Business Bankruptcy in Belgium: Procedures and Consequences

What Is Bankruptcy Under Belgian Law?

Bankruptcy is a collective procedure organized by Book XX of the Code of Economic Law (CEL). It aims to liquidate the assets of a company in cessation of payment in an orderly manner, protecting the rights of all creditors.

Conditions for Bankruptcy

To be declared bankrupt, the debtor must meet three cumulative conditions:

Who Can Request Bankruptcy?

Voluntary Filing

The debtor may file a voluntary bankruptcy petition with the registry of the enterprise court. Article XX.102 CEL requires the debtor to file within one month of cessation of payment.

Creditor Petition

Any unpaid creditor may petition for the debtor's bankruptcy before the enterprise court. The creditor must prove the three bankruptcy conditions.

Public Prosecutor's Petition

The public prosecutor may also request bankruptcy when the public interest requires it.

Course of Proceedings

1. Bankruptcy Judgment

The enterprise court pronounces the bankruptcy judgment and appoints:

• A trustee (specialized lawyer) responsible for managing and liquidating assets
• A supervisory judge responsible for monitoring the procedure

2. Divestment of the Bankrupt

From the judgment onward, the bankrupt is divested of the management of their assets. They can no longer perform acts of administration or disposal. The trustee takes full control of the estate.

3. Verification of Claims

Creditors must file their claims with the trustee within the deadlines set by the judgment. The trustee verifies each claim and establishes a verification statement.

4. Asset Realization

The trustee proceeds with the sale of the company's assets:

• Private sale or public auction
• Going concern transfer if possible
• Collection of the bankrupt's receivables

5. Distribution to Creditors

Proceeds are distributed according to the order of priority:

6. Closure of Bankruptcy

Bankruptcy is closed when all assets have been realized and distributed. The court pronounces closure and debt discharge for natural persons.

Consequences for Directors

Personal Liability

Directors may be held personally liable in certain cases:

• Manifest serious fault contributing to the bankruptcy (Article XX.225 CEL)
• Continuing a loss-making activity knowingly
• Failure to comply with accounting and tax obligations

Excusability (Natural Persons)

A director who is a natural person may ask the court to declare them excusable, allowing them to be freed from their debts and resume professional activity.

Conclusion

Facing financial difficulties? LegalBelgique assists you in analyzing your situation and advises you on available options: judicial reorganization, creditor negotiation, or guidance through bankruptcy proceedings. Don't wait to act.