Coronavirus - Government measures in key jurisdictions - Flipbook - Page 11
Belgium
3
Insolvency
•
Has the
government made
any changes
•
to insolvency
legislation?
For the time being, no legal regulation protecting entrepreneurs in difficulty against
bankruptcy has yet been approved. In practice, it appears that, depending on the judicial
district, when the entrepreneur itself applies for bankruptcy, priority is given to those
bankruptcies that are considered urgent, mainly those enterprises employing staff.
In the meantime, a draft decree is in the legislative process. It wishes to introduce a
temporary moratorium for all companies that have run into difficulties as a result of
COVID-19. The measures are expected to contain the following:
– the company will be protected against seizure proceedings,
– companies cannot be declared bankrupt at the request of their creditors (but can
be declared bankrupt at the request of the public prosecutor, or with the agreement
of the debtor himself),
– current contracts cannot be terminated on grounds of non-payment,
– the debtor is temporarily not obliged to file a declaration of bankruptcy, and
– the company judge decides whether a debtor can benefit from this suspension if he
invokes it as a defence.
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Contractual
Issues
What measures
have been taken
to reinforce
contracts?
•
There is an anti-abuse mechanism. The president of the competent court can at all
times, at the request of the creditor, lift the temporary suspension. The scheme is not
intended for those companies that were already in a state of bankruptcy prior to 18
March 2020, but only for those companies that were still in good financial shape until
18 March 2020 but have run into difficulties as a result of COVID-19.
•
The draft decree has already been approved by the federal government, but still
needs to go through the remaining legislative process before it can be implemented.
•
Currently there have been no specific legal regulations to reinforce contracts.
•
Parties will have to analyse the applicable contractual provisions in order to establish
whether the current governmental measures can be invoked to suspend performance
under the contract or to lift liability for non or late performance. Contracts in Belgium
often include clauses relating to force majeure or hardship.
•
If parties did not include such provisions, Belgian law and jurisprudence of the
highest court provide for several mechanisms to protect contracting parties against
adverse events. Principles of good faith and obligations to renegotiate contracts can
be invoked under strict conditions. Application of these principles are casuistic and
must be assessed in detail.
•
For more details on this topic, please refer to section Contract at our Corona Desk
website.
Government measures in key jurisdictions
11