Judicial reorganisation in Belgium: breathing space for your business without bankruptcy

Not every business in debt is lost. If you are facing temporary payment difficulties but your business is still viable, judicial reorganisation in Belgium can protect you from your creditors while trading continues as normal.

Since 1 May 2018, judicial reorganisation (gerechtelijke reorganisatie / réorganisation judiciaire) has been governed by Book XX of the Code of Economic Law (Wetboek van economisch recht / Code de droit économique), which replaced the former Business Continuity Act (WCO / LCE). New rules have applied since 1 September 2023, in particular for larger businesses. This article explains how the procedure works and who it is suitable for.

When is judicial reorganisation possible?

Judicial reorganisation is available when the continuity of the business is threatened, either immediately or in the longer term. You therefore do not have to wait until the conditions for bankruptcy are met. On the contrary: the earlier you apply, the better your chances of success.

The procedure is open not only to companies, but also to self-employed persons, members of the liberal professions and non-profit associations (vzw / ASBL). In practice, the decisive question is whether your business can become profitable again with a realistic plan.

A reorganisation does not always start in public: you can first negotiate confidentially, for example with the help of a business mediator (ondernemingsbemiddelaar / médiateur d’entreprise) or, in a private judicial reorganisation (besloten gerechtelijke reorganisatie / réorganisation judiciaire privée), a restructuring expert appointed by the president of the court (herstructureringsdeskundige / praticien de la réorganisation).

The petition to the enterprise court

The procedure is started by filing a petition with the enterprise court (ondernemingsrechtbank / tribunal de l’entreprise). It must be accompanied by, among other things:

• a statement of the events showing that the continuity of the business is threatened;
• the annual accounts for the last two financial years;
• an accounting statement of assets and liabilities;
• a budget with an estimate of income and expenditure;
• a list of creditors with the amounts owed to them;
• a description of the measures you propose to restore the business.

An incomplete or unconvincing file weakens your position. Careful preparation with your lawyer and your accountant is therefore essential.

The moratorium: protection from your creditors

If the court opens the procedure, the business is granted a moratorium (opschorting / sursis). During that period it cannot be declared bankrupt. For debts that arose before the opening, creditors cannot in principle levy an enforcement attachment or use any other means of enforcement against its assets.

The moratorium is granted for a maximum of four months and can, under certain conditions, be extended up to a maximum of twelve months. Ongoing contracts do not end because the procedure has been opened, and in principle you remain in charge of the business. A delegated judge (gedelegeerd rechter / juge délégué) oversees the proceedings.

Three possible outcomes

• The amicable agreement: you reach an agreement with one or more creditors, for example on payment terms or a partial write-off. The agreement binds only those who sign it.
• The collective agreement: you submit a reorganisation plan to your creditors, for example with a repayment schedule of up to five years from the court’s sanction (Article XX.76 of the Code of Economic Law) and a partial write-off. If the plan is approved by the statutory majority and sanctioned (homologated) by the court, it also binds the creditors who voted against it.
• The transfer under judicial authority: the viable activities are transferred to a buyer under the direction of a judicial representative, so that jobs and value are preserved.

How do creditors vote on a collective agreement?

In the ordinary procedure, the reorganisation plan is approved if a majority of the creditors taking part in the vote agree to it and those creditors together represent at least half of all amounts owed in principal and interest; creditors who do not take part in the vote, and their claims, are not taken into account (Article XX.78/2 of the Code of Economic Law). The court then reviews the plan: it may refuse to sanction it on several grounds, including failure to comply with the procedure or a breach of public policy (Article XX.79 of the Code of Economic Law).

Good communication with your main creditors before the vote is therefore crucial. If you fail to convince the National Social Security Office (RSZ / ONSS), the tax authorities and your largest suppliers, you will rarely obtain the majority.

Employees and ongoing contracts

The opening of the procedure does not bring ongoing contracts to an end, and a contracting party cannot in principle terminate a contract merely because the procedure has been opened. Your employees remain employed and their wages must be paid as usual during the procedure. In a transfer under judicial authority, special rules govern the transfer of staff to the buyer.

What changed in 2023?

The Act of 7 June 2023 transposed Directive (EU) 2019/1023 on preventive restructuring. Since 1 September 2023, special rules have applied to the collective agreement of large businesses: creditors must be divided into classes and vote by class.

Under certain conditions, the court may still sanction the plan even if one or more classes voted against it. Smaller businesses can opt into this regime or follow the ordinary procedure.

Who is judicial reorganisation suitable for?

For businesses with genuine prospects: sufficient revenue potential, an identifiable cause of the difficulties, such as non-payment by a major customer, a temporary downturn or a heavy investment, and a credible plan. Applying for reorganisation without a plan merely postpones the inevitable. We will tell you honestly whether this tool suits your situation.

Frequently asked questions

Do I stay in charge during the procedure?

Yes, in principle you retain the management of the business. In a transfer under judicial authority or in the event of serious failings, however, the court may appoint a judicial representative.

Will my customers know that I am in reorganisation?

The opening of the procedure is published in the Belgian Official Gazette (Belgisch Staatsblad / Moniteur belge). Good communication with customers, suppliers and staff is therefore part of the preparation.

Do I have to pay my current debts during the procedure?

Yes. The moratorium applies to debts that arose before the opening. New debts, such as wages, social security contributions and deliveries during the procedure, must continue to be paid as normal. If you cannot do so, your plan is usually not viable.

I have already been summoned in bankruptcy proceedings. Can I still apply for reorganisation?

Yes, as long as you have not been declared bankrupt. As long as the court has not ruled on your petition, you cannot be declared bankrupt (Article XX.44 of the Code of Economic Law). However, the application must be serious and based on a credible plan.

How much does judicial reorganisation cost?

The costs depend on the size of the business and the route chosen: the assistance of your lawyer and accountant, any court costs and, in a transfer, the fee of the judicial representative. Weigh them against what you gain: protection, spread payments and often a partial write-off.

Novex Advocaten can assist you

We assess whether your business qualifies, draft the petition and the plan, and negotiate with your creditors. Also read our articles on the Chamber for Enterprises in Difficulty and on being summoned in bankruptcy proceedings. If a fresh start is no longer possible, see also our articles on filing for bankruptcy and on directors’ liability.

Call 0484 99 22 72 or email asfour@novexadvocaten.be for an initial review of your figures.