End to moratorium on bankruptcies
In our e-flash of 8 January 2021, we informed you that an automatic moratorium was in effect (again) to protect Belgian companies from payment difficulties due to the corona measures.
This moratorium for seizures and bankruptcy was in force until 31 January 2021, but - somewhat contrary to expectations - it was not extended. Consequently, Belgian companies today may once again find themselves in bankruptcy or facing the seizure of their assets.
According to a market study carried out by Graydon for the VBO in September 2020, almost 25% of companies are at risk of bankruptcy, partly as a result of the corona crisis and the measures taken in this context. It is thus not surprising that there is criticism of the decision not to extend the moratorium.
However, a change to insolvency law is in the making, particularly with regard to the judicial reorganization procedure. A legislative proposal aimed at facilitating access to the judicial reorganization procedure, particularly for SMEs, was already submitted on 10 June 2020. Indeed, the proposers of the legislation anticipate that a large number of companies will resort to this procedure in order to protect themselves from the economic consequences of the COVID-19 pandemic. This does not seem unjustified to us. The judicial reorganization procedure (formerly WCO) offers an effective perspective for companies that are in dire financial straits.
The legislative proposal provides for a simplification of the procedure by, among other things, relaxing the formal requirements and the eligibility requirements, expanding the possibility of appointing a court mandatary, granting payment facilities by way of a provisional measure (including for new debts that have become due during the procedure), and expanding the effect of an amicable settlement.
The legislative proposal has not yet been adopted. The target date for its adoption has been pushed forward to March 2021. We are following up on the developments in this regard for you.