Vol 8 (2011) - Issue 3

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A Flexible and Debtor-friendly Restructuring Tool: The Belgian Business Continuity Act

Introduction

The Business Continuity Act of 31 January 2009 (Loi relative à la continuité des enterprises/Wet betreffende de continuïteit van de ondernemingen, hereinafter the 'BCA') entered into force on 1 April 2009. The BCA replaced the unsuccessful Act of 17 July 1997 on judicial composition with creditors which had the same objective, namely to give struggling debtors1 an opportunity to restructure and recover by temporarily suspending creditors’ rights. The BCA has been very successful, as evidenced by the fact that between 1 April 2009 and 30 November 2010, more than 1,760 restructuring proceedings were opened in Belgium, which is in excess of the total number of composition proceedings opened over the course of ten years under the old legislation.

In enacting the BCA, the Belgian legislature was highly sensitive to the existence of foreign legislation enabling struggling debtors to restructure, especially in light of the very broad interpretation of the concept of 'centre of main interest' (COMI) under Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings. The BCA’s crowning achievement is undoubtedly the provision of flexible tools to facilitate business recovery. Indeed, debtors can choose from a range of out-of-court and in-court options and switch from one option to another with relative ease.



General overview of the main restructuring options under the BCA

The three main options for struggling debtors are now:

(a) the conclusion of an agreement with two or more creditors with a view to restructuring the debtor’s liabilities; unlike the other two options mentioned below, such an agreement can be concluded either in court or out of court;

(b) the conclusion of a reorganisation plan, which must be approved by the debtor’s creditors and the court; or

(c) the court-supervised sale of the debtor’s business, or a viable portion thereof, as a going concern. Two years after the entry into force of the BCA, practice indicates that, in most cases, debtors prefer to propose a restructuring plan to their creditors but sometimes have to subsequently adapt their strategy and sell off all or a portion of their business.