On 9 February 2009, the Act of 31 January 2009 on the continuity of companies (Loi relative à la continuité des entreprises/Wet betreffende de continuïteit van de ondernemingen, the "Act") was published in the Belgian State Gazette.
The Act – which actually consists of two separate acts for technical reasons - will replace the unsuccessful Act of 17 July 1997 on composition with creditors.
Tax treatment in the hands of the creditor
The waiver of debt results in the accounting ‘loss’ of a receivable. Such loss, however, is not automatically tax deductible in the hands of the creditor.
The deductibility of such loss may be prohibited, either because it is deemed not to be incurred to retain or increase taxable income (‘general deduction criterion’), or because it is deemed to be an ‘abnormal or benevolent advantage’ granted to the debtor (‘anti-abuse rule’).
New restructuring legislation was recently adopted in Belgium and comes into force on 1 April 2009. The Act of 31 January 2009 on the continuity of undertakings (the Act on Continuity) aims to replace the existing judicial composition procedure (concordat judiciaire/ gerechtelijk akkoord) with a more effective and flexible restructuring instrument.
The key features of the Act on Continuity are:
Entry into force on 1 April 2009 of the new Act on the continuity of companies
The Act of 31 January 2009 on the continuity of companies (Loi relative à la continuité des enterprises/Wet betreffende de continuïteit van de ondernemingen, the "Act") entered into force on 1 April 2009.
The Business Continuity Act of 31 January 2009 (the “Act”) creates a variety of flexible tools to promote business recovery and turnaround. In addition to an updated judicial reorganization procedure (i.e., a reorganization overseen by the court), the Act also introduces several interesting options for out-of-court workouts and preventive measures to promote business recovery.
Out-of-court agreements
The Act of January 31, 2009 on the continuity of companies (Loi relative à la continuité des enterprises/Wet betreffende de continuïteit van de ondernemingen, the "Act") entered into force on April 1, 2009.
The Business Continuity Act of 31 January 2009 (the "Act") creates a variety of flexible tools to promote business recovery. This update focuses on the new judicial (i.e., court-supervised) reorganisation proceedings (as opposed to out-of-court workouts and court-supervised sales of the business).
Simplified access to proceedings
On 6 November 2008, the Belgian House of Representatives adopted a bill on the continuity of companies. Although the Senate has exercised its right to examine the bill and may propose amendments until 26 January 2009, we thought it useful to go ahead and address this new bill, which will replace the Act of 17 July 1997 on composition with creditors (Wet op het gerechtelijk akkoord/Loi sur le concordat judiciaire).
Last 06 November 06, the Fourth Chamber of the Superior Court of Justice, in the judgement of the special appeal n° 1,733,685/SP, brought by Volkswagen Brazil's Automotive Industry Ltda. against Matalzul Industry and Commerce Ltda., understood that, even if there is an arbitration agreement between the parties, the bankruptcy filing based on default of credit title (in this case, duplicates under protest) does not need previous establishment of arbitration court.
Introduction