Legal suspension of enforcement measures – temporary relief for companies in financial difficulty – postponed but not resolved

27/04/2020

In the context of the COVID-19 pandemic, many measures have already been taken to support the economy as much as possible during these turbulent times. It is already clear that the impact will be enormous and that the cash buffer built up by some companies will not be enough to survive this crisis. Measures such as deferrals on paying tax and social debts, temporary unemployment due to economic reasons and the Belgian State’s guarantee scheme for bank loans will not suffice for some. It is expected that many companies will seek protection against their creditors through a judicial reorganisation as provided for in Title V of Book XX of the Belgian Code of Economic Law (‘Wetboek Economisch Recht’) (“WER”). To avoid putting too much strain on the business courts, the Royal Decree N° 15 on the temporary suspension of enforcement measures and other measures in favour of undertakings during the COVID-19 crisis has been introduced. This Royal Decree (“RD”) provides for a legal suspension, until 17 May 2020, of (i) the compulsory collection and execution of debts and (ii) the obligation of the board of directors to file for bankruptcy if the bankruptcy conditions are met. Furthermore, it also provides protection for creditors if the debtor defaults after the suspension period. Note that the above measures only apply to companies that were not in a situation of cessation of payment as of 18 March 2020.