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Coronavirus – Stay on legal enforcement with a view to protect enterprises – Belgium

  • Belgium
  • Coronavirus - Contractual issues
  • Coronavirus - Country overview

28-04-2020

On 24 April 2020, the federal government enacted yet another COVID-19 Decree1 in the on-going battle against the impact of the COVID-19 pandemic. This new emergency Decree provides a temporary protection for debtors that are affected by the COVID-19 pandemic and its consequences from their creditors by imposing a stay on the rights of these creditors to enforce debts, to terminate existing agreements prematurely and to initiate bankruptcy proceedings.

In the following Q&A, we will answer some key questions regarding the impact of the new COVID-19 Decree.

1) Does the COVID-19 Decree prevent any and all forms of legal enforcement for the foreseeable future?

The COVID-19 Decree introduces a stay of enforcement in relation to all debts, irrespective of their date of incurrence or due date, but only until 17 June 2020 (at 11:59 pm) 2.

This reprieve is granted to all enterprises whose continuity is in danger (as envisioned in Book XX of the Code of Economic Law) due to the COVID-19 pandemic and its consequences, and that had not stopped making payments on or prior to 18 March 2020.

More concretely, no protective or executory attachment can be made, and no means of enforcement may be taken or continued on assets of the enterprise.

However, there are a few notable exceptions:

  • the COVID-19 Decree clearly stipulates that legal enforcement on immovable assets remains possible
  • the COVID-19 Decree contains a procedure for the creditor to lift the moratorium. More specifically, if a creditor can argue that the debtor does not qualify to benefit from the moratorium, that creditor can file a petition to lift the moratorium with the president of the competent Court of Enterprises
  • certain assets fall outside of the scope of the COVID-19 Decree such as security interests and assets abroad

2) Can I terminate an existing contract due to one of the contracting parties not fulfilling their payment obligations?

The COVID-19 Decree stipulates that all contracts that were closed by the enterprise before 24 April 2020 cannot be terminated unilaterally or by the courts on the grounds of non-payment of a monetary debt that is contractually due and payable3.

It should be noted that this suspension of the right to terminate existing contracts does not apply in the event of a breach of non-monetary obligations. Parties will regain all their rights after the end of the moratorium, meaning that they will be able to terminate the contract unless the breach of non-payment has been remedied.

Please note that the COVID-19 Decree explicitly states that the aforementioned shall be without prejudice to the obligation to pay debts that are due. Also, other contractual remedies, such as the exception of non-performance, set-off and retention rights, remain available4.

Moreover, as mentioned under question 1, a creditor can file a petition with the president of the competent Court of Enterprises to have the moratorium lifted.

3) Does the COVID-19 Decree prevent my enterprise from being declared bankrupt?

Any enterprise affected by the COVID-19 pandemic cannot be declared bankrupt or, if it is a legal entity, dissolved, unless (i) at the initiative of the public prosecution or a temporary director, or (ii) with the enterprise’ consent.

4) Does the COVID-19 Decree prevent me from filing for bankruptcy?

An enterprise can be declared bankrupt with the enterprise’s consent, meaning it is still possible to file for bankruptcy.

However, the deadline to do this has been extended. Where one is ordinarily required to file for bankruptcy within a month after the enterprise has ceased all payments (cfr. article XX.102 of the Code of Economic Law), the COVID-19 Decree suspends this obligation until 17 June 20205 if the COVID-19 pandemic or its consequences are the reason of the filing for bankruptcy.

5) What are your key recommendations?

This Q&A gives a general overview of the impact of this new COVID-19 Decree. However, please note that the reprieve granted to debtors is of a temporary nature. It will be crucial for your enterprise to prepare for the end of the moratorium, either to protect yourself from debtors or to efficiently enforce your rights as a creditor. Moreover, there are still some possibilities remaining to enforce your debts (e.g. assets abroad) or to secure your position (security interests). Therefore, we recommend contacting a member of our team for any questions you may have in that regard.


1 Royal Decree no. 15, enacted on 24 April 2020 (“Koninklijk besluit n° 15 betreffende de tijdelijke opschorting ten voordele van ondernemingen van uitvoeringsmaatregelen en andere maatregelen gedurende de COVID-19 crisis” / “Arrêté royal n° 15 relatif au sursis temporaire en faveur des entreprises des mesures d’exécution et autres mesures pendant la durée de la crise du COVID-19) (the “COVID-19 Decree”).

2 Please note that this date was extended by virtue of the Royal Decree of 13 May 2020.

3 Employment contracts are excluded from this provision.

4 Please note that the application of the Belgian Financial Collateral Act nor the obligations of employers are affected by the stay of enforcement.

5 Please note that this date was extended by virtue of the Royal Decree of 13 May 2020.

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