Flash News | New moratorium for enterprises in difficulty

Belgium has recently adopted extra measures to combat the negative economic impact of Covid-19.

The Law of 20 December 2020, which entered into force on 24 December 2020, provides for a second moratorium for companies in difficulty up until 31 January 2021 (included).

The scope of application of these measures is, however, more restrictive than during the first lockdown in March 2020. They only concern enterprises subject to closure pursuant to the Ministerial Orders of 28 October and 1 November 2020 (e.g. Horeca establishments, establishments in the cultural, festive, sports and events sectors, companies in the “contact business” sector, etc.).

In addition, as under the Royal Decree n°15, the concerned enterprises cannot have already been in a state of suspension of payments on 18 March 2020 to benefit from these measures.

As to the protection measures, they are identical to those created by the Royal Decree n°15. Please refer to our news of May 2020 for a description of the latter.

The Law of 20 December is available here.


For any question or guidance, please contact Fanny Laune

+32 2 543 70 80

Judicial reorganisation procedure: two draft bills pending under the benefit of urgency

The legislator has tabled two draft bills, respectively on 10 June 2020 and 21 October 2020, to amend a.o. the provisions relating to the judicial reorganisation procedure (PRJ/WCO) governed by Book XX of the Code of Economic Law (CEL).

The review of these draft bills is being carried out under the emergency procedure notably because of the current economic crisis and its impact on the continuity of enterprises.

The first draft bill of 10 June 2020

It aims at adapting the PRJ/WCO to the needs of the economic crisis caused by the Covid-19 pandemic, notably by facilitating access to it, especially for SME’s.

There are three main proposals to this end:

1. The broadening of the possibility to appoint one or more judicial representatives for debtors in difficulty

  • by allowing the debtor himself to ask the president of the competent Court of Enterprise to appoint a judicial representative
  • when “exceptional circumstances or events […] endanger or are likely to endanger all or part of the proper functioning of the economic activities of the debtor” ;

2. The creation of a new provisional guarantee system

With this new system, the debtor could obtain, under the supervision of the court and, if necessary with the help of a company mediator, certain temporary payment facilities. Those facilities notably consist in a suspension period during which the obligation to pay remains intact, but is suspended without any sanction being imposed.

As far as the creditors are concerned:

  • They keep their right of set-off, their right of retention and the possibility to invoke the defence of non-performance;
  • They can also oppose these provisional measures throughout their duration before the president of the Court of Enterprise. In that case, it is up to the president of the Court to decide by assessing the interests of each party;
  • The creditors cannot terminate a contract during the suspension period. In addition, the penalty clauses are deemed unwritten.

3.  The relaxation of the formal admissibility requirements by abolishing the inadmissibility sanction of the application in case of failure to file a specific document/exhibit.

This being said, the debtor shall justify “in a detailed manner” the reason why he is unable to provide the requested document/exhibit. Such an impediment can only be temporary.

Certain documents (see art. XX.41, §2, 5° to 9° of the CEL) must be filed at least 48 hours before the hearing on the application for the PRJ/WCO. If it remains impossible for the debtor to provide these documents within the time limit indicated by the Court, the debtor may file an explanatory note in the register to justify this impossibility.

The second draft bill of 21 October 2020

It notably aims at incorporating the Plessers ruling of the Court of Justice of the European Union in Articles XX.84 and seq. of the CEL regarding the PRJ/WCO by transfer under judicial authority.

The legislator proposes to impose upon the assignee an obligation to motivate his choice not to take over certain employees of the transferred enterprise on technical, economic or organisational grounds that are independent of the transfer itself. The insolvency Court shall check this motivation when the authorisation of the transfer is granted.


Given the uncertain times we are living in now, the measures proposed by these two draft bills should be well received by enterprises.

The first one enables enterprises, particularly SMEs, to obtain the help of a judicial representative and some temporary payment facilities according to a procedure that is simpler, faster and more discreet than the PRJ/WCO. And if this procedure should prove insufficient, access to the PRJ/WCO would then be facilitated.

These measures are in line with the requirements of the European directive on frameworks for preventive restructuring, debt forgiveness and forfeiture, and measures to be taken to increase the efficiency of insolvency proceedings. Our legislator is apparently already anticipating the implementation of this Directive which should be transposed by 17 July 2021.

As for the measures proposed in the second draft, they clarify the rules on the maintenance of employees’ rights in the event of a PRJ/WCO by transfer under judicial authority to avoid such transfer operations under Belgian law to be questioned under the recent European case law.

We will of course monitor these next developments in the insolvency world closely, so stay tuned.


Fanny Laune and Maxime Born

Should you have any question, do not hesitate to contact Fanny Laune:

Simont Braun secures the admissibility of Test Achats’ class action against Ryanair before Belgian Courts

Simont Braun represents Test Achats in a major class action against Ryanair, which aims at obtaining indemnification for passengers who were victims of cancellations and delays of flights in summer 2018. The total compensation is estimated at €16 million.

On 7 December 2020, the Brussels Business Court declared this very large class action admissible. This is a significant victory for consumers’ rights given the number of people (about 30,000 passengers) represented in the context of a single class action in Belgium.

The Brussels Court set aside the provision of Ryanair’s general terms and conditions granting exclusive jurisdiction to Irish courts to hear the matter. This clause was considered as manifestly unfair – and this is a first in Belgian case law – towards all 30,000 passengers, building on the earlier case-law of the Belgian Supreme Court which had so far only examined such choice of court clause in individual cases. This is also the first time that a jurisdiction clause is declared null and void in the context of a class action in Belgium.

The Court also granted strong and very concrete publicity measures for this class action to ensure its efficiency (opt-in via e-mail – more information in this regard on Test Achats’ website).

This decision is a significant step for this exceptionally large class action in Belgium.

The Simont Braun’s team representing the interests in Test Achats is led by partner Rafaël Jafferali with the assistance of Fanny Laune (Counsel), Charles-Edouard Lambert and David-Alexandre Sauvage (Associates).


Have you thought of mediation to solve your disputes?

As part of our objective to offer tailored and efficient solutions to our clients, we are happy to announce that Fanny Laune has become a registered mediator in civil and commercial matters.

Mediation offers many advantages, in particular, the confidentiality of the process, and the possibility to create tailor-made and pragmatic solutions close to every party’s needs.

Simont Braun gathers lawyers having longstanding experience in mediation (as mediator or counsel), notably in civil and commercial matters, real estate, construction, intellectual property and corporate law.

Did you know?

Thomas Braun is a member and former president of the Belgian Chamber of Conciliation, Arbitration and Mediation in Real Estate matters (CCAI).

Emmanuel Cornu acted in the first mediation proceedings organised by the Board of Appeal of the EUIPO (European Union Intellectual Property Office).

Any question?

Do not hesitate to contact Thomas Braun, Emmanuel Cornu or Fanny Laune.

Visit our mediation page.

Fanny Laune featured in Trends-Tendances regarding judicial restructuring procedure

Fanny Laune is featured in the Trends-Tendances article “Faut-il assouplir la réorganisation judiciaire?” by Gilles Quoistiaux.

This is the opportunity to share views on a draft bill aiming to simplify this rescue procedure for companies which will likely boom in the coming months…

The article is available here.

Should you have any question on this subject, bankruptcy or insolvency in general, do not hesitate to contact Fanny: fla@simontbraun.eu



Covid-19 – Temporary protective measures for enterprises in difficulty – Extended until 17 June

Update 13 May  |  The Federal Government has adopted new protective measures for enterprises affected by the COVID-19 crisis in the Royal Decree n°15 of 24 April 2020 (the “Royal Decree”).

Which enterprises are eligible to benefit from these measures?

  • Enterprises within the meaning of Book XX of the Belgian Code of Economic Law;
  • whose continuity is threatened by the COVID-19 pandemic and its consequences; and
  • which were not in a state of cessation of payments on 18 March 2020.

For how long may enterprises benefit from these measures?

The measures shall apply from 24 April 2020 to 17 June 2020 (the “Moratorium”). They have been extended beyond the first Moratorium running until 17 May, by a Royal Decree of 13 May 2020 extending the measures initially provided by the Royal Decree n° 15.

What are the measures to protect enterprises affected by the crisis?

No preventive or enforceable seizure may be granted, and no enforcement action may be pursued or carried out on an enterprise’s assets.

Seizures on real estate assets remain permitted.

An enterprise may not, at the request of its creditors, be declared bankrupt or dissolved (in the case of a legal person) except:

(i) on the initiative of the Public Prosecutor’s Department, or

(ii) on the initiative of the temporary director (voorlopig bewindvoerder/administrateur provisioire) appointed by the President of the Enterprise Court, or

(iii) with the agreement of the enterprise itself.

Eligible enterprises are relieved from the obligation to make an admission of bankruptcy throughout the Moratorium.

However, company’s directors should ring the warning bell (alarmbelprocedure/procedure de la sonnette d’alarme) and call the general meeting if the financial situation of the company justifies it (see our previous news here).

Payment terms provided in a judicial reorganisation plan approved before or during the Moratorium are extended for a period equal to the duration of the Moratorium provided that the execution of the plan does not exceed five years.

Contracts entered into before 24 April 2020 may not be terminated unilaterally or by a court decision due to a failure to pay a debt due under the contract during the Moratorium. Therefore, an express resolutory clause (uitdrukkelijke ontbindende beding/clause résolutoire expresse) cannot take effect during this period.

Similarly, other contractual mechanisms relating to non-payment may not take effect (such as penalty clauses for late payment).

However, the Royal Decree does not provide for a derogation  for:

(i) the debtor’s obligations to pay its debts due,  nor

(ii) the implementation of contractual sanctions under ordinary law such as, inter alia, the defence of non-performance, the set-off and the right of retention,

(iii) the application of the Law of 15 December 2004 on financial securities and various tax provisions relating to security agreements and loans relating to financial instruments,

(iv)  the obligations of employers.

What protection for creditors?

A creditor may proceed before the President of the competent Enterprise Court (“as in summary proceedings” (zoals in kort geding/comme en référé)) to lift the measures mentioned above (in whole or in part).

The President will lift these measures at his discretion, taking into account all relevant circumstances to assess the impact of the Corona crisis on the enterprise, such as:

  • whether, as a result of the Corona crisis, the debtor’s turnover or activity has fallen sharply;
  • whether there has been total or partial recourse to temporary or total unemployment;
  • whether the authorities have ordered the closure of the debtor’s enterprise;
  • whether the debtor and the creditor tried to reach an agreement,
  • whether there were attempts to obtain new credits;
  • the consequences of the suspension on the applicant’s interests (e.g. the creditor) (domino effect);
  • the overall burden of the debt and the debtor’s chances of recovery;
  • the fact that the debt arose from contracts concluded after the outbreak of the COVID-19 pandemic, insofar as the debtor could have foreseen the consequences;
  • whether the company is not affected by the pandemic or is perfectly capable of paying its debts (i.e. fraud).

Finally, and as set out above, creditors can still apply certain traditional contractual sanctions.


Axel MaeterlinckFanny Laune and Maxime Born

Should you have any question, do not hesitate to contact:
Axel Maeterlinck: axel.maeterlinck@simontbraun.eu
Fanny Laune: fanny.laune@simontbraun.eu

Covid-19: Duties and liabilities of directors in times of crisis

The health crisis we are experiencing and the restrictive measures adopted to limit its spread are and will be deeply affecting businesses. With all the economic and human consequences that this entails, this ordeal could be fatal for many of them. What are the decisive role and obligations that directors must now adopt to overcome this crisis? What liabilities do they incur?

Which actions should directors take?

Members of the board of directors, individually or collectively, must take all reasonable actions to ensure the continuity of the company.

Directors’ guidelines should remain the same: business decisions must be taken in the best interest of the company, i.e. the long term interest of shareholders taking into account the interests of all stakeholders – like employees, customers, creditors and suppliers.

Directors should carefully assess and proactively address the (possible) impacts of the current crisis as their passivity in a critical situation might be considered as a fault for which they might be held liable.

They should consider all measures approved by the federal and regional governments to help companies in difficulty following the spread of the coronavirus. These measures consist of:

If the company fulfils the required conditions to benefit from these relief measures, it should take timely action to benefit from them to the fullest extent possible.

Directors should make every effort to adapt the company’s business strategy to enable it to maintain a certain level of activity, taking into account the restrictions imposed by the Government. They should consider the need to put all or part of the employees on temporary unemployment for force majeure (on this topic, see our news here) and they should take all necessary precautions to protect the health and welfare of active employees, subcontractors and public at large.

Nevertheless, directors should be careful not to continue a loss-making activity that would appear unreasonable to normally diligent and prudent directors. They will certainly not pursue the activities of a company that would be in the conditions of bankruptcy (see below).

What must directors do when the financial situation of the company becomes critical?

1. The Warning Bell

Directors should not forget to ring the “warning bell” if financial difficulties increase.

Directors of SRL/BV and SC/CV will have to ring the bell (i) when the company’s net assets are negative or are likely to become negative, or (ii) when the company’s liquid assets are no longer sufficient to pay its debts due for the next twelve months.

Constantly and properly monitor the development of the company’s cash flow can prove very difficult. In case of doubt, directors should ring the bell to limit the risk of liability.

Directors of SA/NV will have to ring the bell when, as a result of a loss (i) the net assets are reduced to less than one-half of the share capital or (ii) the net assets are reduced to less than one-quarter of the share capital. Note that in the event of a reduction in the net assets below EUR 61,500, any interested party may request the winding-up of the company in court.

The activation of the warning bell requires the directors to convene the general shareholders meeting within two months of the statement that the abovementioned conditions are met. The directors must then draw up and submit to the general meeting a report in which they propose measures (i) to improve the situation in order to ensure continuity or, (ii) to wind-up the company. In such a case, directors can protect themselves against liability claims by convening a  general meeting to decide on the future of the company.

These measures involve the meeting of corporate bodies, which is problematic because of the containment measures. Fortunately, a Royal Decree has introduced exceptional temporary measures extending the possibilities of recourse to the unanimous written decision procedure and the use of telecommunication means for the management body. It also facilitates the use of remote voting and the use of proxies to vote at a general meeting, and allows the management body to postpone general meetings. On this subject, see our news here.

2. Possible measures of continuity: the reorganisation procedure

Directors may propose measures to pursue the company’s activities, notably by initiating a judicial reorganisation procedure.

As mentioned above, the directors should first propose all measures that are likely to reduce future losses, improve the company’s profitability, reduce its expenses or enhance the value of some of its assets.

At this stage, they may also assess the suitability of initiating a judicial reorganisation procedure.

Such a procedure aims at allowing enterprises in financial distress, but still having prospect for recovery, to continue all or part of their business as a going concern, by preventing – during maximum six months (the “Suspension period” – renewable once for six months):

  • any sale of the debtor’s movable/immovable assets resulting from creditors’ pending enforcement measures, except when the date of the auction has been scheduled within two months as from the date of the filing of the debtor’s application;
  • that the debtor is declared bankrupt or is judicially liquidated.

Because of the health crisis, several courts of enterprise (and notably the French Brussels court of enterprise) have decided to stay all of their hearings from 19 March up until 20 April 2020 (subject to re-evaluation at this date), except for urgent cases.

Nevertheless, if a company may benefit from a judicial reorganisation procedure, we recommend filing a petition via the electronic insolvency registry (REGSOL) even in the absence of hearing until 20 April (or later). Indeed, as long as the court has not ruled on the petition, the debtor is protected from almost all enforcement measures and from a declaration of bankruptcy (art. XX.44 of the Economic Code).

3. In case continuity of the enterprise is compromised: the dissolution of the company

If there is no prospect for recovery and if bankruptcy conditions are not met, the directors should in principle and under normal circumstances (see below) propose the winding-up of the company. To this end, the directors shall submit to the general meeting a special report justifying the winding-up of the company as well as a statement summarising the active and passive situation of the company, dated not more than three months ago. This statement must be subject to an audit report by the statutory auditor or, failing that, by an external auditor or chartered accountant. The winding-up must then be recorded in a notarial deed.

The Royal Federation of Belgian Notaries has instructed the Belgian notaries’ offices to receive only “urgent” deeds, but internal circulars confirm that transactions on corporate assets and warning bell procedures are of such an urgent nature. The notary should confirm this on a case-by-case basis.

Before considering this option, directors will be well advised to keep the company alive to the extent possible and at least until the end of the health crisis to make sure there is no prospect for recovery and, for example, envisage a judicial reorganisation procedure.

4. Final option: the admission of bankruptcy

In case the company cannot overcome its financial difficulties so that the conditions of bankruptcy are met at some point, directors must make an admission of bankruptcy via the electronic insolvency registry (REGSOL). The admission should be filed within the month of the fulfilment of these two conditions:

  • when it can no longer pay its debts as they fall due (permanent cessation of payment), and
  • when its creditors’ confidence is tainted (its credit is exhausted).

In case they fail to proceed with the admission of bankruptcy, directors might be held liable and might face criminal sanctions. Still, the Government is currently examining the possibility to put on hold the obligation for directors to make an admission of bankruptcy.

Also, governmental discussions are pending about the possibility to freeze bankruptcy proceedings initiated against companies that encounter financial difficulties because of the governmental health security measures. In other words, companies would be protected from being declared bankrupted upon request of a third party/ the Public prosecutor until the end of the crisis.

We are closely monitoring the Government’s decisions in this regard and we will keep you posted as soon as other measures enter into force.

In conclusion

It is not possible at this time to predict the outcome of this crisis. Nor is it possible to determine the extent to which courts and tribunals will show leniency to directors who have not fully complied with their obligations. Many parameters will no doubt be taken into consideration, but proactive directors who meet the basic requirements outlined above should be beyond reproach.


Axel Maeterlinck, Fanny Laune and Maxime Born

Should you have any question, do not hesitate to contact:
Axel Maeterlinck: axel.maeterlinck@simontbraun.eu
Fanny Laune: fanny.laune@simontbraun.eu

Simont Braun authors ICLG Belgian Chapter on the Enforcement of Foreign Judgments

Rafaël Jafferali and Fanny Laune authored the Belgian chapter on the Enforcement of Foreign Judgments in the International Comparative Legal Guide 2020, offering thought and pragmatic insight on the key questions that arise in this complex area.

The Belgian chapter is available here.

For any question in this area, do not hesitate to contact the authors.



Simont Braun promotes Fanny Laune and Thomas Derval to Counsel

Belgian independent law firm Simont Braun boosts its capabilities with two new counsels.

Fanny Laune has been assisting Belgian and international clients before the Belgian courts in commercial and corporate matters for more than ten years. Recently, she successfully completed a training in mediation, an increasingly popular method of dispute resolution.

Apart from her expert knowledge in procedural law, Fanny has also gained extensive experience in all types of insolvency proceedings.

Fanny’s nomination as counsel is a recognition for her sharp legal knowledge and expertise, as well as her excellent communication skills which are highly appreciated by clients,” says Béatrice Thieffry, co-Managing Partner.

Thomas Derval has been practising financial & insurance law for several years, advising and representing the interests of many companies and regulated institutions. Thomas assists his clients on both advisory and litigation aspects of this field of expertise. On the regulatory side, he has notably developed a strong track-record with Fintech & InsurTech companies, helping them to obtain their licences, and to develop and adapt their products and services to the legal requirements of the Belgian market.

Thomas always makes sure to understand clients’ business and to keep the global picture in mind. His multidisciplinary skills allow him to offer expert yet comprehensive guidance to our clients,” says Catherine Houssa, Partner in Banking & Digital Finance. “This is an essential quality as our clients highly appreciate Simont Braun’s multidisciplinary offer.”

We are delighted to count such appreciated and qualified lawyers amongst our counsels. Their respective skills are highly valuable to Simont Braun, and will boost the sustained growth of the firm,” adds Steven Callens, co-Managing Partner.

Contact details:
Fanny Laune – fanny.laune@simontbraun.eu
Thomas Derval – thomas.derval@simontbraun.eu

Has the ECJ just killed the Belgian judicial restructuring procedure by transfer under judicial supervision?

The Belgian judicial restructuring procedure by transfer under judicial supervision (“PRJ 3 / WCO 3”) regulates the transfer of all or part of the debtor’s undertaking under the supervision of a judicial trustee.

One of the main added-values of this Belgian procedure is the “right of option”, which allows the transferee to choose which transferor’s employees it wishes to keep on after the transfer, provided that this choice is dictated by economic, technical or organisational reasons entailing changes in the workforce (article XX.86 §3 of the Economic Code; former article 61 § 3 of the Business Continuity Act).

On 14 August 2017, the Antwerp Labour Court of Appeal referred a preliminary question to the ECJ on the compatibility of the Belgian provision with articles 3 and 4 of Directive 2001/23 relating to the safeguarding of employees’ rights in the event of transfer of (parts of) undertakings (also called “TUPE Regulation”). This question has been raised in proceedings launched by an employee (Mrs Christa Plessers), who has been dismissed further to the transfer of her employer’s company under judicial supervision and is asking for her reinstatement in the transferee’s company.

Condemnation of the Belgian procedure by the ECJ

In order to answer this question, the ECJ had to determine whether:

  • the “right of option” granted to the transferee falls under the exception laid down in article 5 §1 of Directive 2001/23, which requires that the transferor (1) is subject to a bankruptcy proceeding or any analogous insolvency proceeding that has been instituted in view of the liquidation of the transferor’s assets, and (2) is under the supervision of a competent public authority;

and if not,

  • whether articles 3 and 4 of Directive 2001/23 preclude the Belgian “right of option”.

The ECJ decided on 16 May 2019 that the choice granted to the transferee by the Belgian law does not meet the cumulative conditions laid down in Article 5(1) of Directive 2001/23 and that, consequently, transfers carried out in such circumstances must comply with articles 3 and 4 of Directive 2001/23.

The ECJ emphasised that “dismissals which occur in the context of the transfer of an undertaking must be justified by economic, technical or organisational reasons relating to employment which do not intrinsically relate to that transfer”.

Yet, article XX.86§3 of the Economic Code does not impose upon the transferee to justify its choice with regard to the transferor’s employees who are made redundant.

As a result, according to the Court, the application of current article XX.86§3 of the Economic Code could seriously threaten the principal objective of Directive 2001/23, i.e. to protect employees against unjustified dismissals in the event of a transfer of undertaking.

Therefore, the ECJ decided that Directive 2001/23 has to be interpreted as prohibiting the transferee to choose the employees it wishes to keep on after the transfer.

What is the impact of this decision under Belgian law?

Given the ruling of the ECJ, it becomes complicated for the Belgian courts to interpret article 86 §3 of the Economic Code consistently with Directive 2001/23.

However, and as the ECJ pointed out itself, in accordance with EU law, the Belgian courts will not have to discard their own national provisions. As a result, as long as article 86 §3 of the Belgian Economic Code is not amended, it seems that the sole possibility for employees who have been dismissed in the framework of a transfer under judicial supervision will be to sue the Belgian State to claim compensation because (i) it did not correctly implement Directive 2001/23, or (ii) the national courts did not correctly interpret article 86 §3. However, in that second case, the dismissed employees will also have to prove that they suffered damages due to this wrongful behaviour. In other words, they will have to prove that they were not dismissed for economic, technical or organisational reasons, which might be a difficult task.

Conclusion: is it the end of the PRJ3/WCO 3?

By considering that current article 86§3 of the Belgian economic Code does not comply with Directive 2001/23, the ECJ might have sounded the death knell of the PRJ3/WCO3.

As mentioned before, the main advantage of such a proceeding is precisely to allow the transferee not to keep all the transferor’s employees but only the chosen ones. In addition, under this proceeding, the transferee can also modify the working conditions of the transferred employees. Even if this second principle of the Belgian legislation was not referred to the ECJ, one can expect a similar ruling, which would make the PRJ3/WCO3 completely useless.

In any case, the Belgian legislator will have no choice but to modify the Title V of the Economic Code to make it consistent with Directive 2001/23. This modification might be included in the coming (and more significant) reform of the Belgian insolvency law to implement the Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures, whose final text has just been approved (15 May 2019) by the Parliament and the Council.

To be continued with our next government…


Fanny Laune & Pierre Van Achter