Sellers and suppliers of movable assets can deal with problems caused by poorly-paying customers through a retention of title clause. This clause makes it contractually possible to stipulate that ownership of a certain good does not transfer until the third party acquirer has paid the full price.
It is interesting to note that the new Law on Pledges has created a better legal framework for the retention of title clause, putting any creditor - assuming a retention of title clause has been included - in a stronger position.
Context
As we described in our client alert dated September 14, 2016, in the aftermath of the real estate downturn from 1989 to 1993, when real estate mortgage lenders began to contemplate making new mortgage loans, they sought to create new legal structures to prevent their prospective borrowers from filing for Chapter 11, and to ameliorate the adverse consequences, if such a filing were to occur.
In our client alert dated September 14, 2016, we discussed the decision of the United States Bankruptcy Court for the District of Delaware in In re Intervention Energy Holdings, LLC, which refused to invalidate a bankruptcy filing made without the consent of its lender who held a “Golden Share” as void against federal public policy.
The law of 11 August 2017 that adds Book XX "Insolvency of Enterprises" into the Code of Economic Law enters into force on 1 May 2018.
As we already stated in our previous contributions about the reform of the insolvency law, this law modifies and regroups the Bankruptcy law and the Law of 31 January 2009 on the Continuity of Enterprises.
1. The notion "Enterprise" replaces the notion "Merchant"
On 13 July 2017 parliament voted to introduce book XX "Insolvency of Companies" in the Code of Economic Law.
In a previous article we already wrote that the insolvency law would be adapted to current national and international regulations and case law and would be incorporated into the Code of Economic Law as a coherent whole.
In this way, solvency procedures must be more transparent, efficient and effective.
Minister of Justice Koen Geens has abandoned the introduction of the 'silent bankruptcy' following a judgment of 22 June 2017 of the European Court of Justice.
Recently, government introduced a new draft law on the reform of the Bankruptcy Act and the Law regarding the Continuity of Enterprises (LCE).
The draft law still needs to be approved by the Federal Parliament, but it is expected to come into effect no later than 1 September 2017.
The current legislation on insolvency will be made up to date and adapted to European Regulations. Moreover it will be incorporated into the Code of Economic Law to make it a coherent set.
Below is a brief overview of the main new elements of the law.
As from 1 April 2017, Bankruptcy files will be held and followed up entirely electronically in the Central Insolvency Register.
Any bankruptcy that will be declared open as from 1 April 2017, has to be registered and kept in the Central Insolvency Register instead of the Commercial Courts Registry.
The Central Insolvency Register, hereinafter referred to as "the Register", is the computerized database in which bankruptcy files are registered and retained (www.regsol.be).
On November 17, 2016, the Third Circuit Court of Appeals issued an opinion holding that claims for “make-whole” amounts were valid and enforceable as “redemption premiums” under New York law despite the automatic acceleration of the underlying debt upon the issuer filing for chapter 11 bankruptcy protection. See In re Energy Future Holdings Corp., No. 16-1351 (3d Cir. Nov. 17, 2016) (the “EFH Decision”).