What legal options do you have if your company runs into difficulties?

Since 2009, Toon Proost has been guiding entrepreneurs in various sectors through the life cycle of their businesses. He does so within the insolvency team as a lawyer and receiver, but above all as a person of trust with great respect for the professional Novius clientele.

"Those who never do business can never go bankrupt. Even the most successful companies can face a financial setback. In that case, it is crucial to act quickly and proactively. Where are the pain points? What do the latest annual accounts tell us? Is the business plan still up to date? Novius sits down with the manager and the accountant, analyses the current situation and provides concrete tools to turn the negative spiral into a positive one. A realistic reflection moment in which all legal avenues are carefully considered."

Prevention and continuity are key pillars in insolvency law reform. The chambers for enterprises in difficulty (KOIM) of the corporate courts play a key role in this respect.

"The revamped insolvency law significantly expands the powers of the KOIM," says Toon. "Previously, the KOIM summoned companies on the basis of legally enshrined alarm bells, such as failure to file annual accounts or seizure by a bailiff. From September, debtors can also request KOIM to summon certain creditors. The KOIM will hear these creditors individually or jointly behind closed doors, with a view to reaching an agreement."

In addition, according to new Article XX. 29/2 WER, at the debtor's request, appoint a restructuring expert. This facilitates a settlement with creditors in confidence without third parties taking cognisance of his appointment or reports.

The responsibility of economic figure professionals, such as external auditors and auditors, is now explicitly mentioned in the new Article XX. 23 § 3 WER.

"This reporting obligation should not be underestimated," argues Toon. "Statutory auditors have a special role: as soon as they establish facts that compromise the economic activity of the company, they must inform the company in writing."

In terms of the judicial reorganization procedure (GRP), the new insolvency law also makes important changes. Limited publicity is central to this. Toon explains.

"In addition to the fact that the initial duration of the suspension measures is now a maximum of four months, both the amicable and collective agreement can now also take place quietly. This has the important advantage that a company in difficulty can also negotiate with some of its creditors behind closed doors. Unaffected creditors are not notified, with all the advantages that entails."

"The introduction of silent bankruptcy is a big step forward," adus Toon. "The publicity in a public bankruptcy often causes reputational damage, the sledgehammer blow for struggling companies. A pre-pack gives a company breathing room to discreetly prepare for bankruptcy, allowing employees to stay on the job and maximizing proceeds for creditors." Silent bankruptcy is initiated by a petition in which the company asks to be declared bankrupt after it has the opportunity to transfer all or part of its assets privately.

Finally, Articles XX. 171 and XX. 173 WER introduce a new default rule on bankruptcy discharge. From now on, a natural person is automatically discharged of his residual debts, without having to file a formal petition to that effect. Interested parties who believe that the bankrupt has manifestly committed gross errors that contributed to the bankruptcy, can claim through a petition that the remission is denied (in part).

With its focus on prevention and efficiency, the revamped Book XX WER offers promising prospects. For now, it is still a bit of a pipe dream how the new insolvency law will develop in practice. Novius closely follows case law and informs you in function of your professional needs.