Temporary changes to Belgian judicial reorganisation proceedings in light of COVID-19
To make judicial reorganisation procedeedings (“JRP”) more accessible and effective, the legislator has introduced some temporary relaxations and improvements to offset the effects of the COVID-19 crisis1.
The most important changes that will apply as of 26 March until 30 June 2021 (unless extended by Royal Decree) are the following:
Relaxations regarding documents to be submitted
To make the procedure more accessible, the law allows companies to apply for a JRP without necessarily having all the documents required by law readily available, and allows them to provide them to the court during the procedure (ie up to two days before the hearing). In their application, the debtor only has to prove that the continuity of the company was threatened, indicate the purpose of the JRP2, and provide the email address through which the debtor can be contacted, as well as a copy of the last two annual accounts.
Introduction of confidential preparatory phase
On the unilateral request of the debtor, the President of the enterprise court may appoint a judicial administrator to facilitate the conclusion of an amicable agreement within the meaning of article XX.64 of the Belgian Economic Law Code (BELC) or a reorganisation plan as provided for in Article XX.67 BELC3. After receiving the request, the President of the court appoints a delegated judge, without this appointment being published in the Belgian Official Gazette. The application is dealt with in chambers within eight days of the application being filed in the register and after hearing the delegated judge's report. The order ruling on the application, as well as the appointment of the judicial administrator is also not published.
The advantage of this confidential pre-JRP phase, which can last up to four months, is obvious: it allows companies to negotiate with their creditors without their financial difficulties being made public, and companies that wish to do so can benefit from the assistance of a judicial administrator familiar with companies in distress, as well as judicial reorganisation proceedings. It should be stressed, however, that the protection offered by Article XX.44 CDE4 will only apply after the judicial administrator has decided to refer the matter to the court when they consider that the approval of a reorganisation plan seems sufficiently plausible. Nevertheless, the judicial administrator may ask the president of the court, during the preparatory phase, with regard to the situation of the debtor, the negotiations in progress and taking into account the prejudice caused by the measure to the creditors as well as the general interest, to grant terms and deadlines proportionate to the needs of the debtor for a maximum of four months. The President of the court can thus grant terms and deadlines to the debtor for the payment of all or part of the debts mentioned in the application of the judicial administrator and suspend any enforcement, even if the debt is established by an authenticated deed or a judgment.
For any questions on Belgian reorganisation proceedings, please contact the author.
1Law of 21 March 2021, published in the Official Gazette on 26 March 2021 (applicable as of date of publication).
2Type of JRP, which is either an amicable settlement, a collective agreement or a transfer under judicial authority.
3Article 6 of the Law of 21 March 2021.
4Through article XX.44 CDE the debtor is normally protected as of the filing of the application against enforcement proceedings and cannot be declared bankrupt or judicially dissolved.
