The law of 11 august 2017 introducing a new Book XX in the Code of Economic Law, hereunder “CEL” [i] comes from a Law Project which was approved by the Parliament on 13 July 2017 and published in the Belgian State Gazette (Belgisch Staatsblad/Moniteur Belge) on 11 September 2017.
This new Book XX of CEL mostly integrates, modifies and harmonizes the Bankruptcy Law of 8 August 1997 (Faillissementswet /Loi sur les faillites) and the Law regarding the continuity of enterprises of 31 January 2009 (Wet betreffende de continuïteit van de ondernemingen/Loi sur la continuité des entreprises) which contained the different judicial reorganization procedures.
The entry into force of the new provisions is scheduled for 1 May 2018.
A few days before its entry into force let’s remind us the most important changes brought by this new legislation:
- The application scope of this Book XX of CEL and of the insolvency procedures (Bankruptcy and Judicial Reorganization) is extended to any enterprise (Onderneming/entreprise) which is defined as:
- Any natural person pursuing a professional activity on a self-employed basis;
- Any legal person;
- Any other organization without legal personality;
The article XX.1. specifically excludes:
- The organizations without legal personality if they neither aim to provide benefits nor actually provide benefits to their members or to any other person with a decisive influence on the management of the organization
- Any legal person of public law
- Federal state and other public entities such as regions, communities, provinces etc.
Non-profit Associations and Liberal Professionals (Beoefenaars van een vrij berope/titulaires de profession libérale) such as doctors or lawyers are thus now considered as enterprise (Onderneming/entreprise) entering into the scope of Book XX of the CEL. As from the 1 May 2018, they will be able to launch a Judicial reorganization procedure or could be forced into Bankruptcy.
- The legislator took the opportunity to modernize the handling of insolvency files by introducing full online procedures. The Central Solvability Register (Centraal Register Solvabiliteit/Registre Central de la Solvabilité)had already been created in 2016. The online platform “REGSOL” was already functioning, but limited to bankruptcy procedures and only accessible to curators (Curators/Curateurs). Some people can now have an online access to the insolvency files if they are concerned. The creditor must declare his claim online. Exceptions are made: physical persons who are assisted by a lawyer or foreign legal entities, for instance.
- The collection of data related to the enterprises in difficulty made by the “chambers of enterprises in difficulty” (Kamers voor ondernemingen in moeilijkheden/chambres des entreprises en difficulté), formerly called chambers of commercial investigations, is now more efficient and costs less. These chambers of the Tribunal can now focus on a more juridical handling of the files with their other new competence related to the hunting and dissolution of “sleeping companies”.
- The Bar and other professional associations establish a list of the persons who can be designated as insolvency practitioners (Insolventiefunctionarissen/praticiens de l’insolvabilité).
- Title III of Book XX of CEL now describes the interim measures which could be taken when the continuity of the enterprise is endangered by a serious misconduct of the debtor (company leader). Those interim measures were dispersed in different laws. They have now been clarified and put together in a unique chapter.
- The system of “excusability” (Verschoonbaarheid/excusabilité) of the bankrupted physical person is replaced by the system of “erasure” (Kwijtschelding/effacement). The Tribunal can now pronounce the erasure of the debts before the closing of the bankruptcy procedure. The aim of these new provisions is to promote a “second chance” after bankruptcy and to make it possible for the bankrupted person to start a new activity quicker than before.
- The Book XX of the CEL sets out a new body of rules (integrating and modifying the ancient rules of the “Companies Code” (Wetboek van venootschappen/Code des sociétés)) related to the liability of the administrators or leaders of the enterprises in difficulty integrating, among others, the concept of “wrongful trading” brought out these last years in the jurisprudence.
The major modification is incontestably the enlargement of the application scope of the insolvency law and procedures and the definition of the term “enterprise” (onderneming/entreprise) in this context.
The other modifications are more likely to be called “adjustments” to introduce the online procedures, to precise some rules which already existed, to compile rules which were dispersed or to codify the existing jurisprudence without modifying (too much) the actual legislation.
For the insolvency practitioners, those slight modifications or adjustments are more essential as they must perfectly know the details of each procedure for their day to day practice.
The entry into force of this new law of 11 august 2017 is scheduled for 1 May 2018. The new provisions will apply as of this date to any new insolvency procedure. With a few exceptions, the insolvency procedures opened before this date will stay under the current legislation.
[i](Wet van 11 augustus 2017 houdende invoeging van het Boek XX “Insolventie van ondernemingen”, in het Wetboek van Economisch Recht, en houdende invoeging van de de nities eigen aan Boek XX en van de rechtshandhavingsbepalingen eigen aan Boek XX in het Boek I van het Wetboek van Economisch Recht/Loi du 11 août 2017 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)