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As opposed to the incorporation of a company in Belgium, the standard procedure Liquidatijg winding-up and liquidation of Liquidating a company in belgium company is a relatively cumbersome and time consuming and therefore costly procedure. Liqudiating is also the reason why such procedure should remain the standard procedure for most companies. For some companies, however, e. This practice already copmany before the Act and was based on a circular letter of the Minister of Justice dated 14 November Because there was no legal basis for this practice in the BCC, a majority of notaries refused bellgium follow this procedure.
Some notaries did follow it, however, and this created a considerable degree of legal uncertainty. After six years, the legislator finally responded by implementing the Act. Simplified Liquidation Based on the Act, Simplified Liquidation is now possible, provided that the following cumulative conditions are fulfilled: No liquidator is appointed; Based ij a recent statement of assets and liabilities, the company has no liabilities at all at the time the company is wound-up; All shareholders are present or represented at the EGM at which the resolution for winding-up ij adopted; The EGM unanimously approves the winding-up and immediate closing of the liquidation of the company; The remaining assets are allocated to the shareholders.
Prevention is at the heart of any Liquidatong measures. Court-supervised restructuring procedure Objective. Liquidating a company in belgium purpose of this procedure is to preserve Liquidaing continuity of all or part of the company's assets or activities. It allows the debtor to be granted a stay in the proceedings, with a view either to concluding an amicable agreement or a collective agreement, or to transferring all or part of its assets or activities under judicial authority to one or more third parties. The court-supervised restructuring procedure is initiated on the basis of a petition filed by the debtor at the registry of the bankruptcy and court-supervised restructuring service the Commercial Court.
It must be accompanied by an account of the events, the objectives sought, the measures and proposals to restore the company's profitability, as well as the accounting documents for the last two years. The statute requires nine annexes to be filed. Where a company is transferred, a petition can be ordered by summons of the public prosecutor, a creditor or any person with an interest in the transfer. The debtor must demonstrate that the continuity of the business is threatened in the short term or in the long term. There is a presumption that business is interrupted when the losses have reduced the net worth to less than half of the registered share capital. The court verifies the existence of these formal conditions with a view to declaring the debtor's application well-founded.
If the debtor has already benefited from a court-supervised restructuring procedure in the last three years, a new procedure can only be opened for the total or partial transfer of the business. If a new court-supervised restructuring procedure is requested during the fourth and fifth years following a previous court-supervised restructuring procedure, within the framework of an amicable or collective agreement still being implemented, the new court-supervised restructuring procedure cannot call into question the satisfaction of creditors decided during the previous proceedings.
As soon as the petition for a court-supervised restructuring procedure application has been filed, the president of the Commercial Court appoints a judge to file a report. The prosecutor's office is also notified. The creditors can consult the file. The court examines the application within 14 days of being filed at the registry. At the hearing, the debtor is heard, the appointed judge files a report and judgment must be delivered within eight days. The court declares the proceedings which cannot exceed six months the stay period open, without prejudice to any subsequent extension. The judgment is published in the Moniteur belge Belgian official gazette.
The judgment authorising or refusing court-supervised restructuring can be appealed. With a view to better monitoring the proceedings in progress, the court can, in its judgment, require the debtor to provide additional information on the situation of the business. One of the objectives is to allow better supervision of the company's activity, in particular the increase in debts and losses during the stay period granted to the cost of creditors. The sanction against the debtor will be early closure of the court-supervised restructuring proceedings. The company in difficulty is monitored during the court-supervised restructuring procedure by the appointed judge, who is a magistrate usually a consular judge of the court.
The court-supervised restructuring procedure does not create a competitive situation between creditors to the estate in bankruptcy. The creditors continue to benefit from their prerogatives, as long as the law does not prohibit them from doing so.
The opening of the stay period has the effect of postponing payment of so-called "stayed" credit claims, that is, credit claims arising before the judgment opening the court-supervised restructuring procedure, or arising from the filing of the petition or the judicial decisions taken in the context of the proceedings. Seizures carried out before the opening of proceedings retain their safeguarding effect, but the court can decide to discharge the seizure orders. No enforcement proceedings can be instituted in respect of "stayed" credit claims. On the Liquidating a company in belgium hand, enforcement procedures are possible for credit claims arising after opening of the proceedings. Creditors who hold extraordinary "stayed" credit claims secured by collateral at the time the court-supervised restructuring procedure was opened and claims of creditor-owners benefit from additional protection up to the amount covered by the registration of their encumbrance or in the contrary case, up to the going concern realisation value of the asset or, if the pledge relates to specifically pledged credit claims, their book value.
In addition, creditors can intervene voluntarily in the proceedings to make their observations or file a claim. They are convened to the hearing at which the restructuring plan is presented and may or may not vote in its favour. They can oppose an extension of the stay and seek early closure of the proceedings or subsequently seek revocation of a plan that is not complied with. A court-supervised restructuring procedure in principle takes six months and can be extended to 12 or 18 months, depending on the circumstances. The court-supervised restructuring procedure ends when: An amicable agreement has been reached with certain creditors.
A collective plan has been voted on and approved by the court. The transfer of the company is authorised by the court. If the restructuring plan is not approved or is not complied with, the company reverts to the situation before the procedure was initiated. It can then file for bankruptcy or be summoned in bankruptcy by its creditors. What are the main insolvency procedures in your jurisdiction? The dissolution of a company leads to its liquidation. The proposal for voluntary dissolution is made by the management body, which draws up a written report for the shareholders' or members' meeting.
The management body informs the shareholders or members of the justification or reasons for the proposed dissolution and of its consequences. The reasons justifying a Liquidating a company in belgium for dissolution can include: Restructuring within a group. Assignment of an operational division. Poor economic prospects. Administrative charges. Disagreement among the members. Consents and approval. The shareholders' or members' meeting that decides on the dissolution and liquidation of the company must be held before a notary as this constitutes an amendment of the articles of association. The notary responsible for stipulating the deed will confirm the existence and external legality of the procedure.
The quorum and majority requirements for an amendment to the articles of association are half of the capital and three-quarters of the voting rights without prejudice to more rigorous provisions in the articles of association. The shareholders' or members' meeting appoints one or more liquidators who must be approved by the Commercial Court within five days of the petition being filed. The liquidators conduct the actual liquidation of the company. During the seventh and 13th months of the liquidation, and every year after that, the liquidator must submit a "detailed statement of the liquidation situation" to the Commercial Court.
From the second year of liquidation, this statement needs only to be transmitted to the court every year. The liquidator will first pay the secured creditors for example mortgage creditors, tax authorities, staff, social security organisations. The surplus after satisfaction of secured creditors must be distributed among the ordinary creditors in proportion to the debt. When the asset allocation plan has been approved by the court and implemented by the liquidator sthe liquidation procedure can be closed. There is no maximum duration. Judicial dissolution leading to liquidation can be requested by either: The Public Prosecutor or any interested party. The chamber of companies in difficulty which has concluded that it is impossible to save the company.
The following assumptions can lead to judicial liquidation: Non-filing of annual financial statements even for a single financial year. An action for dissolution can be brought only seven months after the closing date of the financial year. The company's representatives failed to appear before the chamber of companies in difficulty, despite two summonses, 30 days apart. A "just reason" under the Companies Code by any interested third party that is, anything that irremediably prevents the company from achieving its corporate purpose. A company's equity falls below the minimum authorised registered capital. The court decides on the liquidation of a company. The court appoints a liquidator who will be accountable to it, with the management body having no say.
Dissolution and judicial liquidation involve competition between creditors with regard to the estate in bankruptcy, which means freezing liabilities and, in principle, the impossibility for creditors to individually pursue enforcement measures against the company in liquidation. When liquidation is completed, the liquidator reports to the court and, where appropriate, submits statements on the social values and the use made of them. The court then confirms closure of the liquidation procedure. The Commercial Court can either grant a time limit for regularisation and refer the case to the commercial investigation chamber, or order the dissolution of the company.
Once the company is dissolved, the Commercial Court can: Declare the immediate closure of the liquidation procedure. Determine the method of liquidation and appoint one or more liquidators. Not appoint a liquidator if no interested party intervenes in the procedure to request appointment within a year. Debts are automatically considered to be irrecoverable, assets automatically revert to the state and liquidation is deemed completed. The court registry is responsible for publishing the closure of the liquidation procedure in the Moniteur belge Belgian official gazette. Bankruptcy procedure Objective. The purpose of this procedure is to place the debtor's assets under the management of a trustee in bankruptcy, who is responsible for administering the bankrupt's assets, liquidating them and distributing the liquidation proceeds among the creditors.
A debtor who has persistently defaulted on payments and who has no creditworthiness is in a state of bankruptcy. The debtor need not have defaulted on all payments, but only on the principal ones. The following can be declared bankrupt: Any natural person who is self-employed in a professional activity. Any legal person. Any other organisation without legal personality. Every debtor is bound within one month of its insolvency to notify the situation to the registry of the competent court. A person who no longer carries on an economic activity as a natural person can be declared bankrupt if the state of insolvency payment default dates back to a period when it was still carrying out its business.
The trustee in bankruptcy is assisted in the bankruptcy by a bankruptcy judge juge commissaire appointed by the court. Certain transactions for example, the sale of real estate must also be authorised by the court. Unlike the court-supervised restructuring procedure, bankruptcy creates competition between creditors regarding the estate in bankruptcy. The competing claims to the estate in bankruptcy occur automatically under law. The bankrupt debtor's assets are used exclusively to satisfy creditors existing on the day of bankruptcy and whose claim is fixed on the day of bankruptcy.
The orang is no longer included, and so he will open to not make his eyebrows to us. That is because parameters may incur liability in the client that the vast selection is initiated too easily.
Belgiim principle, an equal distribution among the creditors will take place, except when the regime of mortgages and liens allows for derogations. When a bankrupt's property is realised, liens and mortgages entitle the lien holder to be paid preferentially from the proceeds with priority over other unsecured creditors. Indirect benefits, cpmpany as the benefit of the group. Jurisprudence has over time accepted the idea of "group interest" that is, indirect benefit z a legitimate corporate interest. This includes, to a certain extent and under certain conditions, making certain sacrifices for the benefit of the group. Some legal writers argue that the transaction must not be exclusively for compay benefit of one group company, but should be entered into for the group as a whole.
In addition, Liquidatiny risk or potential loss incurred by the company must not be disproportionate to the benefits it expects to receive out of the envisaged transactions. The ultimate decision whether a transaction is or is not within the corporate interest of a company lies with the board of directors of that company. Implication of misuse of company assets In an intra-group context, misuse of company assets occurs where a director for example, Liquidatjng group company or a de facto director has directly or indirectly applied the assets or the credit of the bslgium with the intent to benefit itself.
The director must have known that the application would have a material adverse effect on the company itself and its creditors or shareholders. Misuse of company assets is a criminal offence. How are claims of one member of a corporate group against other members of the group Liquidatiing in a formal insolvency processes for those members? Claims of one member of a corporate family against other members of the comany family are as a rule valid and enforceable, as all members of the group are to be considered as separate legal entities with their own set of Liquidating a company in belgium and obligations. If there is no contractual mechanism of subordination of Liquidating a company in belgium Liquidaing in place between the members of the same corporate family, such claims are as a rule on equal footing with those of third party creditors.
However, in the case of intra-group debt structures clearly set up to damage the interests Liquidaying third party copmany, a court can subordinate these claims by means of a court order. Substantive consolidation Is pooling of assets and liabilities of some or all members of a corporate group allowed, so that a creditor of one member becomes, in essence, a creditor of all members? Rule Belgian law does not recognise the pooling of assets and liabilities in such a way that the creditor of one company becomes a creditor of all members other than in contractual pooling arrangements.
Each Belgian company that forms part of a group will be seen as a separate legal entity with its own asset base that serves as general collateral for its creditors. This has been confirmed on many occasions by the Belgian Supreme Court that is, an obligation entered into by one company remains an obligation of that company and not of the group as a whole. Exception When it is unclear which assets belong to the bankrupt company and its group company, legal scholars have questioned whether the bankruptcy of one company should not lead to the bankruptcy of the other with whom the assets are mingled. The Supreme Court has ruled that even in this case, each company should be considered separate from the other, each with its own assets.
The assets which are mingled are then part of the asset base of each separate company, but held in co-ownership. Only in very exceptional circumstances where it could not be concluded that the assets are completely mingled between the bankrupt company and its group company will the bankruptcy of one company lead to the bankruptcy of the other. Further, and despite the clear view of the Supreme Court, insolvency case law shows a very diverse landscape of tools and techniques used to extend obligations entered into by one group company to the other group companies. These techniques consist of damages payable by group companies for obligations entered into by one group company, and subordination of intra-group claims in more fraudulent circumstances.
However, as case law is so diverse and given the clear view of the Supreme Court in this respect, there is no clear rule in relation to pooling assets and liabilities of group companies. Finally, a group company may enter into an agreement for itself and on behalf of some or all of the group companies. In this case and if the contracting third party acts in good faith, the contracting third party may rely on the fact that the contracting group company can validly represent the other group companies in entering into the agreement. Professional counterparties, such as banks and financial institutions, have a duty to verify whether the other group companies are validly represented by the contracting group company and can therefore as a rule not rely on its good faith.
What proceedings are required for the court to order the pooling of assets and liabilities? In the case of bankruptcy, the receiver who represents the creditors requests the commercial court to render a judgment declaring the pooling of the assets and liabilities of some or all group companies. Is the partial pooling of assets and liabilities allowed? What conditions apply? The pooling of assets will never be assumed and will have to be proven in a court of law not taking into account any contractual pooling of assets. The pooling of assets and liabilities of group companies remains the exception and not the rule.
If the pooling of assets and liabilities is permitted, are there any protections for certain types of creditors? If the pooling of assets and liabilities is called for, the claim will as a rule rank pari passu with all other unsecured creditors, and creditors holding the benefit of a certain type of security interest can fully enforce their rights over the secured asset even when this asset is pooled. Bankruptcy In the case of bankruptcy, there is a clear ranking of the claims: Estate debt. Costs and indebtedness incurred by the receiver during the bankruptcy proceedings "estate debts" have the highest priority over all claims.
In addition, if the receiver has contributed to the realisation and enforcement of secured assets, these costs will be paid to the receiver in priority out of the proceeds of the realised assets, before distributing the remainder to the secured creditors. Security interests. Creditors that hold the benefit of a security interest have a priority right over the secured asset whether by means of appropriation of the asset or on the proceeds on realisation. After satisfying the claims of the secured creditors, the creditors having a particular privilege on certain or all assets will be paid out for example, tax claims and claims for social security premiums.
Privileges over specific assets rank before privileges on all assets of the debtor. Pari passu. Once all estate debts and creditors having the benefit of security interests and privileges have been satisfied, the proceeds of the remaining assets will be distributed by the receiver among the unsecured creditors who rank pari passu unless a creditor agreed to be subordinated. Judicial reorganisation The ranking of claims is not an issue in the case of a judicial reorganisation, as the purpose of reorganisation is to achieve the continuity of the company.
However, secured creditors can in certain circumstances enforce their rights during the judicial reorganisation see Question Secured creditors How are secured creditors treated in relation to a group of companies? A claim relating to security interests in the assets of one group company and a claim relating to the guarantee of the other group company are treated separately and generally remain valid and enforceable. This is the case even in relation to junction of insolvency proceedings. Insolvency proceedings for international corporate groups What extra considerations are necessary if one or more members of the corporate group is incorporated under or governed by the laws of another jurisdiction?
EU context If the centre of main interest COMI of the Belgian group company is located in Belgium, the answers to the previous questions remain unchanged. That jurisdiction will have jurisdiction over the insolvency procedure of the Belgian group company and may apply its own laws and regulations. The PIL Code provides that Belgium has jurisdiction over the main insolvency proceeding if the most important establishment or its registered seat of the group company concerned is located in Belgium. If the latter is the case, the answers to the previous questions remain unchanged.
However, a foreign non-EU jurisdiction may have insolvency regulations in place which may take jurisdiction Liquidating a company in belgium the Belgian group company. EU context Other than the Insolvency Regulation, no other EU legislation deals with European cross-border insolvency or restructuring proceedings. Do domestic courts typically attempt to exercise jurisdiction over all the assets of a company filing locally regardless of where the assets are Liquidaing or do Liquidatinv limit their jurisdiction to local Liquuidating Under the Insolvency Regulation if the Belgian group company has its belgijm of main interests COMI in Belgium, the Belgian commercial court will have jurisdiction to open the main insolvency proceeding.
Belgian insolvency law will consequently govern the bankrupt estate Liuidating the assets are located. If the assets located abroad can be qualified as an establishment that is, any place of operations where the company carries out non-transitory Liquidatjng activities with human Lkquidating and goodsa secondary proceeding may be opened by the Belgian receiver or any interested iLquidating party including a creditor in that jurisdiction with a view to the liquidation of such assets. The secondary insolvency proceeding will be governed under the laws of that foreign jurisdiction and the main domestic Lkquidating proceeding will have no effect on the secondary proceeding.
Insolvency laws of a non-EU jurisdiction may have an impact on the preceding. Do local courts enforce court orders from foreign jurisdictions that attempt to exercise jurisdiction over assets located in your jurisdiction that are owned by a company subject to foreign insolvency proceedings? An insolvency judgment is recognised in Belgium if that judgment is pronounced by a court located in one of the EU member states Insolvency Regulation. An insolvency judgment of beligum non-EU member state will be recognised in Belgium and may be enforced after a review of Liquidating a company in belgium merits of the case by a Belgian Court of First Instance, provided that the following conditions of the Belgian Code on Private International Law are satisfied: The judgment is not contrary to Belgian public policy or to the rules of Belgian public law.
The defendant's rights of defence have been respected. The court that handed down the judgment was not competent for the sole reason of the nationality of the claimant. The judgment is final under the laws of that jurisdiction. The certified copy of the judgment delivered to the Belgian court satisfies the authenticity requirements of the laws of that jurisdiction or the applicable procedural rules. Can the courts co-operate with foreign courts to co-ordinate the administration of group assets? Apart from the provisions relating to the co-operation and communication of receivers provided for in the Insolvency Regulation and the Belgian Code on Private International Law, Belgium has not yet adopted any legal provisions or guidelines with respect to communications between different courts in cross-border insolvency cases.
However, informal communications between courts is not excluded there is no published case law or doctrine in this respect. Directors' duties Does your jurisdiction encourage or discourage overlapping boards or management teams for separate members of a corporate group? Belgian law does not particularly encourage or discourage overlapping boards or management teams, and has no specific relevant legal provisions apart from the common conflict of interest and similar rules. Further, it is general practice that the same directors or managers are appointed for the board or management of the Belgian company ies which form s part of the same group.
Specific rules apply for listed companies. What legal consequences are there for the directors of a parent company where they are not directors of the subsidiary but do manage the affairs of the subsidiary? De facto directors The concept of de facto directors is not defined, but is developed by case law and legal writers. A de facto director is basically a person who has not been formally appointed as a director, but is nonetheless treated as such. Three criteria determine if a person qualifies as a de facto director: He performs a positive act of management.
His actions qualify as real acts of management that can lead to liability. These acts of management are decisions that affect the commercial and financial position of the company. He performs the act of management in total independence and freedom. The consequences of being a de facto director are diverse: Tax law provides for equal tax treatment of the remuneration paid to appointed directors and de facto directors. De facto directors are personally liable for the debts, and personally and severally liable for the outstanding social security contributions, of the company in the case of bankruptcy, where the debts exceed the profits and it is proven that the de facto director committed a serious fault that contributed to the bankruptcy Companies Code.
Further, de facto directors may be held liable towards the company and third parties for the damages caused by their faults tort liability. Henceforth, companies with no ongoing activities or outstanding liabilities can be dissolved and liquidated in a single step. This procedure should be carried out and overseen by the board of directors, taking into account the reporting obligations to liquidate a companywhich remain unchanged. Clarification of reporting obligations during liquidation In order to set a company into liquidation, or to dissolve and liquidate it in a single step, the reporting obligations, inserted in the Company Code inremain unchanged.
The board of directors must still draw up i a special report setting out the reasons for dissolving and liquidating the company and ii a statement of assets and liabilities dated no more than three months prior to the date of the general meeting's decision to dissolve and liquidate the company. In addition, the company's auditor or an external auditor if no auditor has been appointed must draw up a report on the aforementioned statement of assets and liabilities.