On 13 July 2017, the Chamber of Representatives of the federal Parliament adopted in plenary session the Bill introducing a new Book XX "Insolvency of undertakings" into the Code of Economic Law ("CEL") (Wetsontwerp houdende invoeging van het boek XX "Insolventie van ondernemingen", in het Wetboek van Economisch Recht, en houdende invoeging van de definities eigen aan boek XX, en van de rechtshandhavingsbepalingen eigen aan boek XX, in boek I van het Wetboek van Economisch Recht/Projet de loi portant insertion du livre XX "Insolvabilité des entreprises", dans le Code de droit économique, et portant insertion des définitions propres au livre XX, et des dispositions d'application au livre XX, dans le livre I du Code de droit économique).
The reform of Belgian insolvency law forms part of a broader move to modify and rationalise key economic legislation (including, for instance, the Belgian Companies' Code, the reform of which is ongoing). The objective of the reform is to create an easily comprehensible and coherent insolvency regime by merging the currently separated bankruptcy Law of 8 August 1997 (Faillissementswet/Loi sur les faillites) and the Law of 31 January 2009 on the continuity of enterprises (Wet betreffende de continuïteit van de ondernemingen/Loi relative à la continuité des entreprises) and incorporating them in Book XX of the CEL. In practice, Book XX of the CEL will contain general principles applicable to both procedures as well as rules specific to each such procedure.
The main features of the reform can be summarised as follows:
- The scope of application of the new insolvency rules will be significantly expanded. The narrow definition of "tradesman" will be replaced by the definition of "undertaking", which will for example allow private individuals active on a self-employed basis to benefit from the protections offered by the insolvency law regime in case of financial difficulties.
- All insolvency procedures will be fully digitised. To that end, a Central Insolvability Database (Regsol) has already been established and was officially launched on 1 April 2017. Since that date, all notifications, depositions or communications to or by insolvency officials or delegated judges must be carried out through Regsol.
- The Bill contains various measures to encourage second chance entrepreneurship. For instance, natural persons who have been subject to a bankruptcy procedure will be entitled to obtain liberation of residual debts, subject to the approval of the competent judge.
- Amicable settlements between debtors and creditors are encouraged in order to increase the possibility of a swift re-launch of distressed companies at a moderate cost. It will also be possible for amicable settlements to be granted an executory nature, which will in turn allow creditors to enforce them in Court in the event the debtor would not comply with the terms of the settlement. Furthermore, the debtor will be entitled to request that the Court appoint a company mediator in order to prepare and support the amicable settlement, collective agreement or transfer under judicial supervision procedure.
- In order to avoid situations in which debtors abuse insolvency procedures in order to prevent creditors from enforcing a legal or contractual security, an exception to the principle that a request for judicial reorganisation suspends the sale following an attachment, is introduced subject to specific conditions.
- The provisions on director's liability for gross negligence that contributed to the bankruptcy of the company are relocated from the Belgian Companies' Code to Book XX of the CEL. Also, the provisions on the directors' personal liability for overdue social security contributions are relocated from the social security legislation to Book XX of the CEL. A specific liability for wrongful trading is also introduced.
- The provisions implementing Regulation 2015/848 of 20 May 2015 on insolvency proceedings (the "Insolvency Regulation") are inserted in a separate title of Book XX of the CEL. Furthermore, a framework similar to that of the Insolvency Regulation will apply to cross-border insolvency procedures which do not fall under the scope of the Insolvency Regulation.
The Bill will be published shortly and will enter into force on 1 May 2018.
The Bill is available in Dutch and French and can be found here.
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