Coronavirus – Moratorium on bankruptcy proceedings – Belgium

• Belgium

• Coronavirus - Country overview

17-04-2020

Under Belgian insolvency law, a debtor who has consistently ceased to pay its debts and no longer has access to additional loans finds itself in a state of bankruptcy. In such a case, the company itself may file for bankruptcy, or it may be subpoenaed in bankruptcy by any creditor, or the public prosecutor's office.

As already discussed in a previous article, a company that sees its continuity threatened can also apply for protection against creditors via a judicial reorganization procedure.

However, in order to avoid a rush to the courts, requesting such protection via a judicial reorganization procedure, and to limit the costs for companies (associated with such proceedings), the Belgian government intends to create a temporary moratorium on bankruptcy proceedings.

Temporary and automatic suspension of bankruptcy proceedings in Belgium

This would result in companies in financial difficulties being granted a temporary and automatic suspension. Such suspension has the concrete consequence that these companies are protected against seizures, cannot be declared bankrupt at the request of creditors, are not obliged to file a bankruptcy request and do not see their current contracts terminated based on insolvency.

The practical details are not yet clear, but the measures would apply only to companies that were in a good financial situation prior to the COVID-19 crisis. In addition, in cases of for example abuse of the suspension, the enterprise court will be able to terminate the suspension at the request of a creditor.

When the concrete details are clear we will be able to inform you in detail about this suspension. In the meantime, do not hesitate to contact us with all your questions regarding judicial reorganization and insolvency.

Contact an insolvency lawyer in Belgium today