase the efficiency of the case.

On-line insolvency register

The eventual total digitalisation of the insolvency process to reduce costs will include an online central insolvency register to include all information regarding all amicable settlements...